Startups: The Alternative Factor

If you ever want your own startup it’s time I told you something you might find uncomfortable: you are probably living in the wrong universe.

Most people live in a universe where smart people study hard to get a good job that’s steady and provides for them and their family. There are a set of rules to follow in life, even though nobody ever comes out and tells you them directly. Those who don’t follow the rules are to be pitied or politely shunned. Among academics there are one set of rules; among business people another. Among laborers there is yet another. We collect and share these rules in clans which take the shape of churches, civic groups, political parties, or professional organizations.

Most people will never have a startup. Worst yet, they have no idea what it means to form and run a startup. Their value system, their experiences, their social structure — everything about their life has purposefully designed them not to understand the startup world. They live in another universe.

It’s difficult to explain this at the level it needs explaining. They’re not wrong — in their universe they are existing and doing things as they should. Or as someone once said, they’re not even wrong. You can’t be wrong if you are acting in a natural way as best as you know how.

I’ve had a passion for startups for several years. I used to think that forming and running a startup would be like learning a new skill, say C++ or flying airplanes. Apply enough hard work, pour yourself into the subject matter, find some examples to copy, then work until you reach your goal.

How wrong I was.

Instead what I’m finding is that all (or at least most) of the things I have learned before I started working on startups have conditioned me to do exactly the wrong things in my startup. Want to write good, solid, bullet-proof code? Excellent goal — become a true craftsman. Only it has jack shit to do with startups and can easily prevent you from ever having a successful one.

I thought at first perhaps this was an isolated incident: that there were a couple of things that work one way in the corporate world yet another way in startup land. But then the examples kept coming. Want to build a vision of utopia — a field of dreams — for your users to come visit? Never works that way. Want funding so that you can develop for a year or so and build a solid product? Forget it — you’re clueless. Want to educate people with your startup about some cool social cause? Bad idea. It’s a startup, not a charity. Want to build a business and flip it? Wrong thing to be thinking right now. Want to take some new technology and do really cool stuff with it? Great. You’ve got a hobby, not a startup. Want to do some stuff to impress fellow hackers? Wonderful. You’re now in a popularity contest, not a startup.

It goes on and on.

That’s not saying that there are exceptions to each of the conclusions above — there are plenty of folks who make a startup around a social cause and do quite well, and there are folks who take cool new tech and make a workable startup around it — but they are the exception rather than the rule. There are even people who don’t believe any of what I’ve said who have crazy successful startups. These people are an example of selection bias: a person with random attributes who gets lucky and then associates their success with one of those attributes. Who knows how much harm these folks have caused simply trying to help other entrepreneurs.

The startup world is effectively its own universe: a place where the normal rules don’t apply.

Paul Graham (a person who studies startups and runs a startup “bootcamp”) said something once along the lines of “We used to think that you had to be smart to be a founder, but we found through trial and error that wasn’t a reliable indicator at all”

From what I can tell of their latest selection strategy, it’s somewhere between a beauty contest and just finding people who are too stubborn to give up and able to figure things out on their own. In a way this doesn’t solve the underlying problem at all — what makes for a good startup — but it works, at least more than other systems do.

The interesting thing I’m finding in my personal journey is that the more I learn about startups and figure out where I’m going, the less I am attached to the old universe.

For example, I was helping a large corporation out a while back. One of the projects they had completed was a huge repository of job instructions and process descriptions for how they develop technology. As an organization that built things, this made total sense: how could you build something without a clear set of rules? But as a startup person, I had two concerns. First, I don’t know what might be useful or not. (I also had some concerns about prescriptive process, but that’s not relevant for this discussion.) Second, unless we’re doing something that actually has value, we should stop doing it. That means measure whatever you do and stop doing things that don’t help anybody.

To me this seemed very natural — after all, I have a dozen ideas around startups. I could spend from here to eternity working on things I find cool. But instead of trusting my “coolness factor” or my own sense of self-confidence for something, I’ve learned to rely on the people I’m trying to help to tell me what I can do for them. That’s the only true metric I can trust — not my instinct or some huge body of knowledge I might have absorbed about some topic or another. But to the folks I was helping, this seemed odd, strange, threatening, and perhaps even rude. Why would we want to do things this way? Are you dismissing all this hard work we’ve done? Shouldn’t we be telling folks stuff? (even if nobody listens) How will people know what to do unless we provide them instructions? All great questions, by the way — but the assumption is that somehow we could sit around and reason what might be useful or not, then never check back with the folks we are actually trying to help. From a startup perspective, it’s just the opposite: assume you know nothing, form a hypothesis, then check. Repeat and rinse.

I could go on with these examples, but I’m afraid it’ll sound like I’m criticizing folks, and that’s not my intention. We just live in different universes.

I’ll close by sharing with you my comment to a teenager who made several hundred thousand dollars in his own business before being shut down by a legal threat. He had described his problems online, and received a sound thrashing for it by people who have never done anything like that in their life. Note the completely different value system I suggest than the “normal” universe:

Notes to people wanting to hustle and form a company/startup.

Note 1: Never underestimate the ability of the press and your fellow citizens to trash whatever you are doing. Because if you are providing value and making money, you are doing more than 99% of the people out there. They will punish you for this.

Note 2: Always expect a lawyer to call. The other 1% who are providing value have learned that the best way to keep making more and more money isn’t to innovate; it’s to use the political and legal system as a club to kill the little upstarts. Be ready for the club.

Note 3: People who end up making a lot of value usually don’t think anybody would much want what they have. First sale comes as a nice surprise. People who have grandiose dreams of killing the market usually wander off into fantasyland and never produce anything anybody wants.

Note 4: It’s all marketing and distribution. Know your customer and be able to get close to them. If you can do that, you can experiment with things until you find something that works. The market comes first, the product second. Great founders weren’t guys with genius ideas who went forth in some heroic journey: they were guys who were able to grok markets; to deeply understand the people they were trying to help.

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2 thoughts on “Startups: The Alternative Factor

  1. Matt McCormick

    Wow, this was a really good article. I’m surprised it got no comments either here or on HN. I often think the pressure for young developers to build a start-up is way too high. I think in a lot of cases, many successful companies started not from the founder saying “I’m going to start a company” but from them just working on something interesting without any regard to where it will go.
    I’ve had a couple unsuccessful attempts at building a business but I think from here on in, I’m just going to do work for other people, get paid well, and in my spare time work on other things I find interesting. If it ends up working out and I can build a sustainable business from it then great. If not, then at least I am enjoying what I am doing and have a comfortable life.
    I think the worst thing around startups is the idea that you have to put everything else on hold in your life for it to succeed. Although it shouldn’t be surprising as you usually hear that advice from investors for whom it benefits.

    Reply
  2. DanielBMarkham

    Hey Matt,
    Thanks for the comment!
    I was one of those guys who put the startup first. It’s been a long haul — almost seven years. Maybe in another five years I can break even and sit back and relax. When I was young, a lot of people in startups wanted me to come on-board, but I refused. Why? Because I said I was a complete idiot about how startups work! And now, of course, I am having to learn.
    Good luck to you with your new plan! I think maybe if I had to do it over, I would have spent much more time around startups working for them and much less time working for BigCorp.
    One note, though, Matt. Most everybody I knew at startups lost their jobs within 5 years. Most everybody I knew at BigCorp also lost their jobs within 5 years. This business does not forgive. There is no hiding — except maybe in government jobs.
    Take it from an old guy: I think the only way out is through.

    Reply

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