Peng founded game-changing companies like Match.com, and as an experienced venture capitalist, offered his perspective on what it takes to succeed in the ever-evolving landscape of startups and business ventures.
Observing the “Ridiculous States of the World”
His approach to entrepreneurship is a blend of keenly observing the world’s absurdities and taking proactive steps in response. He shared that his methodology extends beyond merely identifying gaps; it involves a profound sense of astonishment at the current state of affairs and a genuine conviction that they can be transformed into something different, and potentially improved.
For instance, the process of going through printed classified ads and manually marking them with a pencil for future reference seemed illogical, which in turn, led to the creation of Match.com, a pioneering online dating platform that revolutionized how people connect. With the same principle, Peng also developed Interwoven, a content management system (CMS), before CMS became mainstream. The magic lay in recognizing the solution in the chaos stemming from the struggle to manage digital content. His vision reshaped the digital landscape.
The Formula: R+K>1
Central to his conversation with Sina was Peng’s winning concept of R+K>1, a formula for a startup’s success – one that emphasizes the importance of retaining and engaging customers, clients, or employees in your business. In the article, you could delve into his recommended approach of concentrating on building and measuring customer/client/employee loyalty and engagement. The key question is, “How much do these stakeholders love the business, and how many new stakeholders are they bringing in?”
To measure R+K effectively, he highlighted the importance of a statistically significant sample size and timeline. While he prefers a sample size of 5,000 clients/customers over 100, he acknowledges that at least 100 users and a timeline of six to 12 months is necessary to make informed decisions.
The Potential of “B2E2E2B”
While he primarily focuses on B2B and enterprise-oriented businesses, Peng discussed whether R+K>1 applies to B2B models. Although he initially believed it might not, he now sees potential in a model he dubs “B2E2E2B,” where the “E” stands for employees. This involves creating and measuring vitality based on the number of new clients the employees within a target organization bring onboard.
As the conversation progressed, the audience raised questions about community building in a B2B context. Peng emphasized the importance of finding commonalities and creating value. Even seemingly niche markets, like semiconductor enthusiasts or supply chain optimization, could look towards forming communities.
Ultimately, the secret sauce is in the ingredients of the R+K>1 formula. It is through identifying the “ridiculous,” nurturing communities, and prioritizing retention that entrepreneurs can increase their chances of building successful ventures. The most extraordinary ideas, as Peng truly believes, can often come from the most ridiculous state of things.
We thank Sina Merarji for hosting an engaging conversation and discussion with founders from Southeast Asia looking to learn about unlocking success in their entrepreneurial journey.