Things that compound are significantly more valuable than things that don't.
For startups, when you learn something about your users, that learning helps you every time you design a new feature, run a new marketing campaign, etc. for the lifetime of the company.
For startups, $ does not compound. In fact, it loses value over time because of inflation. So if you raise $1M and it's sitting in the bank, it's declining in value.
What should you do? The obvious answer is trade $ for learnings. Trade something that does not compound for something that does.
As examples, here are 2 ways you can make this trade.
- Run Experiments – If you have 3 value propositions, and you're not sure which of them is more important, I'll run an ad for each. The results will tell me which is more important and to who. The demographic data with paid ads is great for figuring out personas.
- Hire – There's a lot of nuance with this but generally, if you hire the right people, you'll be able to iterate faster. If you iterate faster, you learn faster.
If that's the case, why not trade all your $ for learning right now? It turns out not all learnings are of equal value. I've talked about learnings as if they were disconnected, singular things. In reality, they are deeply interconnected and form a structure. Learnings that form the base of that structure (fundamental) are much more valuable than those at the periphery.
Learning if your target users are teenagers or professionals will fundamentally change what you do. That's how you can tell if something is a fundamental (and therefore valuable) learning. Does learning it fundamentally change what you do?
Given the broader market environment, everyone is being told to cut cost. Generally good advice but there's nuance. I'd still be spending to learn, especially if it's to learn fundamental things.
Hsu Ken Ooi Newsletter
Join the newsletter to receive the latest updates in your inbox.