

Too Many Pivots, Too Little Passion? - Eduardo3rd
http://hbr.org/2012/09/too-many-pivots-too-little-passion/ar/1

======
tatsuke95
> _"Indeed, one of the most successful teams in Y Combinator’s 2011 class
> ripped up its business plan eight weeks through the 12-week program,
> switched to a different industry, and wound up raising $2.5 million in
> funding"_

And then...what?

I guess I'll never understand how, in this world, getting funded is some sort
of end. Getting funded means you now have the cash to become a real business,
rather than having a two-man team eating ramen and sleeping on the floor. But
it's still only the _beginning_. What proportion of funded startups end up
failing? I'll fathom it's a lot. And if you get funded, then flame out, are
you a success?

~~~
lsc
>I guess I'll never understand how, in this world, getting funded is some sort
of end.

Most people have a goal of selling their company, no? I mean, our tax code is
such that it makes far more sense to sell a company than to just take money
out the usual way, even if you get the same amount of money total. If you sell
the company, you pay a much lower capital gains rate, wheras if you take
profit either as a distribution or as salary, you pay much more. (If you take
profit as a dividend, you pay corp. income tax on it, then you pay capital
gains on it; if you take it as salary/bonus, of course, you pay FICA and
everything.)

You can sell a company based on it's current earnings, or you can sell a
company based on it's anticipated future earnings. When you get investors, you
are doing the latter.

Of course, then you need to figure out how to cash out; but certainly that's
easier after getting funding than before.

Personally, I'd prefer to think of it as selling (perhaps only part of) the
company rather than "taking funding" - I mean, I'd be okay saying I'd stick
around and help out for a number of years (for enough money, of course,) but
once you have investors, it's not really yours anymore anyhow; it's more clear
to all involved, I think, if you think of it as a sale.

> Getting funded means you now have the cash to become a real business, rather
> than having a two-man team eating ramen and sleeping on the floor.

See, _I_ don't understand how businesses that can't even bring in enough money
to pay their founders get funding.

~~~
Evbn
Investors are investing in the company, not buying it from you. That's why the
company is worth more post-money. Taking money from the company and quitting
is called embezzlement.

~~~
lsc
>Investors are investing in the company, not buying it from you.

well, they bring money, some of which you [usually] get to keep, and you lose
[varying degrees of] control of the company. It sounds like selling [part of]
the company to me.

>Taking money from the company and quitting is called embezzlement.

Hm. I'm pretty sure that if you take your salary/bonus, then quit, that's not
embezzlement. I'm pretty sure the same goes for selling your share of the
company. (there may be other agreements that go with the investment that
prevent you from selling your share, or even that have penalties for you
quitting, but it's not embezzlement.)

------
Sambdala
I know it's not the main point of the article, but far too many articles these
days seem to dwell on the number of jobs that can be supported by any given
startup.

The most amazing thing, to me, about technology is how it enables such small
groups of people to positively affect millions. Lamenting that this is
possible without hiring thousands of people seems like a such a narrow and
scared mindset to me. It completely ignores huge swaths of possibility and
potential.

~~~
notatoad
the number of jobs that can be supported is really just an easily
understandable analogue for growth potential. any business, no matter how
efficiently they use technology, will end up supporting a large number of jobs
if they grow sufficiently large.

~~~
jdonaldson
There's also stories like craigslist and reddit. It's an uncomfortable reality
that the future of many industries are going to need far fewer people on the
payroll.

~~~
notatoad
i'm not familiar with craigslist's staffing, but reddit is a great example of
why a website with 500k users can't survive on a staff of 4 people. It is
amazing what they did with a small team, but it was very clear that they
needed a larger team, both on the technical/engineering side of things and on
the advertising/sales side of things. The amount of money they were making was
shameful for a site with their traffic, and the site performance was (and
continues to be) equally shameful.

~~~
Evbn
They have like 11 happily employee people, and millions of happy users on that
"shameful" site.

------
hansef
Like "agile", "lean startup" can mean pretty much... anything the person using
the phrase wants it to mean.

With agile, sometimes the word is used to justify a rigid excess of ceremony,
or as a firewall for lazy developers to hide behind to avoid being responsive
to non-engineering members of the organization, or as an unrealistic attempt
to turn software development into an assembly line of a bunch of jack-of-all-
trades "cross-functional" team members ("specialists? we don't need no
stinkin' specialists!"). But the core observation of agile is that writing
huge planning documents and spending weeks perfecting PRDs and GANTT charts at
the outset of an engineering project and then using these to derive project
timelines and costs is inefficient, and that "delivery to QA" 3 months over an
arbitrary schedule and 70% over an arbitrary budget is a classic failure mode
for this approach to planning. Instead, a focus on building self-organizing,
trusted teams who are delivering working software frequently and iteratively,
and gathering customer feedback and adjusting "the plan" after each delivered
increment of software can result in both happier developers AND happier
customers.

Similarly, "lean startup" CAN be synonymous with "changing my mind about what
business I'm in and 'pivoting' every 3 weeks", but really the core observation
could be summarized as "build things people want", with all these new-fangled
buzzword-y tools like customer development interviews, business model canvases
and even "pivoting" as a means to this end. While the Ries book is useful,
Steve Blank's The Startup Owner's Manual ([http://www.amazon.com/The-Startup-
Owners-Manual-Step-By-Step...](http://www.amazon.com/The-Startup-Owners-
Manual-Step-By-Step/dp/0984999302)) is _phenomenal_ and the ideas there
certainly "transfer very well outside the world of tech start-ups."

Take what works, leave what doesn't, ignore the hype and think critically.

~~~
olefoo
There's a lot of demand for a "surefire recipe for success", that may not be
what Eric Ries is selling, but it's what a lot of people are buying when they
purchase his books and attend his seminars.

------
IsaacL
Most entrepreneurs I've met want to "build a company, any company" rather than
"follow their life-long vision". That might not be a bad thing.

Idea generation is a learnable skill, and once you can generate a bunch of
viable ideas, you can select the best one. I think this is better than going
with the first "brilliant insight" that pops into your head and deciding it's
your lifelong passion.

Also, lean works outside of tech -- remember those infomercial products that
took 6-8 weeks to order? That's because they didn't get the products built
until they received enough orders. And while they might not change the world,
AirBnB, Heroku, Dropbox, Reddit, GoCardless, Exec et al. seem set to leave
pretty big craters in it.

~~~
yurylifshits
Typically, it's not "build a company, any company" vs. "follow their life-long
vision".

More common story is to build some successful project/company, then to build
the real thing.

Elon Musk started with Zip2, Tony Hsieh started with LinkExchange.

------
richcollins
_He and his partner debated “pivoting” from one nascent business to the next,
even as the clock ticked toward the all-important “Demo Day,” when they were
to present their ideas to investors._

 _A pivot is a change in strategy without a change in vision. You cannot have
a pivot without vision (that's just wandering around)._

<https://twitter.com/ericries/status/221318901018017792>

~~~
nanijoe
wandering around can be ok too

------
richcollins
_Mark Zuckerberg expressed this view at a Y Combinator event, chiding the
crowd: “You’ve decided you want to start a company, but you don’t know what
you’re passionate about yet.”_

Wasn't Facebook an MVP that he put up primarily on a whim? Seems like he
derived his "passion" from the fact that it was blowing up.

In fact, weren't Apple, Google ... etc built in a similar fashion? Maybe big
vision works best once you have lots of resources and experience.

~~~
Evbn
Yeah but Zuck and Page and Brin all had working products and users, and most
importantly, perhaps, a nearly perfect guarantee of success in a fallback
career, before they got their startup ideas funded. They walked away from top
schools and cushy jobs, not ramen.

------
hansef
Saw this post this evening: <http://nickoneill.com/building-a-plane-on-the-
runway/> \- "pivoting" is a meaningful startup pattern when it means
"variations on a theme", informed by data and quantitative customer discovery,
rather than the the "am I building an iOS app to manage your pet rock
collection, or Airbnb for dogs?" flailing which too often hides behind the
label.

