Singularity: rise of the ignorant e-commerce geniuses and their lean machines

I think we know a few things about the future shape of startups by now.  They will:

• Remain focused on core expertise and outsource everything else;
• Ignore customer focus groups and rely on tight expertise groups at their core to design differentiated products
• Launch fast and iterate at speed
• Be run according to facts and not opinions
• Test and iterate continuously
• Make decisions quickly and constantly
• Keep capital intensity low

Beyond that, here is a fascinating phenomenon that I have seen happen recently and that seems to be getting prevalent:  Ignorant founders do it better.

Yes I am toying with you, dear Reader, but bear with me. 

I have been talking to a number of e-commerce startups recently who share a few things in common. 

• They do not anticipate any knowledge of their end market
• They do not pretend to understand what their customers want
• ... nor where they can be found online

They understand the basics of product and pricing and how to manage their supplier relationships; they are competent but not stellar on back-end and customer service.

Where they shine is precisely where you would expect them to be weak: they are entirely ignorant of, and refuse to assume any knowledge of, what method will work in terms of attracting customers.  They will continuously spend small amounts of money across channels and simply measure, measure, measure (or correlate, correlate, correlate).  They throw data at the problem. 

In truth, this is nothing new.  It is very similar to how some areas of science are evolving. Algorithms and heuristics are supplanted by simpe data crunching but on a massive scale; throw enough data and computational power at a problem and let the machine tell you what works.  See Wired:

In just over a day, a powerful computer program accomplished a feat that took physicists centuries to complete: extrapolating the laws of motion from a pendulum’s swings.  Developed by Cornell researchers, the program deduced the natural laws without a shred of knowledge about physics or geometry.

The Singularity is Near and coming to a website near you.

PS: this post was partly inspired by some great blogs I stumbled across recently thanks to nivi;

• Steve Blank
• Sean Ellis
• This Wired Article
• and as always ParkParadigm ;-)

And just post writing, stumbled across this one from Eric Ries:

2009 05 21 The Lean Startup At SIPA

View more OpenOffice presentations from Eric Ries.

Comments

[William Reeve]

Interesting point. I haven't thought of myself as an Ignorant Founder before but when I (and Alex Chesterman) set up ScreenSelect (now LOVEFiLM), now the leading international DVD rental service, we were a good fit with your description above. We knew nothing about video rental. We were however relentless analysts in every sense (and we had a good role model, Netflix). The video rental industry told us we were daft. We showed them. Boy we showed them....

Thanks, Fred, for the terrific seed you have planted with this blog.

[Daio]

I think untainted is a better word, or uncorrupted a clean mind and fresh ideas.

[Erwin]

I guess that if you change "ignorant" with "humble" you will see that most entrepreneurs that do not pretend to be the "smart owners of the absolute truth" are more likely to succeed than those who do think (or make you think) so.

But then, that is not necessarily a new insight.

There is no substitute for hard work and humble attitude.