
The Struggle (2012) - yarapavan
https://a16z.com/2012/06/15/the-struggle/
======
dang
Discussed at the time:

[https://news.ycombinator.com/item?id=4113428](https://news.ycombinator.com/item?id=4113428)

[https://news.ycombinator.com/item?id=4663277](https://news.ycombinator.com/item?id=4663277)

------
trevyn
> _There is no answer to The Struggle_

I posit that there is an answer, but someone in Ben Horowitz’s position is
literally unable to find it, is blind to it, unless he un-becomes Ben
Horowitz.

~~~
mdonahoe
Interesting take.

Did you read The Hard Thing About Hard Things? Or his new one?

------
graycat
IIRC, eventually Opsware was a success and, thus, Horowitz was on the main
point _successful_. Congrats for his success.

From that essay I see two points:

(1) He was spending money, apparently mostly VC equity money, rapidly before
he had the intended corresponding revenue.

(2) In particular he had hired a lot of people and, thus, had to spend money
quickly.

(3) He was counting on the revenue he needed for his spending, a lot of
revenue, before that revenue arrived and was in the bank.

Well, those are parts of some ways to do a startup. In particular there is a
lot of advice about information technology startups that say spend fast and
get big and successful fast or fail.

But (1)-(3) and that advice about startups has high promise of "The Struggle"
he describes.

And maybe there is a _good_ aspect to "The Struggle": Without all the
pressure, crises, desperation, the staff won't form the productive team, do
the hard work, etc. needed for success.

Yes, I saw a lot of such struggle in the early days at FedEx: Several times
the bank account was so low the company was about to go out of business.
Closer to me at FedEx:

(1) At one point some Members of the BoD had an idea bubble up from their
upset stomach to between their ears and conclude that it would be impossible
to schedule the fleet. E.g., these Members had backgrounds in the airlines and
remembered the _struggle_ getting schedules that would have "connecting
flights" work and looked at the FedEx central hub sort -- no plane can leave
the sort before all the incoming planes have arrived -- as the world's worst
_connecting flight_ challenge. Some crucial funding was waiting on a solution
-- no solution and then no funding and no company.

So, long story short, I looked at the problem, said I'd solve it, and
furiously designed and wrote some software. Soon one evening a Senior VP and I
used my software and developed a schedule for all the planned fleet serving
all the planned cities. The next day two guys from Board Member General
Dynamics (GD) said "It's a little tight in a few places, but it's flyable."
The founder, COB, CEO Smith said "Solved the most important problem facing the
start of Federal Express.". Then all the BoD was happy and the funding came.

Ah, this whole dust up, "struggle", was more emotional and political than
technical. E.g., my schedule didn't do more on the "connecting flight" problem
than the airlines were doing; what really happened was that the BoD Members
with the tummy problems saw the really good looking schedule and the remarks
of the two GD guys, apparently more than they expected, and just shut up.

(2) A few months later, some more BoD Members had more tummy upsets that got
between their ears and wanted "revenue projections". So around the C-level
offices, there were hopes, intentions, etc. but nothing very convincing. So, I
said, let t be time in days with t = 0 the present. Let y(t) be the number of
customers (proportional to revenue) at time t. Let b be the number of
customers when the planned company is fully busy. Then assume that the growth
will be from _word of mouth advertising_ of the y(t) current customers
influencing (b - y(t)) target customers not yet customers, influencing them
via just talking or maybe actually receiving packages "overnight before 10 AM"
from existing customers. Then for a constant of proportionality k, we have
with calculus

d/dt y(t) = k y(t) (b - y(t))

The closed form solution is just

y(t) = y(0) b e^(bkt) / ( y(0) ( e^(bkt) - 1 ) )

So on a Friday a Senior VP and I, for each of several values of k, drew a
graph of the revenue projections. Then we picked a graph that looked
reasonable and submitted that.

Right, the solution is the famous _logistic curve_. So, I'd stumbled onto a
rediscovery of the logistic curve and, also, found some assumptions about
_viral growth_ that yielded a little differential equation whose solution was
the logistic curve. So, it's a simple, first-cut from 50,000 feet up viral
growth model.

At noon the next day, Saturday, I was in my office thinking about actual good
ways to schedule the fleet via 0-1 integer linear programming set partitioning
and got a call to come over to the C-level suite. Turns out that Saturday was
a BoD meeting; it had started at 8 AM; first thing my graph was presented;
right away our two guys from GD asked how the projections were calculated; all
the FedEx people there tried to figure it out without success; by noon the GD
guys gave up on FedEx, got airline tickets back to Texas, packed up in their
rented rooms, and as a last chance returned to the BoD meeting. When I got
there, the GD guys were in the hall with their bags packed, and there were no
smiles. The SVP I'd worked with on Friday was traveling, and the SVP I'd
worked with on the fleet schedule was taking charge, gave me the graph,
selected a point on the time axis, and asked me to calculate the graph value
-- my trusty HP calculator. I did that. He picked a few more points, and I
reproduced those, too. There were big smiles. The GD guys stayed and chipped
in their equity funding and saved the company.

No one asked for my rationality of the viral growth, the little differential
equation, my closed form solution, etc. So, somehow much of "the struggle" was
more political and a test hoop to jump through than a serious technical or
financial problem.

A guess is that the GD guys were concerned about the management of FedEx: The
graph was there, but no one at the meeting knew how it was developed -- bad
management. Sure, I should have been asked to be at or available for the
meeting but was not. So, I was deliberately kept out of the meeting until the
company was about to die. So, bad management. I have to suspect that the GD
guys -- that I got to know well from the scheduling software -- guessed I'd
done the projections and wanted to see how long the company would take to let
me explain the projections.

I got thanks for the scheduling work but not a word of thanks for the revenue
projections. A guess is that my little calculus exercise -- apparently I was
the only one around who still understood first calculus -- intimidated and
torqued everyone else. Gee, guys, I did the projections; no one else actually
did anything; there was at least a little rationality behind the projections;
the projections were what was wanted, right? Maybe not!!!! Politics?

FedEx and Opsware both seem to have come close to violating two old pieces of
advice: (1) Don't count the chickens before they hatch. (2) Don't try to put
10 pounds into a five pound sack.

Later many of us learned about the Canadian romantic match making Web site
Plenty of Fish, long one guy, 100% owner, two old Dell servers, .NET, ASP.NET
(for Web pages), and SQL Server, and $10 million a year in revenue all from
Google's ads, grew the staff, and sold out for, IIRC $575 million. My guess:
No VC funding. _Burn rate_ , both Capex and Opex, so low the founder could
keep going with $0 revenue.

Don't spend more money before the revenue is in the bank. Yes, that approach
would not have worked with FedEx with its many very expensive airplanes, very
expensive jet fuel, very professional pilots, many trucks, etc. And maybe
similarly for Opsware.

So, some startups can work like FedEx and Opsware, and others can work like
Plenty of Fish.

For my startup, I'm going the Plenty of Fish way! My Capex and Opex are both
tiny! My checkbook has plenty of funds to let me keep going a long time with
$0 revenue.

And I've had hit lots of unexpected obstacles, all from other than the actual
work. All the actual work has been fast, fun, and easy; I guessed the project
would be doable to live and ready for revenue as just a one person effort, and
it has been.

But with all the obstacles, I have not had "the struggle" of frowns from some
VC equity holders, meeting a payroll of employees, or going out of business.

So, my main lesson would be: Try to pick a project that can do as a sole,
solo, self-funded founder and 100% owner. Then don't start the big spending --
e.g., don't try to cram 10 pounds of spending into a five pound checkbook,
wait until the chickens have hatched -- before the revenue is in the bank.
Else, accept that will encounter "The Struggle".

