When and why should I do a startup?
I've done a couple of startups myself now. One in online education for lawyers (www.blueprintlearning.com), one geared towards end-consumers (www.halusta.com) and one SaaS business (www.signkit.io).
Lately, I've been wondering when and why you should do a startup. I have an idea myself, but wanted to hear the perspective from others.
Should you do one because there's a market? What if that market is already being served? Should you then do it, if you can differentiate from competitors in the product offering? Or if you believe you can do a better job in market it? Is it a prerequisite to do a startup in a area you are passionate about?
It is going to be different for everyone because motivations are different for everyone.
I like Sam Altman's advice that unless you want to stick with the startup for at least 10 years—then you aren't going to be motivated to stick through it. It doesn't mean that you can't exit, but I think he wants to weed out those who won't stick it out once you start experiencing the difficulties. Having a deep purpose for doing something is a "why" you can hold on to when there are shifts in the market and you may not be in the best position, do you hold out or do you find something more "promising?"
Some people are more motivated by seeking the security and freedom of creating multiple streams of revenue.
Some people just like creating startups and then quickly moving on, they like the Hunger Games quality of rushing without very much information into a new market—and they don't like working for anyone.
Finding a good idea is hard—I just re-read Revolution in the Valley, about the creation of the original Macintosh and most of those guys were just starting out—their whole lives in front of them and afterwards as hard as they tried to make an impact—the Macintosh was the biggest thing that they did.
Was it because Steve Jobs helped to connect what they were doing with some bigger purpose—so that shaving seconds off the boot time translated into lifetimes saved waiting for the computer to load?
I've found for me—personally—so many philosophical layers align themselves when I'm pursuing something that has meaning to me. And within that space that is created—is drawn the best of me. Whatever happens, I want to stay in that space.
I think you are so right. My experience is that, more often than not, it's not about the business model - it's more about your persistence . If you're passionated and committed to the market that you're in, you will find a way.
I'm not saying that, and I don't know if that is good advice. I do put in the effort and I get results, but actually where I get the most results is doing things that I don't directly want to do. However I align myself with a higher purpose that gets me through it.
What I was saying was that if you have meaning—actually it is better said that if you reframe the situation to align with what you find meaningful—then you have a better experience. Where even if you fail, you will feel it was worthwhile.
There are a lot of passionate people—but it doesn't ensure success. I don't think they are always able to get themselves to do what they know they should be doing, when they should do it. And the ones that do, they have a reason for it that gets them to push through that.
The story of the Macintosh team... I think those guys were always just as passionate—to this day. And I mean even Steve Jobs left that team to do NeXT for a while and didn't have as much success there, but I don't want to extrapolate meaning that isn't there.
Perhaps what I am saying is think of things in terms where the effort you spend is to towards something that has meaning to you. Act as if you do have control over your success, because the positive state it has on you makes for better work, and a better life experience. But be ready to drop any ideas you have that might be keeping you from success, because it isn't guaranteed—you also need to be self-reflective.
That Sam Altman bit is great insight. Thanks !
Are you sure there's a market? A great market is considered to be the best environment to build in.
From pmarca: "In a great market -- a market with lots of real potential customers -- the market pulls product out of the startup." https://pmarchive.com/guide_to_startups_part4.html
That's ok, but it should greatly influence your approach. Don't start by coding or even coming up with ideas. Start by talking to users. Test your assumptions about that market. Ask them about what they do and why. Observe and see how they're spending their time. It's easy to skip this step if you have a lot of domain expertise, but it's also easy to end up building a product for a market of one. Be sure you really understand how customers feel. This is the time to test your theories about user behavior.
When marketing your product, it's critical to appreciate the impact to the customer of your features. Katie Gregorio offered a powerful framework for features: elephants, pigs, and chihuahuas (https://medium.com/tradecraft-traction/what-do-product-marketers-do-insights-from-pmms-at-facebook-uber-lyft-and-figma-9159e625e5e9).
This is where you find out if your elephants really are elephants. Don't focus on how they relate to your competitors - focus on how well they solve the problem for your customers. Do they solve it well enough that they come back over and over? Do they tell their friends about it? If not, focus 100% of your effort there.
It's not. I prefer Ben Horowitz's advice to work in an area you are especially talented in, not necessarily one you are passionate about. The personal satisfaction of doing an extremely good job and attaining respect in your field are underestimated. You'll be a more effective recruiter and customer advocate because you'll be able to parse out the bullshit.
Ben Horowitz's advice is good, and it can be very difficult to objectively tell what you are good at—because it seems so pedestrian to you that you might not even realize that it is a thing.
"Most people think they know what they are good at. They are usually wrong." — Peter Drucker
When you can’t sleep at night because your monkey brain won’t let go of the big idea. Make a start, validate to see if it has legs, let the monkey have its banana. Most moneys will return to the jungle after they have had their say, a rare few will evolve. Give evolution a chance.
I don't have much experience with it myself so I could be talking out of my arse, but...
Rather than focusing on a market existing or being under-served or whatever, maybe think about it in terms of growth and learning. What will you learn by starting a business project? Will it expose you to new methods, people, demographics?
Even something that is not profitable now can still be super valuable in ways you don't realize until much later.
I really like this take on it. Learning is also potentially an investment that can pay dividends in years to come. Thanks for sharing.
I think that is a valid approach, most learning occurs while seeking an answer and stops once you have reached an answer.
I would say if you think there is real value to be provided in doing so and you think you have a reasonable expectation of making a proper go of it.
But how do you measure value in a market that already exist for instance? Is value only in the product offering or could it also be in the marketing?
My view is that value is the long-term willingness of your customers to pay for the product.
The marketing will make something look like it has a value that is less, more or just right.
If the marketing makes the value proposition look a lot higher than the value delivered you'll probably lose customers over time since they didn't get what they thought they were paying for. If it looks too low you'll probably delight the customers that choose to buy, but ultimately you might miss out because many people don't see the value (although word of mouth might start snowballing).
That's my 2c. Oh, and there's probably no general way of measuring value in any given market. That's part of the work. :)
PS. Value isn't objective. Someone buying a business will value different things than the customers of that business. Marketing efforts will put more eyeballs in front of the business ... so for the biz-buyer a lot of eyeballs will probably mean an opportunity to increase the business' value to them.
All of this is really good, and subjective value is unintuitive. Shoppers are more sensitive to milk prices, than they are to the large margins in shredding the cheese in shredded cheese packages.
You are also increase margins by re-aligning value with what the customer perceives—it reminds me of this great story in Peter Drucker's Innovation and Entrepreneurship, where a British ex-pat has a lock company in India. He found out that a lot of people buy locks as a superstition to protect objects and wouldn't use the key—they would actually usually lose it. So he built two locks, each with higher margins. A lock without a key, that is just push to unlock—cheaper than the old lock. And a stronger lock for shop owners who needed a stronger lock.
Very nice insight - thanks for sharing!
Thats a cool story. Thanks for sharing!
Well as Warren Buffet says "price is what you pay, value is what you get". That simple definition serves me well when thinking about it. Put simply, can you make it possible for people to get something better than what is on offer? And the dimensions of "better" are many. Could be a better product. Could be a similar product but with a better message. Could be a worse product but at a better price. Could be a better product with a better message at a better price!
Now if you think you can pull that off, or at the very least the expected value calculatation comes back as positive, then you should do it if you are motivated and capable.
I like your point on expected value. Basically, every perspective on value is just a metric in a bigger equation
I think that's a fair statement. And it's why the more you learn wider and deeper across different domains of knowledge, you amass more mutual information which reduces your uncertainty on new problems and challenges thus raising your probabilities when performing expected value calculatations and literally increasing your odds of success. You can't spot value if you don't know what it looks like.
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