
Start a business, not a startup - pchristensen
http://www.37signals.com/svn/posts/997-start-a-business-not-a-startup
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hugh
Y'know, I liked DHH's talk as much as anyone. It was a good talk, which
provided an interesting and much-needed contrasting perspective. But haven't
we had a sufficient number of reports, notes, videos, paraphrases,
discussions, comparisons to other talks, rebuttals and repeats-of-the-same-
thing-by-some-other-guy by now?

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andreyf
I'm guessing this is coming off the discussion DHH and PG had in another
thread and... wow. I've never seen such intelligent people waste so much time
arguing word choice. What a waste of time.

Different kind of "entrepreneurial enterprises" can be successful in different
ways - and most of us would be happy with either kind of success. So let's be
specific as to what has the highest probability of success.

PG advocates iterative design throughout the product - he mentions it
repeatedly in his essays and talks, that startups should start somewhere which
looks good and change their ideas "en route". It seems to me that DHH might
call this "trying to give turds wings" - instead, he advocates starting with
an idea which will have a strong market to start with, like Basecamp. Then you
can work a productive 4-day week working on "objectives [which] are reasonably
clear". PG would argue that most of the time, the objectives should never be
too clear - in the sense that we should keep an flexible mindset about what we
are building.

I guess the unknowns we don't agree on are:

1) How many "obvious" market niches are there, where at least 2,000 users will
pay you $40/month? In his SS2008 talk, DHH hypothesizes that there are many,
but as far as I can tell, it's just a hunch.

2) What is the probability of hitting one of those niches, and what is the
probability of getting acquired/going IPO using "iterative design" to traverse
the space of ideas? I don't think there are enough data available to really
say.

Since there aren't enough data to make a call statistically, both PG and DHH
argue from their experiences - which differ. Both are right to claim that you
can be successful either way, so I guess the best way to make a call is based
on an individual's personality.

~~~
run4yourlives
Take your agnostic ideas away from out religious flame war! :)

Just kidding. I don't think its fair to say that DHH is pulling markets out of
his butt though. They service the fortune 5M, so obviously their own customers
are living proof that the market is bigger than you'll ever need it to be. As
well, $40 a month is less than most people pay for a cell phone. That's a
pretty low bar.

To your second point, given that there exists a "fortune 5M" and there exists
a lot fewer "big mammoths", I think there's plenty of data if you care to see
it.

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prakash
For those of you interested in growing a business, read Paul Hawken's,
"Growing a Business": <http://www.amazon.com/dp/0671671642>

For those of you arguing for or against, read Joel's Strategy Letter I: Ben
and Jerry's vs. Amazon:
<http://www.joelonsoftware.com/articles/fog0000000056.html>

I am with the 37signals guys on this one. DHH's startup school presentation
was refreshing.

~~~
Xichekolas
There is no need to 'pick a side' ... this should not be a flame war.
Honestly, the 'argument' is over the best way to make millions. That is like
arguing over whether it's better to 'have your cake' or 'eat it too'.

~~~
hugh
Exactly. My favourite slide that I saw at Startup School was Paul Bucheit's
one that said "Advice = Limited Life Experience + Overgeneralization", since
it was a great antidote to all the other talks.

If you listen to the 37signals guys, they're going to tell you the best way to
get rich is to do pretty much what they're doing. If you listen to PG, he's
going to tell you the best way to get rich is to do pretty much what he did.
Both business models are valid, and they both work. If you're thinking of
starting a business, you should keep both models (and several others) in mind
and pick the one that best suits your situation, your needs, your ambitions,
your available funding and your product.

Of course, that doesn't mean that it's useless to sit around and discuss the
upsides and downsides of various business models -- that's actually a very
useful discussion. But it is silly to argue that one is better overall.

~~~
ojbyrne
Having a fairly unhealthy obsession with entrepreneurship, and having actually
read some of the research, rather than generalizing from my own experience,
there is one basic reason why VC funding works better than bootstrapping. That
is that small companies (less than roughly a million $ in revenue) are much
more likely to be hurt by random events - key employees leaving, acts of god,
macroeconomic events, etc. Getting big isn't just about making millions, it's
about increasing the chances of survival. And when you hear a bootstrapped
company talking about their path as the only way to go, just repeat the words
"survivorship bias" to yourself.

~~~
dennykmiu
I agree. My only input is that I believe entrepreneurship is about wealth
creation.

One can make the argument that if we make money for VC's, then we make money
for ourselves. I think there are plenty of examples (especially in the Silicon
Valley) where this is true. That's the "a small slice of a large pie" school
of thoughts. The other side of the same argument is that if you bootstrap your
company, then you are on your own and the world conspires against you. So at
best you have "a large slice of a small pie".

I think these are false choices. My own experience (I had two startups, one of
each) is that bootstrapping is not a lifestyle but a tactic in wealth
creation.

I believe the speakers at Startup School are all in agreement that the world
has changed and that it is possible to build a meaningful company with
sustainable revenues by bootstrapping. But bootstrapping does not mean that
you don't take VC money, just not for R&D.

When you have a working product and a workable business model, then you can go
out for VC money, but now as "working" capital. And if you can take it further
and actually become profitable, trust me, VC's will be kicking down your doors
wanting to buy a piece of the action.

I enjoyed the Startup School presentations very much, especially that of PG,
PB & DHH and the following is my takeaway ...

“Make something people want … don’t ignore but try to understand [people’s]
advise … listen [mainly] to yourself … don’t worry too much about money … the
secret to making money online … is to ask for it.”

I believe they are arguing that the optimal solution might be "a medium slice
of a medium pie". As one of the commenter has stated, "getting the bus back in
the middle of the road where it belongs".

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paul
"Suggesting startups — specifically tech startups — don’t need to look for
revenue opportunities now is akin to spoiling a child and shielding them from
the outside world: They’re far less prepared when they eventually have to
leave the house for the first time."

That's why I make my daughter pay her own way. Sure she's only three years
old, but she's already able to work 10 hour days at the factory, which makes
her way more profitable than most other three year olds. Best of all, we're
not spoiling her, and you can be sure that we won't waste money on frivolous
"startup" expenses, such as school.

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dkokelley
I'm surprised I haven't seen more about this yet. Doesn't anyone realize that
these smaller businesses are good for 37signals?

Starting companies designed to change the world either succeed or die, and
they tend to find out which very fast, which leaves a good number of them
dead. Those dead ones have no reason to stay subscribed to campfire. 37signals
will make more money on "lifestyle" businesses than startup businesses (if
startup is defined as high technology, get rich or die trying).

It's the long tail of business types. On the left, taller side, you have a few
wildly successful companies (startup or otherwise). Just to the right of that,
there are the moderately successful ones. They don't make as much, but there
are more of them. To the right of that there extends a massive tail of
"lifestyle" or similar businesses that didn't set out to change the world or
make the founders billions - millions maybe, but not billions. The farther
that long tail extends to the right, the larger the market potential for
37signals products.

The point is that they don't make money on the hight of the graph (the success
of the companies) but by the length of the graph (the number of companies).

Bottom line: it's good business for 37signals to encourage more lifestyle
companies. I don't blame them for it. In fact, it's actually pretty smart of
them.

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garbowza
In the past week this has progressively turned into a "startups" vs
"businesses" meme.

Regardless of your definition, each is simply a different approach towards
business, and as such, they will take different paths (VC funded, angel, self
funded) towards their goals. There is no panacea and no single way to succeed,
so articles like this that imply otherwise just sound a bit pretentious.

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galactus
Again, DHH says "what you can't say" on HN ;)

<http://www.paulgraham.com/say.html>

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hooande
I'm still waiting to hear the name of the 'startup' that had a wildly
successful product and failed to make any money. The key of course will be the
definition of "wildly successful". We could use twitter as an example.

Is there any one on hackernews that believes twitter won't make any money when
they finally decide on a revenue model? Anyone who is willing to say publicly
that 37signals will be worth more as a business than twitter in 12 months?

Just to be clear: if your product is very popular, finding a way to make money
will not be difficult. You might not make a lot of money (but DHH says that's
ok right?) and you might have to sustain a huge level of traffic to stay in
business, but you won't go broke.

~~~
skmurphy
I would take that bet. 37 Signals > Twitter in 12, 24 and 36 months. 37
Signals has real businesses paying monthly for a service intrinsic to how they
make money. There are clearly scenarios where Twitter can be more successful,
but if I had to bet it would be on 37 signals. And I don't user their service
but I do use Twitter.

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edw519
I think one of the main reasons all this "37 Signals/DHH/Make Money Now" talk
has been so well received is because it's a message ripe for this community.

I just spent my first weekend ever in the Silicon Valley and was incredibly
impressed with all the smart personable people working on and talking about
cool things.

I was also perplexed at how many of them were having trouble making money, and
the general lack of customer facing skills that we take for granted in other
parts of the U.S.

Sure, it's nice to dream of hitting a grand slam, but it's also nice to eat
while you're dreaming. You CAN have it both ways; it's just so easy to get
caught up in the hype of the former that we forget about the latter.

Thanks, 37 Signals, for helping put the bus back in the middle of the road
where it belongs.

~~~
attack
Yeah you can have it both ways, it's called getting a regular job and having
some stock options.

~~~
edw519
There's lots of ways.

You can also write a great app that people want, get them to pay for it, and
scale, scale, scale. With great tech, nice financials, and growth, you may be
surprised at the investors who seek you, not the other way around.

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menloparkbum
A company that sells software to small businesses suggests you start a small
business rather than a startup? Call me cynical, but this seems like SEO
marketing.

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attack
Starting a business sucks. Failure rates are often just as high, no big reward
to look forward to, your peers who work a fourth as hard in regular jobs
usually get more money. Unless you're already rich, starting a business is the
worst of everything.

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axod
Can we get a spam filter :/

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pius
yeah, it's called just reading the front page and not the newest links ;)

~~~
axod
3 stories on the front page are from 37signals. Essentially saying pretty much
the same thing - "You're wrong", "You're wrong", and "You're even wronger".
Just gets a little tiresome IMHO.

~~~
pchristensen
Yeah, imagine what the HN readers who have families and focus on profit must
feel.

The upvotes and comments mean that some (lots) of HN readers appreciate the
discussion and the alternate viewpoint.

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TrevorJ
Well said.

~~~
TrevorJ
Hmm, I see that my appreciation was ill-received :-) Ah well, I found the
article to be helpful to me.

~~~
andreyf
Appreciation is better expressed with an upvote. The comment didn't add
anything to the discussion, so it was spam. Although, I do agree that -5 is a
bit harsh for simple spam. I'd suggest we try to keep those at -1 or 0.

~~~
acangiano
> The comment didn't add anything to the discussion, so it was spam.

Can we please stop using the word "spam" for everything? Spam doesn't
constitute anything online that you didn't appreciate. His comment wasn't
enlightening nor insightful and as such many may consider it useless. But it's
noise, not spam.

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sabat
Enough already with the divisive posts.

