Startup lessons

http://www.defmacro.org/2013/07/23/startup-lessons.html

by coffeemug • 13 years ago

551 163 13 years ago

If it doesn’t augment the human condition for a huge number of people in a meaningful way, it’s not worth doing.

this is the kind of arrogance i find disheartening about these kinds of lists. really - things aren't worth doing unless they clear this impossibly ambitious bar?

should i tell the owner of the corner cafe i stop into after work every other day, and that gives me a huge amount of joy nearly every time, that she should give it up because her business doesn't "augment the human condition for a huge number of people"? how about the guy who wrote the $5 clipboard app that makes my life much easier? i'm sure he has lots of customers but "a huge number" that have "augmented" their humanity because of his clipboards....

and i hate to be an ass, but ... under whose criteria does rethinkdb qualify for this, anyway? how meta do we have to go here? how many degrees of separation are we talking about exactly?

the problem with these kinds of statements is they can be rationalized by smart people into all sorts of justifications for doing and/or not doing a huge number of things.

jfarmer3• 13 years ago

He's most likely only talking about venture-backed startups or those startups that have the potential to be venture-backed but forego it for other reasons. These are obviously not "57 lessons for any business anywhere", especially since there is an entire section called Fundraising.

In that context that's a perfectly reasonable piece of advice. Without an "enormous potential for growth" you're likely not going to get substantial interest from investors or have the kind of outcome that folks joining your "startup" would expect.

If that's the case then your critique is off-point. He was deliberately excluding the those kinds of businesses from his analysis.

franz12• 13 years ago

Question is whether that corner cafe falls into the category of a startup or not.

beachstartup3• 13 years ago

starbucks started out this way, in downtown seattle. literally a corner cafe.

but of course this (i believe false) line of reasoning then raises the question of what tiny business couldn't be considered to be potentially an augmenter of the "human condition for a huge number of people", doesn't it?

aufreak3• 13 years ago

A mentor of mine drew the line like this (paraphrased) -- a "startup" is a new company with some innovation at its core. Without the focus on innovation, most discussions tend to drift off into categorical murk such as whether mom-n-pop shops are startups, whether the local hardware guy is "an entrepreneur", etc.

tlb2• 13 years ago

It's not an impossibly ambitious bar. Many people have cleared it in the past, and many more will clear it in the future (including Slava the OP).

ezl3• 13 years ago

"people have done it" doesn't mean that its a good lesson (or a lesson at all)

i think @beachstartup's point is that the problem with treating this as a "lesson" is that you're imposing a value judgment on other peoples' value creation by saying that what they're doing, possibly their LIFE'S WORK, is NOT WORTH DOING just because they may not "augment the human condition for a huge number of people in a meaningful way".

For example, any failed venture could probably be said "not to augment the human condition for a huge number of people in a meaningful way". Goodbye scientists who are trying to cure cancer but haven't succeeded yet. No offense, patio11, but bingo cards? Come on... try to augment the human condition a bit.

It just comes off as judgmental and moralistic bs.

ezl3• 13 years ago

even more fun is that you should be simultaneously

1. Getting to ramen profitability with a team of 2 – 4 within six months to a year, AND

2. augmenting the human condition for a huge number of people in a meaningful way.

Well shit... if SV is a community of 2-4 person creating profitable products that augment the human condition every year...

pg2• 13 years ago

You seem to be misunderstanding him. Perhaps deliberately. But I will clarify this for you anyway. You don't have to do these things simultaneously. You start out with a handful of people, and reach profitability making something small, which ultimately grows into something that changes a lot of people's lives. This is not only possible, but how most successful technology companies started.

coffeemug4• 13 years ago

and i hate to be an ass, but ... under whose criteria does rethinkdb qualify for this, anyway?

You're not being an ass. This is a question we struggle to answer every day. (I'd argue that even very successful companies have to struggle to answer it every day if they want to remain successful.)

I think that there are two separate issues here. The first is that many of these lessons came from messing things up with RethinkDB. RethinkDB didn't germinate this way at all -- many of the things we had to fix, and many things we can't fix so we have to live with their consequences daily. These lessons aren't right for everyone (and you can't hit the ballpark on all of them no matter how hard you try), but if I started another company, this is what I'd look out for and strive for. If you want to do something different (like open a dive shop in the Caribbean), that's awesome (really -- I mean that; I always feel a bit of envy for people who take this path). It's just not what I would do if I started another company.

As for RethinkDB augmenting the human condition, this is a lot simpler than it seems. Thousands of people take time out of their day to learn Rethink and build cool things on top of it. In many cases RethinkDB is crucial to their livelihoods (because their products depend on Rethink working). Instead of spending their time on thing X, they spend it on Rethink, which gives everyone here a tremendous sense of joy. Since the adoption is growing extremely rapidly, it's giving us a great platform to reach more people. We have lots of things in mind that will allow people to do things they can't feasibly do today. That's augmenting the human condition.

(You can't look too far out. We're not inventing flying cars, but if we can make scalable web apps accessible to people that couldn't do it before, well, that's augmenting the human condition for them.)

jdoliner• 13 years ago

"Augmenting the human condition" is admittedly a bit of a platitude (and a bit grandiose). However your question "under whose criteria does rethinkdb qualify for this?" is exactly the right one and the actual lesson from this statement. No one who's running a business says to themselves "I bet I can get away with not augmenting the human condition." Partly because people's internal monologues don't normally use that sort of diction but also because everyone who's running a business knows that this is the whole point. Most people who fail to accomplish this do so because they don't know what will augment their customer's lives. Figuring out the criteria with which to judge augmentation is the hard part. I could go into details about how I think we're doing this at RethinkDB (although referring to it as "augmenting to human condition" is a bit of an over the top for my tastes) but I think this is the general answer to your question.

ksks• 13 years ago

A quote from pg that, I believe, says more or less the same thing as the author did, and incidentally kind of apply to your coffeeshop example: "That difference is why there's a distinct word, "startup," for companies designed to grow fast... To grow rapidly, you need to make something you can sell to a big market. That's the difference between Google and a barbershop. A barbershop doesn't scale. For a company to grow really big, it must (a) make something lots of people want, and (b) reach and serve all those people. "

I think the author is describing the vision a startup should have, even before it starts tackling the problem its trying to solve.

Using your coffeeshop example, if the owner's goal is to, one day, change the way people drink their coffee (in a better way that the owner believes), then yes, this vision is worth pursing, and he/she might need to start out as a corner cafe at first. If the owner's goal is to have his/her own corner cafe and have a stable income from it, then its not a startup.

But, as you said, "a huge number of people" and "augment the human condition in a meaningful way" is pretty vague wording, but the intend/meaning of his statement seems reasonable to me.

mikeknoop• 13 years ago

There is good advise in this list. But I also know counter-examples from "successful" startups for many of the points.

Given that, I'll propose a 58th: be formidable enough to overcome any of the other 57.

mmaunder• 13 years ago

Cashflow.

GregorStocks• 13 years ago

Yep, that's the first thing on the list, all right. Okay, my turn: split the stock between the founding team evenly.

nandemo2• 13 years ago

No, it is not. The first item on the list is about profitability. Being profitable isn't the same thing as having positive cash flow:

http://www.investopedia.com/articles/01/110701.asp

jacques_chester• 13 years ago

I didn't really understand cashflow until I took an accounting 101 unit. It was an eye-opening experience.

Patrick_Devine• 13 years ago

While I do agree with many of the things which are on this list, most of them have trade offs. They certainly are not as black-and-white as the author has stated it.

I really recommend reading The Founders Dilemmas. It covers many of these issues in detail. Here's a link: http://hbr.org/2008/02/the-founders-dilemma/ar/1

mindcrime4• 13 years ago

If you can’t get to ramen profitability with a team of 2 – 4 within six months to a year, something’s wrong.

That probably makes perfect sense for some random SaaS app or consumer facing app, but for an enterprise startup, I'll argue that it's off the mark. Just doing market research, a few rounds of customer development interviews, and building the product out to prototype phase could burn up the better part of a year, and enterprise sales cycles are often slloooooowwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww.........

Pick the initial team very carefully. Everyone should be pleasant to work with, have at least one skill relevant to the business they’re spectacular at, be extremely effective and pragmatic. Everyone should have product sense and a shared vision for the product and the company.

That's one of those things that is on every one of these lists, and for good reason. But, by the same token, you could spend the rest of your life looking for the "perfect" co-founding team, never build a god-damned thing, and die peacefully in your sleep, of old age, at 97. By the same token that "good is the enemy of great", one has to realize that "perfect is the enemy of good enough".

That said, I worked alone for quite some time before inviting anyone else to join up, because this does matter. But you can't wait indefinitely... in the real world, the environment around you is changing, and windows (of opportunity) come and go. You could easily miss one trying too hard to find the ideal co-founder(s).

d0m4• 13 years ago

imho being solo-founder > having a bad co-founder any day. Agree you can't wait indefinitely, but if you're onto something and you can't find someone great to help you grow it, the problem might be elsewhere. (Bad product/market, Hard personalty, etc)

mindcrime4• 13 years ago

I think there's some room between "bad" and "great", though. My point isn't to accept a "bad" co-founder, but rather to not let the quest for a "great" co-founder keep you from going with a "pretty good" co-founder for so long that you miss the opportunity anyway.

That said, this is all pretty subjective and hard to measure anyway. I mean, do you really know that a "great" co-founder is "great" from day one? Or that someone you think is just "good enough" actually is "great"? Of course, that fuzziness is part of why I say "just pick somebody and get started already" to some extent.

jpatokal• 13 years ago

A bit of self-contradiction here:

* Product sense is everything

* Product comes first

* Sales fix everything

* Development speed is everything

* Do everything you can not to attach your self esteem to your startup

I'm reminded of a former CEO who, after careful analysis of a failing business, decided there were nine critical areas of focus for the company. (She was eventually fired.)

coffeemug4• 13 years ago

I don't think it's contradictory at all. There are really three things here:

  * Make something people want
  * Ship it on time
  * If you screw up everything else but still manage to sell
    your product somehow, you'll be ok

As for the self esteem part, you don't need to disassociate yourself, but it helps for mental health. This is more of a sidenote.

timruffles3• 13 years ago

This type of post often uses the Goldilocks fallacy to appear like it offers advice when it's actually restating the actual problem: the way to achieve Y is with just the right amount of X.

"A successful startup is easy: simply build the right product in the right market with the right team, and don't forget to build it at the right speed!"

dylangs103010• 13 years ago

I've never heard of that term, good explanation.

sublimit2• 13 years ago

That's what these list things do regularly. They're just linkbait with either bullshit or obvious advice.

pmarca19• 13 years ago

Which is why you're reading them, right?

Noxchi• 13 years ago

Marketing Product comes first

Marketing should always come first, in terms of what you do.

Don't build a product and see if anyone wants it. See if anyone wants your product and then build it.

mindcrime4• 13 years ago

Or you can do those two things at the same time. That's the essence of @sgblank's "Customer Development Process" - it's mean to run in parallel with the Product Development process, with periodic synchronization between the two.

liveinoakland• 13 years ago

Lesson #58: Don't always believe your own BS.

There is some good stuff in here, but it's not all right all of the time. The part about firing people is interesting. Maybe there is friction because the manager/CEO is doing something wrong and the employee is merely agitating to make things better for the business? The ability to self-evaluate and take criticism/recognize the difference between "difficult" employees and employees who are trying to fix things you are doing wrong seems important and missing from the "people" section.

calibraxis• 13 years ago

I think that will always be a problem. Subjective actors reading the article: us; and as founders, we're at the stronger end of a power imbalance. This whole list assumes a raft of skills that we had to learn elsewhere. And nothing is certain.

In my personal experience, for each Cassandra who correctly nails the company's errors, there's more self-important kiss-up-kick-down types who think their critiques are gold. (People who punch-up-kiss-down are far more respectable, but tend not to last long...)

pmarca19• 13 years ago

That's what pain in the ass employees who get fired for being pains in the ass always think on their way out the door.

david9272• 13 years ago

And Marc that's also what really good employees who leave because they're not listened to always think on their way out the door.

pcwalton• 13 years ago

This is a bit callous, don't you think?

jwilliams• 13 years ago

"11. If you have to give away more than 15% of the company at any given fundraising round, your company didn’t germinate correctly. It’s salvageable but not ideal."

I thought the rule of thumb was a lot higher than this. Any good references this one?

pytrin• 13 years ago

This article says the industry norm is 20-25% at the early rounds, which has been my experience as well.

http://techli.com/2012/02/the-founder-dilemma-risk-equity-di...

crazygringo• 13 years ago

Split the stock between the founding team evenly.

I've heard the exact opposite from VC's -- fact is, the engineer or product founder might be bringing way more value to the table than the business guy. Or sometimes it's vice-versa.

And that "unfairness" in an initial even stock split will come back to haunt the company, since certain founders are not being rewarded justly for their contributions, and will come to resent it later. And that VC investment can be contingent on founders adjusting their ownership stakes beforehand to match the reality of what each founder is actually bringing to the table.

d0m4• 13 years ago

That's why you want to split the stock evenly with co-founders you know will put as much effort/time into it. Starting a business with not-evenly stock is akin to saying "I'm better than you" which is, arguably over-simplified, but not a meaningful way to start a long adventure with someone.

Obviously, if someone is ready to join part-time or come more as an early employee with more salary, then the variable changes. I'm talking here about the "I start with 60, you get 40 because I've got the idea first and I've been working on it for 2 weeks". That's a recipe for trouble.

laglad• 13 years ago

What about "I've tested the market with a prototype over the last year that has generated revenue (not much but some) and now I'm recruiting a cofounder?" Still 50/50? Or should the earlier founder be compensated for earlier work with future work being earned evenly b/w the two cofounders on a vesting schedule?

pmarca19• 13 years ago

"That's why you want to split the stock evenly with co-founders you know will put as much effort/time into it." That's exactly right. One way to interpret Slava's advice is as a gut check -- if you're considering a cofounder who you don't want to give equal stock to, do you really have the right cofounder?

netcan• 13 years ago

I'm not speaking from experience but..

I think even is different to any other split in the same way free is different to any other price. It creates an implicit definition of "fair." A 60%-40% split is implicitly valuing founders' previous contributions, potential value, experience, etc. These are very hard things to estimate. If you ask everyone to quantify their contribution to a success and add up all the percentages, you will usually get a total >100%.

An even split avoids all those problems by putting them aside and agreeing to a definition of fair. Humans understand egality intuitively. They are usually emotionally comfortable with it.

fphilipe2• 13 years ago

Split the stock between the founding team evenly.

I worked as the first employee at a now successful start up. They were 5 founders with each 20% of the shares. What I heard from them after several investment rounds is that investors don't like evenly split stock and prefer that one of the founders has the most stock, even if that's just a single stock more than the other founders.

philsnow3• 13 years ago

N/5 + 1 is just plurality.

"most" == majority == N/2 + 1

which is it, is it just that VCs want to see that there is a designated leader among the founders, or do they want the relative amounts of stock to not ever become an issue for the viability of the startup ?

mere plurality is risky, because any of the founders could sell their share to another, creating an ownership crisis where the nominal head of the company has a minority share.

fphilipe2• 13 years ago

Thanks for clarifying the semantics :)

Jormundir2• 13 years ago

My experience has given me a simple litmus for whether a startup is going to fail or not:

Are they trying to build a small idea into a great company, or are they trying to build a giant idea into a giant company?

AVTizzle• 13 years ago

Which one of those two options do you feel is the one more likely to fail?

Jormundir2• 13 years ago

I hoped it was obvious:

There are huge advantages to having a small idea. There's a clear MVP, a clear short term goal to achieve. This has a big effect on morale: the developing team has a series of short development bursts ending with an achievement and the vision of the company in eyesight. The quality of the product tends to be higher sheerly out of being simpler.

A small idea can have very wide reach, and can be an essential need to users, or a new pillar of infrastructure. Often after building a small and strong product, a company has the freedom to apply and maximize it for the full range of possible use cases. The easy example is Google, but I like to use the StackExchange network. They started with a Q&A site for software engineers, and once that was successful they expanded to a huge range of fields.

Huge ideas often send startups down a path to failure. Morale gets drained over time as features get completed but the vision remains too far away. Complexity increases greatly, and the core product gravitates to unmanageability as it grows. Even a best in class engineering team can be toppled by the exponential complexity of a large product, there's a potter's field of large products being built by awesome engineers, in big companies and small.

I could go on and on for each side, but the main point is, having a company vision that is the MVP is amazingly powerful, and opposite, having a company vision that is massive even with an MVP that is a stepping stone on the way to the massive vision, is a swamp to trudge through for years.

pg2• 13 years ago

Wow is this list good. It has the kind of resonance you only get when you're writing from a lot of hard experience.

As I just wrote when I sent this link to the current YC batch, if you see advice here that puzzles you, it may be a sign of a painful lesson you're going to learn in the future.

dylangs103010• 13 years ago

With respect, I completely disagree with you. I'm sure a lot of this advice is valid and useful for founders, maybe even the majority of it, but I see a lot that strikes me as false.

I'm not a founder of a startup, but I don't think a lot of these are good advice because Slava comes across as so condescending when he states them. That's not to say I'm attacking his tone instead of the advice, but I don't think the advice is valid because it comes from a place of dogmatic declaration (I understand he has a lot of experience, but I don't think some of these subjects can have absolute statements said about them).

Take this one, which other commenters have mentioned already:

"If it doesn’t augment the human condition for a huge number of people in a meaningful way, it’s not worth doing."

I'm going to say this is not only blatantly false, but just bad advice and nothing but discouragement.

'cperciva's startup, Tarsnap, is not something I'd say "augments the human condition for a huge number of people in a meaningful way" - it's Colin's full-time job, and I personally think it's fantastic, creative, and genuinely useful to his client-base.

But apparently, it's not worth doing because it doesn't "augment the human condition." (I don't mean to involve you, Colin, it's just a relatively well-known example on HN).

Let's see...'patio11. His most recent startup, Appointment Reminder, might fall into the category of augmenting the human condition. Does Bingo Card Creator? Maybe I'm reaching here...but no, probably not. Was it not worth doing? Absolutely not. (Again, same to you Patrick).

Then we have this tidbit:

"Pick new ideas because they’ve been made possible by other social or technological change. Get on the train as early as possible, but make sure the technology is there to make the product be enough better that it matters."

This encourages the stream of, for example, crappy camera apps that currently saturate the app store. A lot of developers got on the train, but giving this kind of advice will probably (as history suggests) make founders believe they have the technology to genuinely make a difference in a highly saturated market.

On the other end of the extreme:

"Don’t build something that already exists. Customers won’t buy it just because it’s yours."

If you do get on that train early, and you can genuinely innovate, or just plain reverse-engineer at a lower manufacturing cost, by all means do it. That's a good starting recipe for profit.

"Pick implementations that give 80% of the benefit with 20% of the work."

The 80/20 ratio has cropped up everywhere and grown in popularity for a while now, but I think it's too vague. In particular, I believe this advice would encourage the wrong kind of behavior. It could be interpreted as being efficient, or it could be interpreted as foregoing the more rewarding, effort-filled path with the one that's only marginally useful but exponentially easier. Risky absolutes for advice.

Finally:

"If you can’t get to ramen profitability with a team of 2 – 4 within six months to a year, something’s wrong. (You can choose not to be profitable, but it must be your choice, not something forced on you by the market)."

Maybe Slava successfully did this, but I don't think it's fair to hold all startups to this bar.

I also don't think things like being a "final say" CEO are fully compatible with evenly splitting stocks. This is a very highly debated part of startup financial management. So, yes, this is my opinion, but equally importantly, the opposite advice is also Slava's opinion.

Now, on the other hand, a lot of these statements are really good. I'm not flaming the entire post. In particular, I liked:

"Product sense is everything. Learn it as quickly as you can. Being good at engineering has nothing to do with being good at product management."

Yes, very true, and something you have echoed before as well, pg. Running a company in any sense of the term is completely different from engineering a company's product.

"Learn the difference between people who might buy your product and people who are just commenting. Pay obsessive attention to the former. Ignore the latter."

Often stated, definitely true, also applies to investor courting.

My personal favorite:

"Morale is very real and self-perpetuating. If you work too long without victories, your investors, employees, family, and you yourself will lose faith. Work like hell not to get yourself into this position."

This is one of those murky, non-actionable truths of startups that you don't really get until you've tried it. Judging from the "I failed" Ask HN: posts, I think this might be one of the least expected but extremely true ones. I might even say that for personal well-being, this might be the most important piece of advice.

I'm sure I'll be downvoted for this, but I would ask people to at least explain why they disagree so we can have productive discussion. I respect the OP, I'm just expressing my disagreements here.

timruffles3• 13 years ago

Not sure why you're being downvoted. As you said: the list contains great, tough advice, but some of it is wrong as it's personal preference or pompous.

"augmenting the human condition" sounds like it'd be better achieved by writing a novel. I'm trying to imagine the person who could say their startup was "augmenting the human condition" with a straight face.

swombat• 13 years ago

Tarsnap and BCC are pretty awful by the metrics by which startups are judged. They've take. Many years to produce a very modest return.

That doesn't mean they're not worthwhile projects, but make no mistake: they are very lousy startups - so bad that the only reason to invest time or money in them is love or learning. The financial return is pretty close to zero compared to other ways Colin and Patrick could have spent their time.

Startups are high growth businesses. If there's no high growth potential, it's not a startup.

The list is pretty clearly about startups, not pet projects.

coffeemug4• 13 years ago

I don't think the advice is valid because it comes from a place of dogmatic declaration

I hear this from people once in a while, so I've been trying to watch my tone when I say and write stuff. The thing is, I don't mean to be dogmatic (and it's not how things sound in my head). These are my truths that I discovered, and things I try to look out for. When people find a different set of truths that work for them -- that's absolutely wonderful. I always try to learn from others, and try to never make prescriptive statements. I really should learn what about my tone makes it come off prescriptive and dogmatic, and then not do that.

'cperciva's startup, Tarsnap, is not something I'd say "augments the human condition for a huge number of people in a meaningful way"

On the contrary, I would say it does. It lets people store their data and have a complete peace of mind -- people can be secure in knowledge that others won't read it. It changes how people feel as they walk about their day, because security of their data is in the back of their minds. That's changing the human condition.

This encourages the stream of, for example, crappy camera apps that currently saturate the app store.

It also discourages the stream of, for example, services that try to let people order pizzas online, when it's clear that pizza shops don't want them, they never wanted them, and nothing has changed that will make them want such a service now. This isn't the only criteria to look out for -- it's necessary but not sufficient.

pmarca19• 13 years ago

So you're not a founder but you're offended by his advice to founders. Interesting!

philsnow3• 13 years ago

if you see advice here that puzzles you, it may be a sign of a painful lesson you're going to learn in the future.

Ugh, does anybody mind taking a stab at paraphrasing this one:

Don’t say things if your competitors can’t say the opposite. For example, your competitors can’t say their product is slow, so saying yours is fast is sloppy marketing. On the other hand, your competitors can say their software is for Python programmers, so saying yours is for Ruby programmers is good marketing. Apple can get away with breaking this rule, you can’t.

This is the only bullet out of the list that I can't quite brain.

DannoHung• 13 years ago

Don't make positive assertions about your product which your competitor wouldn't make an opposite assertion of their product. Stop trying to say you're the hottest shit on the planet, try to make it clear how you're different without trying to imply everyone is shit. Makes it harder for people to get into idiotic debates about whether the claims are true or not for some stupid metric.

That is, I suppose, unless your product actually is somehow much faster, smaller, bigger, whatever and it does everything else exactly the same.

nostrademons• 13 years ago

Here's Marc Andreesen saying the same thing with very different words:

"There are always real and legitimate reasons why people often pass on opportunities — they see the risks and they wish to avoid them."

And here's me trying to say the thing in still other words:

Most people are not stupid. If they've chosen to make their product a certain way, it's probably for a real reason. If your marketing implies that they're stupid, people will assume that you can't see their real reason, and assume that you're stupid. It's better to phrase things in terms of trade-offs instead, and let your market decide whether the trade-offs you've made are more appropriate for their use-case than the trade-offs your competitors have made.

For an example from a project I just released:

https://news.ycombinator.com/item?id=6209908

(Incidentally, almost all the comments on Gumbo were of the vein of "Why should I use this?" until I started making replies like this, saying "Here's what html5lib does, here's why they made the choices they did, and here's how Gumbo differs from those choices. Here's what validator.nu does, here's why they made the choices they did, and here's how Gumbo differs. Here's what Hubbub does, here's why they made the choices they did, and here's how Gumbo differs."

jonp• 13 years ago

I'd come across a similar suggestion in a political context. Saying "we want a fair tax system" is meaningless, because any political party could say that.

Saying "we want higher taxes on the wealthy to help the poor" or "we want lower taxes on the wealthy to encourage investment" is meaningful and distinctive.

pmarca19• 13 years ago

Hard won marketing lesson: being different is way better than being better.

Scott McNealy polarized this further -- he would say, I want half the potential customers to hate my products but half to love them.

mattlutze• 13 years ago

Here's a go...

Everyone gets innundated with marketing and communications, so the things you say about your product / company have to be maximally valuable to you. I think, the goal is to use marketing to:

1. define a market, 2. define yourself within the market.

If performance isn't a differentiator, talking about it doesn't help to further define your market or yourself within it. It becomes noise and hurts the clarity of your product.

Python vs Ruby, however, defines discrete boundaries between what your product is and isn't with respect to the differentiators your market cares about. This makes the idea of your product / company more clear.

A small set of direct, differentiating messages can be internalized by an audience. A broad set of tangential messages are hard for an audience to adopt.

loumf2• 13 years ago

I like this explanation

http://www.ericsink.com/item_10174.html

from 2004 from Eric Sink, and this recent application of his own advice

http://www.ericsink.com/entries/mobile_database_sync.html

jfarmer3• 13 years ago

I actually disagree with the advice. Well, I'll walk that back: the advice is sound but too specific. I think it's more like, "Don't say things unless it's hard for your competitors to disagree." If your competitor is insisting on the opposite it would of course be hard for them to disagree, but I think that obscures what's really going on.

Take Volvo, for example, a brand strongly associated with safety. They'd never croon about how slow their cars were, of course. It's more like they've chosen a third route -- in the "fast vs. slow" game they've decided to not play.

In a world where Volvo was the only car brand, there is an opportunity for a competitor to differentiate themselves from Volvo by focusing on speed over safety, even though Volvo isn't claiming "the opposite." In fact, this works really well because the type of people who are attracted to raw speed will probably be turned on by the idea of their car being a little more dangerous. I don't need the same protection my grandmother does -- I want something exciting! You see how even though in some sense being "less safe" is objectively worse, it might nevertheless resonate with the customer psychologically?

Once consumers reflexively think "Volvo" when one says "safety," however, you're never going to out-safety them. It's better to compete in a different game than compete in the game they've won.

That's what folks mean when they say "Being different is more important than being better."

I think engineers have a hard time with branding because they imagine building a brand or a product involves maximizing some utility function. People don't work like that, though. They operate in terms of narratives and stories and identity. Who am I? What does using this product say about me? They generalize their utilitarian temperament to everyone else, when in fact that temperament is just one of many.

If you tried to out-safety Volvo you wouldn't be known as the "safer brand," you'd risk being known as "the brand that claims it's more safe than Volvo." But is it really? I don't know, man, I'm scared of buying a car that might not be safe. I'm going to stick with Volvo.

oziegler• 13 years ago

Well I disagree with the ramen profitability timeframe, since sometimes it is better first to penetrate the market without compromising your products (ads) and then implement money generating components. Example facebook... They implemented ads at a later stage, long after 6-12 months

aptwebapps3• 13 years ago

Isn't that covered by the caveat contained in the point? ... (You can choose not to be profitable, but it must be your choice, not something forced on you by the market).

jwp• 13 years ago

It also resonates especially when you're reading from hard experience. A year ago I would have quickly read & enjoyed this, then moved on. Now too many items give me pause as I recall some mistake I've made. It is very good.

Can you tell apart founders who sponge up advice vs those who are doomed to learn on their own? I suspect the answer is conversational resourcefulness (http://www.paulgraham.com/word.html) but wonder if you have more to say.

dylangs103010• 13 years ago

I take issue with a lot of these, but a bunch of other commenters have covered most of them.

This:

"Assume the market is efficient and valuable ideas will be discovered by multiple teams nearly instantaneously."

That's just irresponsible and unrealistic advice.

Splitting stock evenly and governing yourself as a "final say" CEO seems a bit self-contradictory, to say nothing of whether or not you should be a "final say" CEO in a startup (debatable).

This is also deplorable:

"If it doesn’t augment the human condition for a huge number of people in a meaningful way, it’s not worth doing."

Yeah, it's wonderful to "augment the human condition...", but don't be a condescending prick about it. Things are perfectly worth doing even if they don't impact a large number of people.

The trouble with this is, Slava inherently claims superiority to his audience when he declares (not suggest, declares) that things are not worth doing just because they aren't up to his self-defined standard of ambition.

Such a statement is not for him to make; it wouldn't sound right coming straight out of one of Paul Graham's essays, so on what authority does he get to make this statement?

gruseom2• 13 years ago

I see nothing condescending there. "Augment the human condition" means making someone's life better. "Huge number of people" means going after big markets. "Not worth doing" means not worth doing as a startup—it might be well worth doing in some other context, and that's clearly not the scope of this post.

dylangs103010• 13 years ago

Perhaps I worded that comment too harshly.

However, that's a distinction you're making, gruesom. The OP doesn't say it's not worth doing as a startup, he says it's not worth doing in general. There's no qualifier. Had there been, I wouldn't take the same issue with it. This is something other commenters have pointed out down and upthread as well.

captn3m0• 13 years ago

I liked the "Jiro Dreams of Sushi" bit. I saw it yesterday, after seeing a lot of recommendations on HN for it. Excellent movie for all of HN. Go watch it.

McUsr• 13 years ago

I haven't seen it yet, but will today. One other thing, which is that I associate the whole blogpost with the movie "Revolver". It is like Jason Statham, speeking the words; I guess it is the "former and latter" phrases. IMHO also a good movie, when it comes to be better. "You only get to be better, by playing a better opponnent."

Sealy• 13 years ago

2. Split the stock between the founding team evenly.

I can tell that you have all honest intent for writing this, but from experienced accounts I have read (a lot from PG and this forum). Many startup veterans strongly advise against this.

33. Watch Jiro Dreams of Sushi, then do marketing that way. Pick a small set of tasks, do them consistently, and get better every day.

I've seen this and I love it. I love how you tied it in to startups too. That man is an inspirational model of a life long determination to be the best at what you can be.

dcraw• 13 years ago

A lot of these resonate with me... to the extent that I already believe them. It's tough to absorb these sorts of generalities though, which is why startups make the same mistakes over and over again... not because they haven't heard the advice, but because it's hard to apply. I'd love to see, over the next 57 weeks, the author take one of these per week and tell a real story about how he learned it. An example: "Your authority as CEO is earned... don't try to use authority you didn't earn." When did you learn this? You certainly didn't think before "I should use authority that I haven't earned." So how did it stand in your head before, and what experience made you rethink it? Overall, I love stories that give me more concretes to absorb into my understanding of cause and effect, and details that I can use to bolster my understanding of the pithy advice. Thanks for sharing your hard-won experience, and I look forward to more posts in the future.

mixmixmix• 13 years ago

#25 Don’t build something that already exists. Customers won’t buy it just because it’s yours.

Not a good rule. I know many guys that are making serious money because they improved something that already existed.

pavlov• 13 years ago

They didn't just build the same thing - they improved on it in a way that customers understood and wanted.

swah2• 13 years ago

Opposite view: building something that already exists is the easiest way to know that there is a market. Then try to steal the market from other players with a better product.

nandemo2• 13 years ago

Good list. From my point of view, it's also a good source of questions for an employee to ask the founders when interviewing at a startup .

I don't get this, though:

Watch Jiro Dreams of Sushi, then do marketing that way. Pick a small set of tasks, do them consistently, and get better every day.

How is that marketing? That's getting good at your craft and improving your product.

I watched the movie, but I'm not sure that Jiro is good at marketing. Apparently he's very good at making sushi, but it seems he became successful (and later world famous) despite being bad at marketing.

Incidentally, his shop's average ratings at Tabelog (one of the biggest Japanese gourmet websites) is only 3.8 out of 5, with quite a few "bad" reviews.

thsiao• 13 years ago

Marketing after product - totally disagree. Today marketing and product is one in the same, no way to tell when one begins and the other ends. Basically what he should have said is start with deeply understanding your target customer, that's the hard part and people always screw that first step up.

tchock23• 13 years ago

100% agree.

Above all, understand who your customer is, what they need and how they value that need before you begin to think of your solution...

By all means, start with a hypothesis and "big idea," but conduct thorough qualitative research with your prospective target customer before you start building in any real sense (beyond simple prototypes).

As a marketing research consultant, I've worked with too many companies (large and small) who flail around to find target segments after not spending the appropriate time upfront understanding and qualifying their target audience.

Despite seeing so many companies fail at it, it's even tough advice for me to follow on my own personal projects because I love building things and just want to get started right away...

edo• 13 years ago

I feel as though this list overly generalizes. Don't just blindly follow these; many of them can be proven to be wrong.

pmarca19• 13 years ago

I feel as though your comment overly generalizes. Don't just blindly follow it; it can be proven to be wrong.

aptwebapps3• 13 years ago

30. Learn the difference between people who might buy your product and people who are just commenting. Pay obsessive attention to the former. Ignore the latter.

How do you do the first part?

pmarca19• 13 years ago

That's a great question and a really important topic.

You use a sales technique called "qualifying", and when you figure it out, you do it all the time, and not just with potential customers, but also with potential investors, candidates, and even reporters.

(This is part of the art of sales that many founders today refuse to learn.)

To qualify a prospect (potential customer), at the end of every interaction, you should determine from them what has to happen from here for them to pull the trigger. You do this by asking questions, and testing the answers -- have them lay out their process for making the decision, have them identify the steps that have been reached and the steps that have not, have them identify other people in their organization who can block the purchase, and so on. And you do this over and over again until you get the sale.

If the prospect can't lay out the logical sequence of steps from here to close, then you need to qualify them out and stop spending time with them, because they're not going to buy.

Two interesting corollaries:

* Yes, there are a LOT of people in a LOT of companies (as well as a lot of potential investors, potential recruits, etc.) who will spend a lot of time with you even though they can't ultimately pull the trigger. A lot of people like to windowshop, and a lot of people have nothing better to do.

* Like a lot of sales techniques, this sounds to engineers like it might be hard (will the potential customer tolerate all those questions?) But any serious potential customer will have a very easy time answering the questions, and will respect their potential vendor for being professional in the sales process.

pmarca19• 13 years ago

I forgot to add -- when a salesperson in an enterprise software company is getting paid $1 million+ per year in cash, you'll invariably find she's an expert qualifier.

aptwebapps3• 13 years ago

Thanks for the answer - I had seen something similar somewhere but it hadn't gelled. I'm still not completely clear how this would apply to products that were very cheap or ad-supported. Maybe just with a lighter touch? Note: this is academic to me at this point in time as I'm not doing sales.

majani• 13 years ago

The hard part of qualifying is actually not that people will lack the time, but people feel guilty about financially profiling people superficially. Just check the recent Oprah scandal. It could be said that the sales girl was 'qualifying' Oprah's sale and directing her to buy the cheaper handbag, but turns out that she had misjudged the book by it's cover.

kerryfalk• 13 years ago

Qualifying early and quickly is a must but for a successful sale to happen it must quickly transition to implicating the pains found and spending a lot of time there otherwise there's nothing to come back to and once hot prospects can go cold quickly. This is especially true for B2B sales with long sales cycles, not as much for sales which can be closed in a single meeting. The money is in the former.

wes-exp• 13 years ago

Any recommended resources for learning more about sales?

marcamillion• 13 years ago

This is a wonderful list.

Is RethinkDB a YC company?

coffeemug4• 13 years ago

We are.

thejerz• 13 years ago

I disagree with PG entirely. These lists are thoughtful, but they are 100% subjective. The only rule with startups is there are no rules. There is a time and a place for EVERYTHING. There is no "always," and there is no "never."

I have a funded startup. I can list 5 counter-rules for every rule he lists. For example: "Don’t build something that already exists. Customers won’t buy it just because it’s yours." Living Social, anyone?

The phrase, "There is more than one way to skin a cat" comes to mind.

jmngomes• 13 years ago

It's refreshing to see someone defending a point that, IMO, should have been obvious all along, instead of encouraging the "lifeless code-drone" style: "Every once in a while, get away (...) It will make you more effective and make the people around you happier."

Today, I'm releasing my product's 3rd alpha version for testers and then leaving for a small break. My main goal will be to read the two books that are waiting for me for a long time and, to the extent possible, NOT think about anything work related. I could do some productive work these 5 days, but in the long run it'll cripple my stamina when things get rough in a few months. So, it's time to restore balance.

comatose_kid• 13 years ago

This list is so good, I should memorize it to the point when I can look at what I'm doing wrong and shout out one of your numbers! I've made many of these mistakes (#1 in particular).

Here are my top picks by number referring back to the article, for some of the sections (YMMV of course!):

PEOPLE: 1.

FUNDRAISING: 12.

MARKETS: 18.

PRODUCTS: 24 (and 27 which to me is a subset of 24)

MARKETING: 32, 31 (I wonder how RethinkDB or companies like it can do 32??)

SALES: 40

DEVELOPMENT: 45 (and 46 which is a subset of 45)

SingleFounderCo• 13 years ago

"ramen profitability" - LOVE IT!

snoonan• 13 years ago

This list is amazing. I will offer a counterpoint on the free side of freemium users. Have a plan to cultivate their love and action. Ranking in Google, the app store, etc is a part of your revenue path, so don't ignore your army of likers, linkers, etc. Just don't waste time _disproportionally_ in their favor when you have paying customers to service.

swah2• 13 years ago

I guess another valuable hidden lesson is that Slava is a lisp lover working in a C++ product.

ballard• 13 years ago

Read anything by Felix Dennis, and you'll be able to see the meta: it's a mind game and quite fun when you can step back a bit. Also, he's comes off as wickeder than Ben Franklin if that were possible.

ph0rque• 13 years ago

Product sense is everything. Learn it as quickly as you can. Being good at engineering has nothing to do with being good at product management.

How do you know if you have it? How do you learn it or improve it?

derstang• 13 years ago

The problem with "rules" is that they live in an ideal world, not the real world. "Give up only 15% of your company" sure, if you are the next Google, but even then every raise they did wasn't perfect. Let's be honest there is an ideal way you would build a company, but it doesn't exist for anybody. Startups are hard and messy. You do the best you can, but you can't just know in advance you're picking the best idea, the best people and fundraising quickly. It's not like that at all.

Eduard• 13 years ago

Working on the wrong thing for a month is equivalent to not showing up to work for a month at all. I cannot agree to this statement. Even though some venture turns out to be a flop, you did learn a lot while trying to conquer it. And additionally, it's only trying out something to find out that it was the wrong thing - also you learned this about your field of study.

the_economist• 13 years ago

I would add exercise daily, sleep well, eat a healthy diet, and get some sunlight to the list. You'll be happier.

sscalia• 13 years ago

This article's advice creates the same kind of terrible, derivative "feature" companies that simply exist to get acquired, rather than really breaking new ground.

There's gems in there, but lots of bad, bad advice.

rsingel• 13 years ago

I don't know that you get to say that something is wrong if you can't get to Ramen-profitability in 6 to 12 months and then later say to follow the example of Google and build something that touches billions of people's lives. Adwords didn't show up for a long time.

hynahmwxsbyb• 13 years ago

A list full of startup platitudes dressed up in pedantic rhetoric. Did you really learn this o'wise oracle, or did you just plagiarize a bunch of wisdom, rewrite it in your own voice, and claim it as your own? Elements of Style you are not because there is no great sense of consistency. And who the hell are you anyways?

rdl• 13 years ago

Point #11 seems different than my understanding of most VC Series A rounds. It tends to be 20-40%, so almost always over 15%

wmougayar2• 13 years ago

Re: "Market to your users. Getting attention from people who won’t buy your product is a waste of time and money."

That statement is misleading. It's not an "or" situation. You need to market to both your existing users and your prospects (users or customers). You can't just rely on viral and word of mouth for growth. Yup, good marketing is not easy- you need to figure out your segmentation and reach your prospects cleverly.

Startup lessons

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