Recipes for startup failure

November 20, 2012 | 4 comments

Technical co-founderPaul Graham’s essay, How to Get Startup Ideas, is long but very much worth reading. Normally I’d pull a quote, but it’s a valuable piece from start to finish, and it’s hard to know what to choose. Go read it, then come back.

He makes clear that, more than anything else, if you want to be a tech entrepreneur you need to live in the future and build what’s missing. That’s an important idea, which we can break into parts:

  • Have a great idea
  • Build it.

Sounds simple, right? But that second bullet is the hard bit. It’s not anywhere near enough to come up with a great idea, although you can’t have a great startup without one. (Paul has some valuable thoughts on this, including turning off your “sexy” filter and allowing yourself to see problems whose solutions are going to be a pain in the ass for you, but valuable for your customers.) You also have to build it.

This is a complicated field, on which a lot has been written. But I think there are a couple of things that will never allow you to build a successful software-based startup.

If you’re not a geek, don’t outsource the product.

Forget what you may have heard about IT projects. Building a technology company isn’t as simple as coming up with the idea, sending a plan to an outsourcing company and then reselling the result. Not only will your technology be frozen in time, with the outsourcing company effectively holding all of your value (you’ll need to hire them again to make improvements, and it’s important to realize that software products are never actually done), and not only does it send a clear signal that you don’t really care about your product, but it’s also a certainty that no outsourcing company cares as much about your startup as you do. An outsourced software product will always be inferior to one produced in-house by a dedicated team.

There are no shortcuts. Your startup must know how to code. And you, as a startup founder, must learn enough about the technology to be able to make informed decisions. Don’t hand it off – and if you possibly can, learn to code yourself. It’ll be worth it, and as long as you can think logically, it isn’t as hard as you think.

(One quick special note: if you instinctively recoil from the idea of learning how code works, or DNS, or servers, or any of the fundamentals to running a technology company, don’t get involved in tech startups. Those things are the building blocks of your product.)

If you are a geek, don’t make the mistake of thinking it’s all about the code.

This is the mirror image of the above mistake. Building the product is important, as I’ve just laid out. But a startup isn’t a webpage, a service or an app: it’s a company. The temptation, particularly as a single founder or a small team of developers, is to spend all your time working on awesome code that works well. But, equally importantly, you need to nail down the fundamental framework of the business you’re creating.

How do you work? How is your company incorporated? How will you sell your product and market yourself to your potential customers? How will you find those customers? How can you grow? You can’t code the answers to these questions, and if you’ve never started a company before, you’ll find that they’re far harder than building software (because these are new challenges). You’ll need to be empathic, unless you’re building software for a million people who are just like you. (Hint: there aren’t a million people who are just like you.)

As far as the product goes: get something working, fast, and then iterate on it, while you work on the tough stuff. You’re a coder, so you probably don’t read manuals, but get used to not knowing stuff and having to test it in the real world. That’s how companies work. There’s no such thing as sitting in a dark room and – ta da! – coming up with a world-beating company that’ll make you millions. Any story that says otherwise is a lie (because the company in question will have worked out that it’s a great way to sell people their product).

(The geeks get a special note, too: design is marketing. It’s how people perceive your product. If you’re a back-end coder, not only will you need to learn the spreadsheet side of your startup, but you’ll need to learn how to make a clean design, too. You can’t outsource this, but luckily, projects like Bootstrap and Glyphicons help. Get a real in-house designer as soon as you can.)

Your business is the product, and your product is the business.

You can’t do just one. Starting a technology company is an amazing experience – but if you’re a spreadsheet person, you’re going to have to get used to looking at the technicals. And if you’re a technical person, you’re going to have to get used to looking at the spreadsheets. That’s just how it works.

Startups and growth

September 22, 2012 | Leave a comment

Y Combinator founder Paul Graham’s essays are invaluable if you want to be a part of the startup ecosystem. His latest, Startup = Growth, is required reading, and defines, once and for all, the difference between a “startup” and a “new business”:

A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.

[...] Starting a startup is thus very much like deciding to be research scientist: you’re not committing to solve any specific problem; you don’t know for sure which problems are soluble; but you’re committing to try to discover something no one knew before. A startup founder is in effect an economic research scientist. Most don’t discover anything that remarkable, but some discover relativity.

You should read the whole essay over here.

What’s important to remember is that this is one model – you don’t have to go the Y Combinator / venture capital route if you don’t want to. If there’s one thing I learned at XOXO, it’s that a lot of people are earning a living in a lot of ways: there’s many routes to covering your costs, living a sustainable life and doing what you love. Patrick McKenzie and Amy Hoy are worth paying attention to here – as is virtually every successful technology project on Kickstarter.

Die, Hollywood, die!

January 22, 2012 | 18 comments

Paul Graham’s Y-Combinator request for startups that will kill Hollywood has opened up a can of exploding radioactive mega-worms – and this time, they’re angry. In the wake of the Internet industry’s fight against SOPA and PIPA, he posed the problem:

The main reason we want to fund such startups is not to protect the world from more SOPAs, but because SOPA brought it to our attention that Hollywood is dying. They must be dying if they’re resorting to such tactics. [...] How do you kill the movie and TV industries? Or more precisely (since at this level, technological progress is probably predetermined) what is going to kill them? Mostly not what they like to believe is killing them, filesharing. What’s going to kill movies and TV is what’s already killing them: better ways to entertain people. So the best way to approach this problem is to ask yourself: what are people going to do for fun in 20 years instead of what they do now?

Cue pitchfork-wielding posts about how the studios are broken and we should be funding movies using the startup model.

In my opinion, these miss the mark in a fistful of ways.

Paul didn’t ask for new ways to make movies. He asked, what are people going to do for fun in 20 years? That’s a separate problem. Think about how storytelling has evolved through motion pictures: one-off shorts, full-length movies, talkies, serials, TV shows, video games, web shorts. Each of these advances was made possible by technology, but has art at its core. How can a connected medium like the Internet create new narrative experiences without disappearing into the mindless clicking of Zynga et al?

By the way, movies are awesome – and can’t be replaced by games. They’re ingrained as a deep part of our culture in a way that digital narratives have mostly managed when movie people get involved. (My favorite game of all time is The Secret of Monkey Island – a LucasFilm production.) Movies are also a collective experience in a way that digital culture can’t yet manage. Film nights – themed house parties where people watch a curated series of movies – are one of my favorite things in the world. The digital equivalent is probably LAN parties, where everyone has to bring their own computer and play a game together. Admittedly, that was fun when I was 15, but do you have the same conversations? Movies evolved from theater and literature – from pulpy paperbacks all the way through high art – whereas most games can still be tracked back to sports. They’re both important, but occupy different cultural niches.

Also, Raiders of the Lost Ark is five minutes shy of two hours long. Can you imagine sitting and watching someone play a game for that long? I’ve done it, and by the end of the first hour I’m usually half a Goomba jump away from going feral.

You can’t make a minimally viable movie. It’s tempting to treat a movie like a startup – and, of course, most movies are individual businesses with their own profit and loss sheets. But imagine what would happen if you tried to invent a whole plot and script based on the kinds of audience research and iterative demographic analytic analysis we all claim to practice on the web. You’d get the kind of forgettable paint-by-numbers movie that we’ve all seen a thousand times. No risks mean we never get to see anything new. (The same goes for startups, in my opinion.)

(Edit: the community over at Hacker News make an excellent point about this: that test screenings are commonplace, and that I contradict myself by saying that these methods lead to poor movies, which shows that it can be done. I guess I’m saying that movies can’t be made by lean methodologies alone.)

(A further edit: I don’t consider a low-budget movie to be a minimum viable product. This post by Anthony Panozza does a good job of explaining what the difference is, in my opinion.)

Distribution is the weakest link – and the real gatekeeper. Anyone can make a movie, especially now that cameras and professional editing suites have fallen into a price range that ordinary people can afford. The trick is getting a distributor to pick it up. Studios are legally barred from owning movie theaters; in other words, they haven’t owned the whole vertical chain since 1948. It’s distributors who ultimately control release dates and distribution, and who are blocking more innovative models from being established. These companies are the pink elephants on parade. What’ll we do?

The final reel

Movies aren’t going anywhere in the face of digital, just as novels weren’t killed by movies. The incredibly creative people who make them aren’t going away either, although decreasing technology costs mean there may be more of them. Instead, we need to look to the next new model for narrative entertainment: a kind of social experience that we can experience together, passively, holding each other’s hands and laughing at the jokes in unison. That’s the only thing that’ll really kill Hollywood.