July 25, 2013

Dear Startup Critics

In 1994 an elderly woman named Stella Liebeck filed a lawsuit against McDonald’s after spilling hot coffee on her lap. The jury awarded the plaintiff $2.86 million, which was later reduced by the judge and settled for an undisclosed sum. The press ran with it, and the case became a headline fixture and water cooler topic for weeks. Liebeck vs. McDonald’s Restaurants quickly became the poster child for frivolous litigation - lawsuits that lacked merit, instigated out of greed.

This sparked a movement of critics, politicians, and everyday people advocating for legal reform, judging Ms. Liebeck for her unjustified lawsuit. After all, the hot coffee incident was her fault, right?

But lets take a closer look. What if I were to tell you the scalding 180 °F (82 °C) coffee caused third-degree burns, resulting in eight days of hospitalization as the 94 year-old victim underwent skin grafting and two years of medical treatment? If that doesn’t illustrate her suffering, maybe this will (warning: graphic).

Does that change your perspective?

We are often quick to judge. We read headlines, hear gossip, and draw conclusions with very little information. This is not only true in politics, but also in the startup world.

Entrepreneurs are very opinionated (they have to be), and the best are confident in their ideas. The internet houses an abundance of articles and opinions, judging companies’ internal policies, marketing strategy, and product design (I’m one of those voices).

But sometimes we fail to remember we’re operating with incomplete data.

The founders and builders within a company have data, insight, and a vision to which outsiders are not privy. For example:

  • Marissa Mayer received intense backlash against her ban on remote working. What data did she have to drive this decision? What are her long-term goals for Yahoo? Are there other pressures driven by the board or other internal stakeholders?
  • Snapchat recently exposed users’ “best friends" - the people one engages with most often on the private messaging service - more prominently within the app. This lead to heated debate and criticism on privacy. But consider the primary Snapchat audience: teenagers. Did Snapchat receive feedback from its user base influencing this decision? What metrics do they have to support this feature?
  • Despite the internet’s uproar in support of RSS, Google killed Reader. Observers criticized their decision: “It couldn’t have cost much for the Google goliath to maintain. It’s foolish to discontinue a popular service that people love. They should have invested in the product rather than shut it down.“ To the outsider, these arguments appear valid but remember, the outsider does not have visibility into Google’s long-term vision or strategy, nor products it has planned for the future. One does not kill a product used by millions without good reasons.

We justify our opinion based on past experiences but what worked for us at some point in time, does not mean the same approach will be applicable to others today.

Does this mean we shouldn’t share our opinions online? No. Public expression is a great thing. The freedom to express thought is what makes the internet beautiful. Doing so expands our knowledge and perspective. But recognize that you are working with incomplete data before jumping to conclusions. Decisions made within a company’s opaque walls may appear cloudy or imprudent, especially in the short-term as the results of big decisions often don’t bear fruit immediately.

It’s the bold, non-consensus actions that lead to world-changing products and companies.

And ultimately, time will be the final judge.

P.S. Follow me on Twitter (@rrhoover) or subscribe to my email list to hear my thoughts, often founded with incomplete data. :)

More Writing by Ryan