The Hardest Lessons for Startups to Learn
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Saved by 28 people (0 private), first by anonymouse user on 2006-05-01
- Mangifera on 2008-09-02 - Tags business , reference
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Public Sticky notes
So I'm going to number these points, and maybe with future startups
I'll be able to pull off a form of Huffman coding. I'll make them
all read this, and then instead of nagging them in detail, I'll
just be able to say: number four!
Highlighted by arizona2
By "release early" I don't mean you should release something full
of bugs, but that you should release something minimal. Users hate
bugs, but they don't seem to mind a minimal version 1, if there's
more coming soon.
Highlighted by arizona2
One of the things that will surprise you if you build something
popular is that you won't know your users. Reddit now has almost half a million
unique visitors a month. Who are all those people? They have no
idea. No web startup does. And since you don't know your users,
it's dangerous to guess what they'll like. Better to release
something and let them tell you.
Highlighted by arizona2
Linux users complained they used too much Flash, so they
rewrote their software not to. If they'd waited to release everything
at once, they wouldn't have discovered this problem till it was
more deeply wired in.
Highlighted by arizona2
Perhaps the most important reason to release early, though, is that
it makes you work harder.
Highlighted by arizona2
I don't mean, of course, that you should make your application ever
more complex. By "feature" I mean one unit of hacking-- one quantum
of making users' lives better.
Highlighted by arizona2
So it is with hacking: the more ideas you implement, the more
ideas you'll have.
Highlighted by arizona2
As with exercise, improvements beget improvements. If you run every
day, you'll probably feel like running tomorrow. But if you skip
running for a couple weeks, it will be an effort to drag yourself
out.
So it is with hacking: the more ideas you implement, the more
ideas you'll have.
Highlighted by arizona2
Once a product gets past the stage where it has glaring flaws, you
start to get used to it, and gradually whatever features it happens
to have become its identity. For example, I doubt many people at
Yahoo (or Google for that matter) realized how much better web mail
could be till Paul Buchheit showed them.
Highlighted by arizona2
I think the solution is to assume that anything you've made is far
short of what it could be. Force yourself, as a sort of intellectual
exercise, to keep thinking of improvements.
Highlighted by arizona2
If your product seems finished, there are two possible explanations:
(a) it is finished, or (b) you lack imagination. Experience suggests
(b) is a thousand times more likely.
Highlighted by arizona2
A startup has to sing for its supper. That's why the successful
ones make great things. They have to, or die.
Highlighted by arizona2
mproving constantly is an instance of a more general rule: make
users happy. One thing all startups have in common is that they
can't force anyone to do anything. They can't force anyone to use
their software, and they can't force anyone to do deals with them
Highlighted by arizona2
Users are a fickle wind, but more powerful than any
other. If they take you up, no competitor can keep you down.
Highlighted by arizona2
As a little piece of debris, the rational thing for you to do is
not to lie flat, but to curl yourself into a shape the wind will
catch.
Highlighted by arizona2
The vast majority of people who visit your
site will be casual visitors. It's them you have to design your
site for. The people who really care will find what they want by
themselves.
Highlighted by arizona2
Anyone who has used the web for
more than a couple weeks has been trained to click on Back after
following a link. So your site has to say "Wait! Don't click on
Back. This site isn't lame. Look at this, for example."
Highlighted by arizona2
The most
important is to explain, as concisely as possible, what the hell
your site is about.
Highlighted by arizona2
An established company may get away with such an opaque description,
but no startup can. A startup
should be able to explain in one or two sentences exactly what it
does.
Highlighted by arizona2
You need this for everyone:
investors, acquirers, partners, reporters, potential employees, and
even current employees. You probably shouldn't even start a company
to do something that can't be described compellingly in one or two
sentences.
Highlighted by arizona2
If you have something impressive, try to put it on the
front page, because that's the only one most visitors will see.
Highlighted by arizona2
give people everything you've got,
right away.
Highlighted by arizona2
One of the
standard pieces of advice in fiction writing is "show, don't tell."
Don't say that a character's angry; have him grind his teeth, or
break his pencil in half. Nothing will explain what your site does
so well as using it.
Highlighted by arizona2
The industry term here is "conversion." The job of your site is
to convert casual visitors into users-- whatever your definition
of a user is. You can measure this in your growth rate. Either
your site is catching on, or it isn't, and you must know which.
Highlighted by arizona2
"don't worry about this; worry about that instead."
Startups are right to be paranoid, but they sometimes fear the wrong
things.
Highlighted by arizona2
Disasters
are normal in a startup: a founder quits, you discover a patent
that covers what you're doing, your servers keep crashing, you run
into an insoluble technical problem, you have to change your name,
a deal falls through-- these are all par for the course. They won't
kill you unless you let them.
Highlighted by arizona2
The people at Google
are smart, but no smarter than you; they're not as motivated, because
Google is not going to go out of business if this one product fails;
and even at Google they have a lot of bureaucracy to slow them down.
Highlighted by arizona2
but other startups you don't know exist yet. They're way more
dangerous than Google because, like you, they're cornered animals.
Highlighted by arizona2
A corollary is that
you shouldn't relax just because you have no visible competitors
yet. No matter what your idea, there's someone else out there
working on the same thing.
Highlighted by arizona2
More people are starting
startups, but not as many more as could.
Highlighted by arizona2
The average person can't ignore
something that's been beaten into their head since they were three
just because serving web pages recently got a lot cheaper.
Highlighted by arizona2
There
are a lot of ways to do it, but the three main ones are internal
disputes, inertia, and ignoring users.
Highlighted by arizona2
Way more
startups hose themselves than get crushed by competitors. There
are a lot of ways to do it, but the three main ones are internal
disputes, inertia, and ignoring users.
Each is, by itself, enough
to kill you. But if I had to pick the worst, it would be ignoring
users. If you want a recipe for a startup that's going to die,
here it is: a couple of founders who have some great idea they know
everyone is going to love, and that's what they're going to build,
no matter what.
Highlighted by arizona2
If companies stuck to
their initial plans, Microsoft would be selling programming languages,
and Apple would be selling printed circuit boards. In both cases
their customers told them what their business should be-- and they
were smart enough to listen.
Highlighted by arizona2
As Richard Feynman said, the imagination of nature is greater than
the imagination of man. You'll find more interesting things by
looking at the world than you could ever produce just by thinking.
Highlighted by arizona2
I now have enough experience with startups to be able to say what
the most important quality is in a startup founder, and it's not
what you might think. The most important quality in a startup
founder is determination. Not intelligence-- determination.
Highlighted by arizona2
Time after time VCs invest in startups founded by eminent professors.
This may work in biotech, where a lot of startups simply commercialize
existing research, but in software you want to invest in students,
not professors.
Highlighted by arizona2
Microsoft, Yahoo, and Google were all founded by
people who dropped out of school to do it. What students lack in
experience they more than make up in dedication.
Highlighted by arizona2
You can lose quite a lot in the brains department and it won't kill
you. But lose even a little bit in the commitment department, and
that will kill you very rapidly.
Highlighted by arizona2
Running a startup is like walking on your hands: it's possible, but
it requires extraordinary effort.
Highlighted by arizona2
If an ordinary employee were
asked to do the things a startup founder has to, he'd be very
indignant. Imagine if you were hired at some big company, and in
addition to writing software ten times faster than you'd ever had
to before, they expected you to answer support calls, administer
the servers, design the web site, cold-call customers, find the
company office space, and go out and get everyone lunch.
Highlighted by arizona2
And to do all this not in the calm, womb-like atmosphere of a big
company, but against a backdrop of constant disasters. That's the
part that really demands determination. In a startup, there's
always some disaster happening. So if you're the least bit inclined
to find an excuse to quit, there's always one right there.
Highlighted by arizona2
But if you lack commitment, chances are it will have been hurting
you long before you actually quit. Everyone who deals with startups
knows how important commitment is, so if they sense you're ambivalent,
they won't give you much attention. If you lack commitment, you'll
just find that for some mysterious reason good things happen to
your competitors but not to you. If you lack commitment, it will
seem to you that you're unlucky.
Highlighted by arizona2
Whereas if you're determined to stick around, people will pay
attention to you, because odds are they'll have to deal with you
later. You're a local, not just a tourist, so everyone has to come
to terms with you.
Highlighted by arizona2
At Y Combinator we sometimes mistakenly fund teams who have the
attitude that they're going to give this startup thing a shot for
three months, and if something great happens, they'll stick with
it-- "something great" meaning either that someone wants to buy
them or invest millions of dollars in them. But if this is your
attitude, "something great" is very unlikely to happen to you,
because both acquirers and investors judge you by your level of
commitment.
Highlighted by arizona2
If an acquirer thinks you're going to stick around no matter what,
they'll be more likely to buy you, because if they don't and you
stick around, you'll probably grow, your price will go up, and
they'll be left wishing they'd bought you earlier. Ditto for
investors.
Highlighted by arizona2
What really motivates investors, even big VCs, is not
the hope of good returns, but the fear of missing out.
Highlighted by arizona2
You have to be the right kind of determined, though. I carefully
chose the word determined rather than stubborn, because stubbornness
is a disastrous quality in a startup. You have to be determined,
but flexible, like a running back. A successful running back doesn't
just put his head down and try to run through people. He improvises:
if someone appears in front of him, he runs around them; if someone
tries to grab him, he spins out of their grip; he'll even run in
the wrong direction briefly if that will help. The one thing he'll
never do is stand still.
[7]
Highlighted by arizona2
There is always room for new stuff. At every point in history,
even the darkest bits of the dark ages, people were discovering
things that made everyone say "why didn't anyone think of that
before?" We know this continued to be true up till 2004, when the
Facebook was founded-- though strictly speaking someone else did
think of that.
Highlighted by arizona2
The reason we don't see the opportunities all around us is that we
adjust to however things are, and assume that's how things have to
be. For example, it would seem crazy to most people to try to make
a better search engine than Google. Surely that field, at least,
is tapped out. Really? In a hundred years-- or even twenty-- are
people still going to search for information using something like
the current Google? Even Google probably doesn't think that.
Highlighted by arizona2
It seems to me the only limit would be the number of people who
want to work that hard.
Highlighted by arizona2
The shielding of a reactor is not uniform; the reactor would be
useless if it were. It's pierced in a few places to let pipes in.
An optimism shield has to be pierced too. I think the place to
draw the line is between what you expect of yourself, and what you
expect of other people. It's ok to be optimistic about what you
can do, but assume the worst about machines and other people.
Highlighted by arizona2
But you should treat your optimism the way you'd treat
the core of a nuclear reactor: as a source of power that's also
very dangerous. You have to build a shield around it, or it will
fry you.
Highlighted by arizona2
This is particularly necessary in a startup, because you tend to
be pushing the limits of whatever you're doing. So things don't
happen in the smooth, predictable way they do in the rest of the
world. Things change suddenly, and usually for the worse.
Highlighted by arizona2
Shielding your optimism is nowhere more important than with deals.
If your startup is doing a deal, just assume it's not going to
happen. The VCs who say they're going to invest in you aren't.
The company that says they're going to buy you isn't. The big
customer who wants to use your system in their whole company won't.
Then if things work out you can be pleasantly surprised.
Highlighted by arizona2
That's why
people proposing deals seem so positive: they want you to
stop looking. And you want to stop too, because doing deals is a
pain. Raising money, in particular, is a huge time sink. So you
have to consciously force yourself to keep looking.
Highlighted by arizona2
For example, if someone says they want to invest in you, there's a
natural tendency to stop looking for other investors.
That's why
people proposing deals seem so positive: they
want
you to
stop looking. And you want to stop too, because doing deals is a
pain. Raising money, in particular, is a huge time sink. So you
have to consciously force yourself to keep looking.
Highlighted by arizona2
There are usually a lot of subsidiary questions to be cleared
up after the handshake, and if the other side senses weakness-- if
they sense you need this deal-- they will be very tempted to screw
you in the details.
Highlighted by arizona2
VCs and corp dev guys are professional negotiators. They're trained
to take advantage of weakness.
[8]
So while they're often nice
guys, they just can't help it. And as pros they do this more than
you. So don't even try to bluff them. The only way a startup can
have any leverage in a deal is genuinely not to need it. And if
you don't believe in a deal, you'll be less likely to depend on it.
Highlighted by arizona2
So I want to plant a hypnotic suggestion in your heads: when you
hear someone say the words "we want to invest in you" or "we want
to acquire you," I want the following phrase to appear automatically
in your head: don't get your hopes up. Just continue running
your company as if this deal didn't exist. Nothing is more likely
to make it close.
Highlighted by arizona2
So why do it? It would be worth enduring a lot of pain and stress
to do something grand or heroic, but just to make money? Is making
money really that important?
Highlighted by arizona2
There is nothing grand or
heroic about starting a startup per se.
Highlighted by arizona2
So why do I spend so much time thinking about startups? I'll tell
you why. Economically, a startup is best seen not as a way to get
rich, but as a way to work faster. You have to make a living, and
a startup is a way to get that done quickly, instead of letting it
drag on through your whole life.
[9]
Highlighted by arizona2
There are times in most of our
lives when the days go by in a blur, and almost everyone has a
sense, when this happens, of wasting something precious. As Ben
Franklin said, if you love life, don't waste time, because time is
what life is made of.
Highlighted by arizona2
It should not always tell this to users, however. For example,
MySpace is basically a replacement mall for mallrats. But it was
wiser for them, initially, to pretend that the site was about bands.
Highlighted by arizona2
Similarly, don't make users register to try your site. Maybe
what you have is so valuable that visitors should gladly register
to get at it. But they've been trained to expect the opposite.
Most of the things they've tried on the web have sucked-- and
probably especially those that made them register.
Highlighted by arizona2
VCs have rational reasons for behaving this way. They don't
make their money (if they make money) off their median investments.
In a typical fund, half the companies fail, most of the rest generate
mediocre returns, and one or two "make the fund" by succeeding
spectacularly. So if they miss just a few of the most promising
opportunities, it could hose the whole fund.
Highlighted by arizona2
There are two ways to do
work you love: (a) to make money, then work
on what you love, or (b) to get a job where you get paid to work on
stuff you love. In practice the first phases of both
consist mostly of unedifying schleps, and in (b) the second phase is less
secure.
Highlighted by arizona2
1. Release Early.
Highlighted by mikeem
Users hate
bugs, but they don't seem to mind a minimal version 1, if there's
more coming soon.
There are several reasons it pays to get version 1 done fast. One is that this is simply the right way to write software, whether for a startup or not. I've been repeating that since 1993, and I haven't seen much since to contradict it. I've seen a lot of startups die because they were too slow to release stuff, and none because they were too quick. [1]
There are several reasons it pays to get version 1 done fast. One is that this is simply the right way to write software, whether for a startup or not. I've been repeating that since 1993, and I haven't seen much since to contradict it. I've seen a lot of startups die because they were too slow to release stuff, and none because they were too quick. [1]
Highlighted by mikeem
for a startup the initial release acts as a shakedown
cruise. If anything major is broken-- if the idea's no good,
for example, or the founders hate one another-- the stress of getting
that first version out will expose it. And if you have such problems
you want to find them early
Highlighted by mikeem
the most important reason to release early, though, is that
it makes you work harder. When you're working on something that
isn't released, problems are intriguing. In something that's out
there, problems are alarming. There is a lot more urgency once you
release.
Highlighted by mikeem
2. Keep Pumping Out Features.
Highlighted by mikeem
By "feature" I mean one unit of hacking-- one quantum
of making users' lives better.
Highlighted by mikeem
You should make your system better at least in
some small way every day or two.
Highlighted by mikeem
If you're the rare exception-- a company that actually listens--
you'll generate fanatical loyalty. You won't need to advertise,
because your users will do it for you.
Highlighted by mikeem
If your product seems finished, there are two possible explanations:
(a) it is finished, or (b) you lack imagination. Experience suggests
(b) is a thousand times more likely.
Highlighted by mikeem
3. Make Users Happy.
Highlighted by mikeem
One thing all startups have in common is that they
can't force anyone to do anything. They can't force anyone to use
their software, and they can't force anyone to do deals with them.
A startup has to sing for its supper. That's why the successful
ones make great things. They have to, or die.
Highlighted by mikeem
There are two things you have to do to make people pause. The most
important is to explain, as concisely as possible, what the hell
your site is about
Highlighted by mikeem
A startup
should be able to explain in one or two sentences exactly what it
does.
[4]
And not just to users. You need this for everyone:
investors, acquirers, partners, reporters, potential employees, and
even current employees. You probably shouldn't even start a company
to do something that can't be described compellingly in one or two
sentences.
Highlighted by mikeem
If you have something impressive, try to put it on the
front page, because that's the only one most visitors will see.
Highlighted by mikeem
One of the
standard pieces of advice in fiction writing is "show, don't tell."
Don't say that a character's angry; have him grind his teeth, or
break his pencil in half. Nothing will explain what your site does
so well as using it.
Highlighted by mikeem
Most visible disasters are not so alarming as they seem. Disasters
are normal in a startup: a founder quits, you discover a patent
that covers what you're doing, your servers keep crashing, you run
into an insoluble technical problem, you have to change your name,
a deal falls through-- these are all par for the course. They won't
kill you unless you let them.
Highlighted by mikeem
A corollary is that
you shouldn't relax just because you have no visible competitors
yet. No matter what your idea, there's someone else out there
working on the same thing.
Highlighted by mikeem
Public Comment
on 2006-05-02 by ykominami
on 2006-08-03 by sekeener