Don’t start at version infinity, a toy might be just ok!
Yesterday after watching Derek Sivers Uncommon Sense videos I kept thinking about building Version 0.1of something instead of building the vision for Version ∞ at moment 0.
I associated this with Chris Dixon’s post “The next big thing will start out looking like a toy”. He uses the term “toy” to describe a product/service that at an early stage is dismissed by “serious” people, but in the end turns out to be a serious success.
I believe that many times, at the very beginning, even the people working on the toy thought of it as a toy and not as something huge.
Only after discovering they were creating a lot of value with the toy (or wealth in Paul Grahams terms), they start working on the vision for Version ∞ that will enable them to “conquer the world”.
While thinking about the stuff I’ve done in the last couple of years, I came to realize that it often works this way. Most experiments had better outcomes than plans. I’m not pretending to draw any big conclusion, or planning to stop planning, but I’ll definitely try to experiment a little bit more.
There are some good examples of the importance of experimenting instead of trying to come up with huge visions and ideas out of the blue.
Airbnb started as airbedandbreakfast
“We both quit our jobs to become entrepreneurs…. suddenly we found ourselves unable to afford our own apartment” “We started to think creatively about how we could solve our problem of not being able to pay the rent” Joe Gebbia
Joe Gebbia’s talk
CDbaby started as a hobby
Derek Siver’s video
Twitter started as twttr
Jack Dorsey had an idea to make a more “live” LiveJournal, it took him 6 years before experimenting with it. twttr sketch
Facebook started as thefacebook
“Everyone’s been talking a lot about a universal face book within Harvard,” Zuckerberg said. “I think it’s kind of silly that it would take the University a couple of years to get around to it. I can do it better than they can, and I can do it in a week.”
According to this article
Paul Graham & Harjeet Taggar questions during office hours @ Disrupt Conference
I took some notes of Paul Graham & Harjeet Taggar questions during office hours @ Disrupt.
Going through all of them is definitely a worthwhile exercise!
Rules: No google, all by heart, in less than 1 minute each.
What’s your market?
How do you sell to your market?
Where does your current market top out?
You are growing at n%, where does it stop?
What’s the number one reason your customers turn you down for? (Harjeet Taggar)
Make people complain directly to you.
Do you have any evidence of how hard it is to convince people to use your product?
If one of your competitors teams up with a big company, is there room for you still?
How did you find your users? (Harjeet Taggar)
What is the thing you do that users are most excited about?
Why do you make *signing up* so hard for people? You WANT to know the rate at which your product spreads without constraints, and you want to optimize that.
So your product is sort of a supra set of “other product”? (slides.io)
What are the specific features of your product?
How big is your market?
Have you try selling/pitching your product?
Why would people use your product instead of another one? What’s the specific feature that will convince them?
What’s distinctive about you? What specific feature?
Can you think of an example of what you can do better than your competition?
What will they jump to you for?
Why did you decide to work on this particular problem? (Harj Taggar)
Do you have a plan for getting users? (Harjeet Taggar)
Be MUCH better than *incumbent* at a small subset of things. vs being 1% better at everything.
Who is the user of your product?
Are you using it yourself? How do you use it (give example)?
Where does your traffic come from?
What’s your plan for making money?
I wonder if being international from day one is good…
You need evidence that shows that what you are working on is leading down the right path
If you’re making something frivolous, there’s danger that it could be fashionable for a while.
How did people find your product?
Here’s the video:
Michael Burry, the guy who started shorting subprime mortgages in 2005.
Now I´m wondering whether the best option is to completely get out of the dollar, sell printing services to the Fed, or melt nickels for its copper…
Jarle Bernhoft. Awesome music.
Awesome video by Steve Jobs @ WWDC in 1997. Truly inspirational and way ahead of his time. As usual.
Got it from Nick Bergson-Shilcoc.
Summary of Chris Dixon’s posts.
I was re-reading some @cdixon posts and decided to make a small summary:
I wouldn’t try to over think timing. It’s pretty much impossible to predict what will happen in the near term. You should instead focus on solving a big problem and let the chips fall where they may. Be cautious about falling into starting something around the latest fad, e.g. online video, facebook apps, twitter apps. I love the audaciousness behind this Andy Grove interview:
What really infuriates him is the concept of the “exit strategy.” That’s when leaders of startup companies make plans to sell out to the highest bidder rather than trying to build important companies over a long period. “Intel never had an exit strategy,” he tells me. “These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can’t build an empire out of this kind of concoction. You don’t even try.”
Benjamin Graham famously said that the stock market is a voting machine in the short run and weighing machine in the long run. The same is true of startups. Make something weighty – try to build an empire – and you’ll be far less vulnerable to the ups and downs of the market.
The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.” This is one of the main insights of Clay Christensen’s “disruptive technology” theory.
Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” user needs.
This does not mean every product that looks like a toy will turn out to be the next big thing. To distinguish toys that are disruptive from toys that will remain just toys, you need to look at products as processes. Obviously, products get better inasmuch as the designer adds features, but this is a relatively weak force. Much more powerful are external forces: microchips getting cheaper, bandwidth becoming ubiquitous, mobile devices getting smarter, etc. For a product to be disruptive it needs to be designed to ride these changes up the utility curve.
If your timing and execution is right, you can create a very successful business on the back of a sustaining technology
But startups with sustaining technologies are very unlikely to be the new ones we see on top lists in 2020. Those will be disruptive technologies – the ones that sneak by because people dismiss them as toys.
1) All startup employees – including founders! – should vest over 4 years from their start date (with a one year “cliff”).
2) Founders should always have acceleration on change of control! In particular, you should have full acceleration on “double trigger” (company is acquired and you are fired).
You should talk about it (your startup idea) to almost anyone who will listen. This includes investors, entrepreneurs, people who work in similar areas, friends, people on the street, the bartender, etc.
You’ll get suggestions for improvements. You’ll discover flaws and hopefully correct them. You’ll learn a lot more about the sector/industry. You’ll learn about competitive products that exist or are being built. You’ll gauge people’s excitement level for the product and for various features. You’ll refine your sales and investor pitch. You might even discover your idea is a bad idea and save yourself years of hitting your head against the wall.
Even if your idea gets in the wrong hands, they will probably just get the high level “elevator pitch” which isn’t worth much anyways. Hopefully by that time you’ve developed the idea much further and in much greater detail – by talking to as many people as possible.
Almost anything you build on the web has already been tried in one form or another. This should not deter you. Antecedents existed for Google, Facebook, Groupon, and almost every other tech startup that has succeeded since the dot-com bubble.
Entrepreneurs should always ask themselves “why will I succeed where others failed?”
Your answer should include an explanation about why the timing is right – about some fundamental changes in the world that enable the idea you are pursuing to finally succeed
I’ve made more strong ties through Twitter (and blogging) than I have through any communications medium I’ve ever used before. (Caterina, had the foresight to insist that everyone at Hunch blog, tweet, contribute to open source projects, etc.)
A corollary to Metcalf’s law is that when two networks connect or interoperate the smaller network benefits more than the larger network does.
Interoperating is generally good for end users, but assuming the two networks are directly competitive – one’s gain is the other’s loss – the larger network loses.
It is also strategically wise for Google to be open in layers that are not strategic (mobile OS, social graph, Google docs) while remaining closed in layers that are strategic (search ranking algorithm, virtually all of their advertising services).
Over the next few years we’ll see the rising importance of other types of graphs. Some examples:
Taste: (Hunch). Our thesis is that for many activities – for example deciding what movie to see or blouse to buy – it’s more useful to have the neighbors on your graph be people with similar tastes versus people who are your friends.
Financial Trust: Social payment startups like Square and Venmo are creating financial graphs – the nodes are people and institutions and the relations are financial trust.
Endorsement: An endorsement graph is one in which people endorse institutions, products, services or other people for a particular skill or activity. LinkedIn created a successful professional graph and a less successful endorsement graph. A general endorsement graph could be useful for purchasing decisions and hence highly monetizable.
Local: Location-based startups like Foursquare let users create social graphs (which might evolve into better social graphs than what Facebook has since users seem to be more selective friending people in local apps). But probably more interesting are the people and venue graphs created by the check-in patterns. These local graphs could be useful for, among other things, recommendations, coupons, and advertising.
There are two broad philosophical approaches to explaining the forces that drive world events.
The Great man theory, neatly summarized by the quote ”the history of the world is but the biography of great men.”
The alternative view argues that history is largely determined by a complex series of societal, political, institutional, technological and other forces. This view argues that great people are more a product of their time than the times are a product of them.
Akio Morita (Superman): “We don’t ask consumers what they want. They don’t know. Instead we apply our brain power to what they need, and will want, and make sure we’re there, ready”
Bill Gates = Superman. Steve Ballmer = man.
In fact, life is unfair: there are geniuses and then there are the rest of us. When great leaders go away, so does the greatness of their companies.
One of the hardest things to do as a startup is to create a new category. Bloggers and press have a natural tendency to “pigeonhole” – to group startups into cleanly delineated categories, and then do side-by-side comparisons, comment on the “horserace” between them, and so forth.
Pigeonholing is one reason startups should actually welcome direct competitors. It was only once a direct competitor to SiteAdvisor appeared that people started treating “web safety” as its own category (Walt Mossberg was the first one to legitimize the category with this article).
At my current startup, Hunch, being pigeonholed as a so-called Answers site is one of our main marketing challenges.
There is no easy solution to avoid being pigeonholed. All you can do is consistently, straightforwardly describe what you do, and then keep beating that drum over and over until the message gets through.
Techies are only occasionally good predictors of which tech products normals will like.
Techies are enthusiastic evangelists and can therefore give you lots of free marketing. Normals, on the other hand, are what you need to create a large company. There are three main ways that techies and normals can combine to embrace (or ignore) a startup
1. If you are loved first by techies and then by normals you get free marketing and also scale. Google, Skype and YouTube all followed this chronology. It is startup nirvana.
2. The next best scenario is to be loved by normals but not by the techies. The vast majority of successful consumer businesses fall into this category. Groupon, Zynga, and Gilt Group. They often acquire customers through paid marketing.
3. There are lots of products that are loved just by techies but not by normals. A year ago, I would have said they didn’t want to Twitter but obviously I was wrong. Knowing when something is techie-only versus techie-plus-normals is one of the hardest things to predict.
As a rule of thumb, think of enterprise sales as products/services that cost $100K/year or more.
I vastly prefer marketing (one-to-many) versus sales (one-to-one), hence only start companies making consumer or small business products (advertising based or sub-$5000 price tags)
The key question (with enterprise startups) is whether it solves a problem that is one of the prospective customer’s top immediate priorities. Only if your product is a top priority can you get powerful “champions” to cut through the red tape.
Above $100K, you might be able to make a profit given the cost of sales. Below $5k you might be able to market your product, hence have a very low cost of sales. In between, you need to do sales but it’s hard to do it profitably. Your best bet is a “channel” strategy; however, for innovative new products that is often a lot like trying to push a string.
A huge challenge for user-generated websites is overcoming the chicken-and-egg problem: attracting users and contributors when you are starting with zero content. One way to approach this challenge is to use what Geoffrey Moore calls the bowling pin strategy: find a niche where the chicken-and-egg problem is more easily overcome and then find ways to hop from that niche to other niches and eventually to the broader market.
Facebook -> Harvard. Yelp -> San Francisco. Foursquare -> NYC (high density)
How do you identify a good initial niche? First, it has to be a true community – people who have shared interests and frequently interact with one another. They should also have a particularly strong need for your product to be willing to put up with an initial lack of content. StackOverflow -> Programmers
My Hunch cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far?” This exercise is meant to counter a number of common cognitive biases, such as:
1. The sunk costs trap. People tend to overvalue past investments when making forward-looking investment decisions. From the rumors I’ve heard, Joost was a company that fell into the sunk costs trap. (post about Joost vs Skype)
2. The Bridge on the River Kwai syndrome. This is when entrepreneurs fall so in love with their engineering project qua engineering project that they lose site of the larger mission
3. Solving the wrong problem
Ask yourself: if you started over today, would you build the same product? If not, consider significant changes to what you are building. The popular word for this today is “pivoting” and I think it is apropos. You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.
What to look for in hiring a VP Engineering for your internet startup (by Tom Pinckney)
This is based on my experience with very early stage Internet companies.
Note that we think of the VP Engineering role (as opposed to the CTO) as the person who makes software that gets built on schedule, on budget, in a reliable, scalable way etc.
1) They are comfortable with web-speed development
2) They are not overly process oriented
3) They are someone who can architect the system, understands how to test/QA a site, what IT needs to do to keep the site running fast and reliably.Make sure they can talk in intimate detail and have opinions about all of this. How should the DB clustering work? What exactly were the test scripts checking and how did they get written so that as the software changed all the scripts didn’t have to get thrown out? That sort of thing
4) They have experience using open source technologies.
5) They are someone who can code and wants to code on day one and could even build the first version of the system, but understands that by day 365 they won’t be coding any more.
6) They can architect the system in a way that developers can build your project with maximal parallelism and so that computers can run it with maximum parallelism so that you can scale to the millions of users, terabytes of data, or whatever it is you need to do.
7) They should prefer the simple to the Baroque.
1) Watch out for people that seem dogmatic about unreasonable things.
2) Watch out for empire builders or people who need lots of resources.
3) They should be outgoing, fun, intense people. No one likes to work for a low energy introvert. Ask them why they want to manage instead of coding.
4) Are they really excited about technology, do they do techy things in their spare time, etc?
5) Most technical hiring is about convincing engineers that your problems are the best to work on and that the rest of the team are super smart people, so your VP Eng will have to be able to pitch this.
6) The ideal VP Eng could build most parts of the system themselves, but they’re self-confident enough to work with people better then themselves too.
7) They should be hungry to step up and prove themselves.
I think it’s hard for people with no technical background to interview a VP Engineering candidate. If you don’t have a technical background, have someone technical (if not someone full time at your company, perhaps an advisor or board member) interview with the candidate as well.
How can smart, ambitious people stay working in an area where they have no long term ambitions? I think a good analogy for the mistake they are making can be found in computer science
A classic problem in computer science is hill climbing. Imagine you are dropped at a random spot on a hilly terrain, where you can only see a few feet in each direction (assume it’s foggy or something). The goal is to get to the highest hill.
People tend to systematically overvalue near term over long term rewards. This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.
People early in their career should learn from computer science: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.
You’ve either started a company or you haven’t. ”Started” doesn’t mean joining as an early employee, or investing or advising or helping out. It means starting with no money, no help, no one who believes in you (except perhaps your closest friends and family), and building an organization from a borrowed cubicle with credit card debt and nowhere to sleep except the office. It almost invariably means being dismissed by arrogant investors who show up a half hour late, totally unprepared and then instead of saying “no” give you non-committal rejections like “we invest at later stage companies.” It means looking prospective employees in the eyes and convincing them to leave safe jobs, quit everything and throw their lot in with you. It means having pundits in the press and blogs who’ve never built anything criticize you and armchair quarterback your every mistake. It means lying awake at night worrying about running out of cash and having a constant knot in your stomach during the day fearing you’ll disappoint the few people who believed in you and validate your smug doubters.
I don’t care if you succeed or fail, if you are Bill Gates or an unknown entrepreneur who gave everything to make it work but didn’t manage to pull through. The important distinction is whether you risked everything, put your life on the line, made commitments to investors, employees, customers and friends, and tried – against all the forces in the world that try to keep new ideas down – to make something new.