Moderate Success Is the Enemy of Breakout Success

One of the most important skills of an entrepreneur is being able to gauge one's own performance.

Is the project you're working on a failure or success? How do you know?

Should you persevere, pivot or move on and focus on a new, more promising project?

If your company is a success, is it going to be a billion-dollar success or a $10M 'success’?  

These questions are hard to answer, and they’re particularly hard for entrepreneurs, who are, as we all know, 'unique.'

And yes, by unique I mean bipolar, insane, moody, delusional, crazy, irresponsible and unbalanced -- at least the good ones are!

You see, self-rating is riddled with bias.

The 'illusion of superiority' leads most folks to believe they're better than they actually are. I read that 70% of folks think they are above average, which is statistically not possible.

A study once showed that over 94% of college professors thought they were above average.

Luke Skywalker thought he was a Jedi, and Darth Vader cut his hand off.

We're generally not good judges of our own ability or performance.

Paradoxically, this delusional nature is critical to succeeding!

If I had known how absolutely, soul-crushingly hard it was to publish a print magazine in 1995, I would have never started Silicon Alley Reporter. And 'SAR' made me who I am today.

Right now, as I remember the two- or three-day periods when we would 'put an issue to bed,' I literally can feel a rush of adrenaline. It's pumping into my bloodstream right now, and along with a good B.I.G. or Jay-Z track, is a tool I use to get pumped up.

[ Spoiler alert! ]

Getting his hand cut off and almost dying was a critical moment in Luke's development as an entrepreneur. He would have never been able to turn his father back from the Dark Side if he didn't empathize and see himself in that pile of machine and man laying in rubble with a missing hand.  

If I had witnessed the 'closing' of an issue of a magazine before, I would never have tried to launch a magazine. NFW.  

Fact: Being delusional is an awesome trait -- at times.

When I'm starting new companies, I like to hire neophytes for this reason.

I've routinely put 22-year-olds in charge of things they've never done and had wonderful, wonderful outcomes. Blogs like Engadget, podcasts like ‘This Week in Startups’ and conferences like TechCrunch50/LAUNCH were the products of young people not knowing exactly how dangerous, deep and cold the waters I pushed them into actually were.

Those folks who took the plunge have gone on to great, great things as a result.

Young folks are just delightfully delusional and I so prefer their company in some cases and on some projects (not all) -- even if it requires dealing with the occasional boneheaded mistake. 'Wait, we can't smoke pot at a corporate party?' and 'No one told me I couldn't watch Netflix at work!' are two very memorable mishaps from the last couple of years. I kid you not.

Sometimes what you need to solve a problem is '0 years experience' -- not 10. I saw magazine people bring a lot of baggage to the blogging revolution: they wanted to be edited and wanted to write 1,000+ word pieces! TV directors with 10 years' experience trying to shift into YouTube thought adding $10,000 in cameras and lights was the right thing to do, when they really should have focused on brainstorming creative ideas that could go viral and doing audience development.

Anyway, smart folks can debate the 'fresh eyes' vs. 'experience' all day long. The correct answer is 'it depends on the situation.'

So, back to the big question: Should you keep pushing on your current project? Are you successful or not? Is it moderate or breakout?

In a recent 'This Week in Startups' interview, Jason Goldberg of Fab.com fame told me he has a one-year rule. If a startup doesn't breakout in a year, he moves on!

That might be too short in my estimation, but there should be an expiration date on projects. For me, it's more like two or three years.

When Mahalo pursued human-powered search, it took two or three years to figure out that we couldn't make a search result that was 10% to 35% better than Google's -- and we certainly couldn't scale like them. We pivoted to video and apps, and we're really crushing it right now. Those projects broke out in 18 months, and soon we'll be called Inside.com and people will get it. Pivot, pivot, pivot in that case.

One of my other projects has been the podcast network ThisWeekIn.com. It's had moments of amazing success, including ‘Kevin Pollak's Chat Show,’ ‘This Week in Music,’ ‘Web Design’ and ‘Venture Capital.’ Not to mention my show ‘This Week in Startups,’ which is doing decent revenue and seems to help folks.

We got the company to break-even, and it produces amazing content.

However, I recently came to the conclusion that the business was a moderate success and would not be able to scale. So, we decided we'll wind it down, give the remaining funds back to the angel investors and move on.

Moderate success is a distraction, and it keeps founders from bigger success.  

This was a very hard decision because we had all these 'signs of life' and critical acclaim. However, the truth is the long-form podcasting business works under a small set of circumstances:

* A host who is very notable (like Kevin Pollak, Leo Laporte, Adam Carolla, Kevin Rose or Mark Suster) in their industry.
* A notable host who is willing to work five or 10 hours a week on the show for three or four years to build a respectable audience.
* A notable host who is willing to work three years for five to 10 hours a week with little or no expectation of compensation!

Very, very few podcasts have made it to scale, and to me that says this business will never be big. Why? Well, you need folks like Leo or Adam to make millions of dollars and have breakout success, but if they decide to stop doing their show, the networks will shutter. That simple.

It just doesn't make sense to invest in a business with this kind of limited upside.

Hard to come to that conclusion when you have shows like Kevin Pollak's absolutely crushing it in terms of quality, downloads and critical acclaim, or my show doing significant revenue and having a large audience.

So, Kevin and I are both going to keep doing our shows, but we're winding down the company and not launching new shows.

In fact, the only way to make podcasting a real big business would be if you could somehow get the top seven podcasters to team up and make a meganetwork. If Leo Laporte, Kevin Rose, Adam Carolla, Kevin Pollak -- plus three or four more -- all did shows as one company, it would have $8M to $15M in revenue and be worth $50M to $75M, but that's a lot of personality to try and corral -- I dare say it’s impossible.

When you figure out something really conflicted like this, you have to make a decision. Our decision was to wind down the network, letting the podcasters like Kevin Pollak, Jose Caballer, Ian Rogers, Mark Suster and myself do their own indie productions -- but not run a dedicated company.

‘This Week in Startups’ will keep going (for at least 2013), but we won't be trying to solve a problem that we now know is unsolvable. Better to move on and let our angels reinvest their money in the next promising thing (and I'm one of the angels in ThisWeekIn.com).

Is your moderate success holding you back? Want to know if you should keep going?

Easy way to figure it out: get some people together you really respect and trust, and show them the data and whiteboard it out. Do that with 10 folks and you'll find out real quick if you should keep going.

That's what I did, and I can tell you it works.

all the best, @jason

PS - 2,000 developers, designers and UX professionals have received scholarships to the LAUNCH Festival (festival.launch.co) on March 4-6th, 2013 thanks to the support of my partners who include Wilson Sonsini, MailChimp, Bing, Sequoia Capital, Yammer, Google, Tagged, Webconnex, Sourcebits, Charles River Ventures & Zelkova.

If your company wants to reach the 5,000 folks coming to the event, many of which will be developers, designers and UX professionals, please hit reply and let me know. We're half-way to covering the $700,000 it costs to put on a show of this scale. I need some folks to help me pick apples and make the pie -- not just eat it! jason@calacanis.com