“Be in love with your problem, not your solution.”

Requests for Startups: Matt Wallaert (Microsoft Ventures)

How does your academic background in behavioral psychology influence the way you think about building and growing companies?

As a social psychologist, my specialty is something called JDM: judgment and decision making. So when I look at startups, I’m usually evaluating them through the lens of how people will use them to make decisions (or how they will be used to automate so people don’t have to make a decision). I’m also always looking for the behavioral goal: if the startup wins and the world is the way they want it to be, what will people who use their product do? What is the behavior that rises to the top?

You focus on the idea of competing pressures quite often. Could you summarize this idea and comment on why founders might overlook these competing pressures? What are some examples of companies that confront these competing pressures effectively?

Competing pressures is a pretty simple notion, borrowed from psychology. All human behavior is the product of promoting pressures (reasons to do something) and inhibiting pressures (reasons not to do something). They compete against each other and the winner drives the behavior.

You have said that companies should derive “structured, diverse thoughts about consumers’ behaviors.” What are the best methods for companies to do this? What does such information allow companies to do?

We’ve all heard it a million times and yet so few really do it: talk to your customers. I don’t mean email them generic surveys or run user tests with Camtasia. I mean actually talk to them. Get to know them as people, befriend them. When I was Head of Product at Thrive (sold to LendingTree, competed with Mint), our weekly emails had a little note at the bottom: “Live in New York City? Want a free lunch? Our scientist Matt Wallaert will take you out to talk about Thrive.” And I just met people, over and over and over. I didn’t talk about Thrive. I asked them about how they felt about money and why. I listened to their descriptions of how it affected their lives and relationships. I got to know them and honestly, I’m still friends with a few of those folks, all these many years later.

What is the major piece of advice you give to entrepreneurs in the Microsoft Ventures network?

I try to listen to where they are and where they want to be, rather than just giving generic advice. But if there is any lesson I see over and over again, it is that startups need to move away from the middle, toward the extremes. Either you’re for people who care a lot and want to go deep or you are for people who don’t care at all and want to automate. Everything in the middle falls away.

What are the most frequent reasons you see startups fail?

Well, there are some startups that just shouldn’t have existed in the first place. They didn’t have a real problem to solve and they weren’t interested in finding one. But if you’re talking about the good startups, the ones that should have succeeded and didn’t? I think it is mostly just simple exhaustion. I don’t mean “let’s stay up until 2am every night” exhaustion but mental fatigue. You make a million decisions at startups and if you question and maximize and perfect each one, you die. Good enough has to be good enough or startups just…self-destruct.

What startup verticals interest you most right now?

Automation. Not industrial automation, but “I can pay you money so I don’t have to think about something” automation. As people’s discretionary income increases, they need access to services that allow them to focus their time on things they actually care about. For example, I don’t care about fashion. I need to look good enough but beyond that, I want to spend zero mental energy on clothes. So I built a little script that just auto-buys the clothes that I know fit off eBay. Same brand, same size, under $30? Presto, in my closet.

What are your biggest predictions for the year ahead?

I know better than to play this game. My prediction for the year is that I’ll continue to be wrong about a lot of things, right about a few key things, and that will be enough. My son will grow up, I’ll grow out (woof, new dad weight is a killer)…it’ll be a good year.

Are there any specific company ideas that you really want someone to build and would potentially fund?

I have an idea around analytics and management of sponsorships as an enterprise SaaS that I’d really like to see built. I’ve pitched it to a million folks looking for good ideas, but in the end, most people gravitate toward something sexier.

You spearheaded the digital literacy program Bing in the Classroom (BitC) at Microsoft to foster digital literacy in K-12 students. How do you see these kinds of socially responsible product extensions within the context of large technology companies like Microsoft? Is this different for earlier-stage companies? Do you think that companies should have a double bottom line baked into their business plan?

Customizing your products to reach new audiences isn’t something you should have to do out of the goodness of your heart; it just makes good business sense. In schools that use BitC, we see 40% increases in search volume. That’s a huge, huge number. Teaching kids to be computer literate, even if it isn’t on our platforms, is good business, because all technology touches our ecosystem, whether we directly own it or not. When technology is doing well, Microsoft does well.

The Mission

A network of business & tech podcasts designed to accelerate learning. Selected as “Best of 2018” by Apple. Mission.org

Requests for Startups

Written by

Entrepreneurial ideas & perspectives by investors, operators, and influencers. Subscribe: www.requestsforstartups.com. Run by Isaac Madan: isaac@venrock.com.

The Mission

A network of business & tech podcasts designed to accelerate learning. Selected as “Best of 2018” by Apple. Mission.org