As I just wrote when I sent this link to the current YC batch, if you see advice here that puzzles you, it may be a
sign of a painful lesson you're going to learn in the future.
Ugh, does anybody mind taking a stab at paraphrasing this one:
> Don’t say things if your competitors can’t say the opposite. For example, your competitors can’t say their product is slow, so saying yours is fast is sloppy marketing. On the other hand, your competitors can say their software is for Python programmers, so saying yours is for Ruby programmers is good marketing. Apple can get away with breaking this rule, you can’t.
This is the only bullet out of the list that I can't quite brain.
Scott McNealy polarized this further -- he would say, I want half the potential customers to hate my products but half to love them.
Differentiated means that your statement is very defensible, and the competition cannot copy it or it will backfire on them. Differentiated means very unique to you, and it creates a position in the minds of your prospects that lodges you there and keeps you there.
For e.g., "“a16z enables entrepreneurs to utilize expertise from Operating Partners who specialize in business development, technical talent, executive talent, market intelligence, marketing and brand building” is a differentiated statement, but "Andreessen Horowitz is a venture capital firm that provides seed, venture and growth stage funding to the best new technology companies" is not.
I wrote a long post on Positioning: The Battle for Your Startup- that explains a modern version of Positioning, http://startupmanagement.org/2013/04/18/positioning-the-batt...
Saying "we want higher taxes on the wealthy to help the poor" or "we want lower taxes on the wealthy to encourage investment" is meaningful and distinctive.
"There are always real and legitimate reasons why people often pass on opportunities — they see the risks and they wish to avoid them."
And here's me trying to say the thing in still other words:
Most people are not stupid. If they've chosen to make their product a certain way, it's probably for a real reason. If your marketing implies that they're stupid, people will assume that you can't see their real reason, and assume that you're stupid. It's better to phrase things in terms of trade-offs instead, and let your market decide whether the trade-offs you've made are more appropriate for their use-case than the trade-offs your competitors have made.
For an example from a project I just released:
(Incidentally, almost all the comments on Gumbo were of the vein of "Why should I use this?" until I started making replies like this, saying "Here's what html5lib does, here's why they made the choices they did, and here's how Gumbo differs from those choices. Here's what validator.nu does, here's why they made the choices they did, and here's how Gumbo differs. Here's what Hubbub does, here's why they made the choices they did, and here's how Gumbo differs."
That is, I suppose, unless your product actually is somehow much faster, smaller, bigger, whatever and it does everything else exactly the same.
Everyone gets innundated with marketing and communications, so the things you say about your product / company have to be maximally valuable to you. I think, the goal is to use marketing to:
1. define a market,
2. define yourself within the market.
If performance isn't a differentiator, talking about it doesn't help to further define your market or yourself within it. It becomes noise and hurts the clarity of your product.
Python vs Ruby, however, defines discrete boundaries between what your product is and isn't with respect to the differentiators your market cares about. This makes the idea of your product / company more clear.
A small set of direct, differentiating messages can be internalized by an audience. A broad set of tangential messages are hard for an audience to adopt.
Take Volvo, for example, a brand strongly associated with safety. They'd never croon about how slow their cars were, of course. It's more like they've chosen a third route -- in the "fast vs. slow" game they've decided to not play.
In a world where Volvo was the only car brand, there is an opportunity for a competitor to differentiate themselves from Volvo by focusing on speed over safety, even though Volvo isn't claiming "the opposite." In fact, this works really well because the type of people who are attracted to raw speed will probably be turned on by the idea of their car being a little more dangerous. I don't need the same protection my grandmother does -- I want something exciting! You see how even though in some sense being "less safe" is objectively worse, it might nevertheless resonate with the customer psychologically?
Once consumers reflexively think "Volvo" when one says "safety," however, you're never going to out-safety them. It's better to compete in a different game than compete in the game they've won.
That's what folks mean when they say "Being different is more important than being better."
I think engineers have a hard time with branding because they imagine building a brand or a product involves maximizing some utility function. People don't work like that, though. They operate in terms of narratives and stories and identity. Who am I? What does using this product say about me? They generalize their utilitarian temperament to everyone else, when in fact that temperament is just one of many.
If you tried to out-safety Volvo you wouldn't be known as the "safer brand," you'd risk being known as "the brand that claims it's more safe than Volvo." But is it really? I don't know, man, I'm scared of buying a car that might not be safe. I'm going to stick with Volvo.
There are product categories outside of tech (in particular) that are sold to consumers, whose products are more or less interchangeable. Those products get marketed and sold a lot more on how they make the buyer feel, than anything about the actual product. So Volvo is bought by people who want other people around them to think they're the kind of person who would prioritize safety (and therefore boring/conservative) over other attributes -- even though none of those customers, and none of us, actually have any idea whether Volvos in 2013 are actually safer than any other car.
This is classic brand marketing -- it's how Coca-Cola, P&G, bottled water companies, etc. make a living. And it's fine for them.
BUT in the fields in which we operate -- both enterprise tech and consumer tech -- the customers more often actually care about the products. So marketing that is disconnected from actual product differentiation generally doesn't work.
The clearest illustration of this in the past decade is mobile handsets. There's been a series of dramatic (and catastrophic) rises and falls of mobile handset companies -- Motorola, Nokia, RIM, HTC, Samsung, Microsoft. Each of these companies, when they were on top, had state of the art marketing teams and advertising agencies doing classic brand marketing at huge scale -- and none of it did any of them any good when the product trends turned against them. I know a lot of the people at these companies and in each case they were utterly shocked when their brands and their marketing budgets were not more effective buffers against big declines when technology shifted.
So my general MO is -- admire companies outside of tech that are really good at consumer marketing, daydream about someday being in a business where I can pull a Don Draper and sell a product on the basis of it being "toasted" (the classic Lucky Strike cigarettes positioning -- even though all cigarettes are toasted), but never assume that I can get away with marketing a technology product on the basis of anything other than real product differentiation.
p.s. The pushback I often get on this is, oh, no, I drink Coke vs Pepsi or Pepsi vs Coke because I like its flavor better. Same with bottled water and all the rest. To which I say, you are fooling yourself -- in any double-blind study you'd never be able to tell the products apart. Hell, people can't even tell white and red wine apart when they can't see it.
I feel like a few things are being conflated. For example, it seems like you're treating "the set of products marketed and sold a lot more on how they make the buyer feel" as a subset of "products that are more-or-less interchangeable." That is, if consumers can reliably differentiate between products based on "empirical" metrics, they will. If they can't, marketers have to resort to "branding tactics" to create the appearance of more differentiation than there actually is.
I'm skeptical because it seems too consistent with how engineers see the world. The world doesn't seem this discrete to me. I guess I see it more as, "Prefer playing along a new dimension rather than playing along a dimension someone else already owns." To me "different" means "playing along an orthogonal axis" while "better" means "trying to outdo someone else along an already-claimed axis."
Here's the game theory version of what I was trying to say. Your brand position is a good one if it resonates with potential customers and none of your competitors can encroach on it without running the risk of weakening their own brand position. A competitor staking out an opposite brand position in a particular dimension is the most extreme and obvious instance of this, but it's not the only one or even the most prevalent one (IMO).
I agree re: CPG. They're hard to differentiate because they live in such a low-dimensional "brand space," so marketers (who need to differentiate them) go crazy. Bottled water for men! For women! From the mountains! From underground streams! From reclaimed bird urine! Whatever. Physically speaking, there's very little to ground these claims in. Source, material, production process, and maybe a few other things I can't think of. There's a kind of fun, wild west aspect to inventing a new drink or other CPG that takes off. It seems like pure theater to me.
I also agree with you that a claim to differentiation grounded in reality is an easier thing to pull of for those of us, like myself, who are no Don Draper.
But let's take another market where feeling is at the core: fashion and apparel. I don't think it's fair to conflate what the hypothetical bottled water brand is doing with what fashion brands do. I'll give an example from Everlane, a company I was very involved with early on.
"Radical transparency" was one of our brand pillars from the very start.
First, this isn't a case of "water from the mountains" vs. "water from an underground stream" or "toasted cigarettes." Everlane is actually touring factories in China and Europe, taking photos, interviewing people, etc. It's grounded in a real, physical difference, although not in the product itself. In fact, part of our story is that we use the same factories that top brands do. However, it is grounded concrete actions that Everlane is taking, but our competitors aren't. Our customers have access to something they didn't before, viz., insight into the production process.
Second, take the OP's original advice: "Don’t say things if your competitors can’t say the opposite."
What competitor of Everlane, present or future, would say the opposite? "Forget radical transparency -- we're radically opaque!" "Buy from us! We like hiding information from you about how our apparel is made." Nobody is saying that and nobody believes that. Who would brag about that? Everlane wasn't able to get away with this because we're Apple or anything approaching Apple, either, so we appear to be an exception to the OP's rule.
Even so, very few of our competitors can say "We're transparent!" Why? Either it's inconsistent with their existing brand, e.g., they deliberately cultivate an air of mystery super chic blahdeblah, or it's consistent with but ultimately unrelated to their brand. In the former case it'd be suicidal for them to say it and in the latter it'd both dilute their message and run the risk of validating our market position.
The great upshot for Everlane is that if you imagine the web being a tribe, one of the things it values (culturally) is transparency and access to otherwise-hidden information. That was the mindset that led us down the path to radical transparency, not any thoughts about product features.
I think this is just as true of fashion and apparel as it is of consumer tech and I think lots of folks in consumer tech miss it because they imagine everyone sees the world in the same product-centric way they do. One interesting thing I've seen is that consumer tech startups from NYC are much less likely to miss these opportunities than consumer tech startups from the SF Bay Area.
That's the best picture I have in my head right now. I just felt the OP's rule left a lot of opportunity on the table.
from 2004 from Eric Sink, and this recent application of his own advice
Can you tell apart founders who sponge up advice vs those who are doomed to learn on their own? I suspect the answer is conversational resourcefulness (http://www.paulgraham.com/word.html) but wonder if you have more to say.
I'm not a founder of a startup, but I don't think a lot of these are good advice because Slava comes across as so condescending when he states them. That's not to say I'm attacking his tone instead of the advice, but I don't think the advice is valid because it comes from a place of dogmatic declaration (I understand he has a lot of experience, but I don't think some of these subjects can have absolute statements said about them).
Take this one, which other commenters have mentioned already:
>"If it doesn’t augment the human condition for a huge number of people in a meaningful way, it’s not worth doing."
I'm going to say this is not only blatantly false, but just bad advice and nothing but discouragement.
'cperciva's startup, Tarsnap, is not something I'd say "augments the human condition for a huge number of people in a meaningful way" - it's Colin's full-time job, and I personally think it's fantastic, creative, and genuinely useful to his client-base.
But apparently, it's not worth doing because it doesn't "augment the human condition." (I don't mean to involve you, Colin, it's just a relatively well-known example on HN).
Let's see...'patio11. His most recent startup, Appointment Reminder, might fall into the category of augmenting the human condition. Does Bingo Card Creator? Maybe I'm reaching here...but no, probably not. Was it not worth doing? Absolutely not. (Again, same to you Patrick).
Then we have this tidbit:
>"Pick new ideas because they’ve been made possible by other social or technological change. Get on the train as early as possible, but make sure the technology is there to make the product be enough better that it matters."
This encourages the stream of, for example, crappy camera apps that currently saturate the app store. A lot of developers got on the train, but giving this kind of advice will probably (as history suggests) make founders believe they have the technology to genuinely make a difference in a highly saturated market.
On the other end of the extreme:
>"Don’t build something that already exists. Customers won’t buy it just because it’s yours."
If you do get on that train early, and you can genuinely innovate, or just plain reverse-engineer at a lower manufacturing cost, by all means do it. That's a good starting recipe for profit.
>"Pick implementations that give 80% of the benefit with 20% of the work."
The 80/20 ratio has cropped up everywhere and grown in popularity for a while now, but I think it's too vague. In particular, I believe this advice would encourage the wrong kind of behavior. It could be interpreted as being efficient, or it could be interpreted as foregoing the more rewarding, effort-filled path with the one that's only marginally useful but exponentially easier. Risky absolutes for advice.
>"If you can’t get to ramen profitability with a team of 2 – 4 within six months to a year, something’s wrong. (You can choose not to be profitable, but it must be your choice, not something forced on you by the market)."
Maybe Slava successfully did this, but I don't think it's fair to hold all startups to this bar.
I also don't think things like being a "final say" CEO are fully compatible with evenly splitting stocks. This is a very highly debated part of startup financial management. So, yes, this is my opinion, but equally importantly, the opposite advice is also Slava's opinion.
Now, on the other hand, a lot of these statements are really good. I'm not flaming the entire post. In particular, I liked:
>"Product sense is everything. Learn it as quickly as you can. Being good at engineering has nothing to do with being good at product management."
Yes, very true, and something you have echoed before as well, pg. Running a company in any sense of the term is completely different from engineering a company's product.
>"Learn the difference between people who might buy your product and people who are just commenting. Pay obsessive attention to the former. Ignore the latter."
Often stated, definitely true, also applies to investor courting.
My personal favorite:
>"Morale is very real and self-perpetuating. If you work too long without victories, your investors, employees, family, and you yourself will lose faith. Work like hell not to get yourself into this position."
This is one of those murky, non-actionable truths of startups that you don't really get until you've tried it. Judging from the "I failed" Ask HN: posts, I think this might be one of the least expected but extremely true ones. I might even say that for personal well-being, this might be the most important piece of advice.
I'm sure I'll be downvoted for this, but I would ask people to at least explain why they disagree so we can have productive discussion. I respect the OP, I'm just expressing my disagreements here.
I hear this from people once in a while, so I've been trying to watch my tone when I say and write stuff. The thing is, I don't mean to be dogmatic (and it's not how things sound in my head). These are my truths that I discovered, and things I try to look out for. When people find a different set of truths that work for them -- that's absolutely wonderful. I always try to learn from others, and try to never make prescriptive statements. I really should learn what about my tone makes it come off prescriptive and dogmatic, and then not do that.
'cperciva's startup, Tarsnap, is not something I'd say "augments the human condition for a huge number of people in a meaningful way"
On the contrary, I would say it does. It lets people store their data and have a complete peace of mind -- people can be secure in knowledge that others won't read it. It changes how people feel as they walk about their day, because security of their data is in the back of their minds. That's changing the human condition.
This encourages the stream of, for example, crappy camera apps that currently saturate the app store.
It also discourages the stream of, for example, services that try to let people order pizzas online, when it's clear that pizza shops don't want them, they never wanted them, and nothing has changed that will make them want such a service now. This isn't the only criteria to look out for -- it's necessary but not sufficient.
Is this a US cultural assumption? Or is there something else I'm missing?
I understand you didn't intentionally mean to be dogmatic, I probably could have worded that more appropriately. But I think it comes across that way because it's unintentional. That said, it's not as though every piece of advice came across that way. And again, I want to emphasize I'm attacking the advice stated in that way, not you, because you didn't apply this blanket to every piece of advice.
If you believe Tarsnap fits into your own definition of augmenting the human condition, then I suppose I can't argue that. But taken at face value, the original statement appeared to strike a chord with a number of commenters and myself because of the implicit scale - if you ask which companies augment the human condition, I believe most people would respond with companies on the scale of Apple. Small, almost boutique-level startups are very successful without this level of grandeur.
But again, I revise my original criticism if the definition of impact is broadened, like you just clarified.
As for pizza shops - I can see how your advice encourages appropriate behavior, and I agree to that. But I also believe that (and this wouldn't be your fault) it can also encourage "easy exit" mentalities where people just copy a fad and tweak it for success.
Not necessarily. I'm confident there are people who do backups not because they actively worry about data security, but because they know that not worrying won't protect them.
(edit: though I guess this isn't particularly relevant, if it changes how many people feel as they go about their day.)
> That's changing the human condition.
This seems like a stretch; I suspect the phrase means something slightly different to you than it does to me?
That doesn't mean they're not worthwhile projects, but make no mistake: they are very lousy startups - so bad that the only reason to invest time or money in them is love or learning. The financial return is pretty close to zero compared to other ways Colin and Patrick could have spent their time.
Startups are high growth businesses. If there's no high growth potential, it's not a startup.
The list is pretty clearly about startups, not pet projects.
I mostly agree.
We need a good term for stuff like BCC:
* Does not have huge growth prospects.
* Does have very good prospects for automation so that, once launched, the ratio of time dedicated to it / revenue is a good one.
* Is not a "small business" where the owner is also the primary worker, like a small restaurant, or software consultant, or something like that (Hey, DHH, how many owners of small trattorias can afford super expensive cars?)
Not being in SV, and being a bit older than the average, I'm very sold on this approach. I don't need to get rich, or make a "dent in the universe", I just want to be mostly free to do the things I want without worrying about money.
> If there's no high growth potential, it's not a startup.
(edit: I should have said: "many companies that have received angel investment are not startups, since so many have no obvious high growth potential." I sort of get it that as a founder I'd want to be conservative, and launch into a large and well understood market if I'm taking outside money, but that seems to run against the spirit of what VCs are trying to do, that is fund companies that are trying to discover new, untapped markets, in order to reap larger rewards.)
That's not to say your rebuttal isn't valid, but that I think there's confusion of what really constitutes a startup. Was Instapaper a startup? It sold for an exit, but on the face of it I don't see how it inherently scales differently from something like Tarsnap.
I would define any budding tech company as a startup, though it might not be accepted by VC's or Y-Combinator because it couldn't scale. That's my own opinion.
Some people use the definition of small tech company (as you have), but that doesn't meaningfully differentiate a company like BCC from Dropbox, which have very different economics.
PG defined it in his essay on growth  and it seems to work pretty well. It also makes the OP's points about working on something that augments the human condition make a lot more sense.
It's reasonable for you to question my "credentials" for critiquing startup advice if it's accompanied by an analysis of my critique. Then it's relevant and valid. However, alone the comment becomes reduced to an ad hominem dismissal of my point without any real weight beyond it.
I'm not going to engage in the trolling further with you.
I guess I'm saying this: I respect Andreessen a lot, but if you read that comment from a name other than pmarca, would you defend it?
"augmenting the human condition" sounds like it'd be better achieved by writing a novel. I'm trying to imagine the person who could say their startup was "augmenting the human condition" with a straight face.
But to be fair, there are plenty of examples of companies (Microsoft, Google, Airbnb, Dropbox) which arguable have legitimately augmented the human condition for huge numbers of people. There's just plenty more that didn't, and that's okay.
If Google started with the goal of being where it is today (self-driving cars, ubiquity), rather than to build the best search-engine possible, it'd have undoubtably failed.
this is the kind of arrogance i find disheartening about these kinds of lists. really - things aren't worth doing unless they clear this impossibly ambitious bar?
should i tell the owner of the corner cafe i stop into after work every other day, and that gives me a huge amount of joy nearly every time, that she should give it up because her business doesn't "augment the human condition for a huge number of people"? how about the guy who wrote the $5 clipboard app that makes my life much easier? i'm sure he has lots of customers but "a huge number" that have "augmented" their humanity because of his clipboards....
and i hate to be an ass, but ... under whose criteria does rethinkdb qualify for this, anyway? how meta do we have to go here? how many degrees of separation are we talking about exactly?
the problem with these kinds of statements is they can be rationalized by smart people into all sorts of justifications for doing and/or not doing a huge number of things.
You're not being an ass. This is a question we struggle to answer every day. (I'd argue that even very successful companies have to struggle to answer it every day if they want to remain successful.)
I think that there are two separate issues here. The first is that many of these lessons came from messing things up with RethinkDB. RethinkDB didn't germinate this way at all -- many of the things we had to fix, and many things we can't fix so we have to live with their consequences daily. These lessons aren't right for everyone (and you can't hit the ballpark on all of them no matter how hard you try), but if I started another company, this is what I'd look out for and strive for. If you want to do something different (like open a dive shop in the Caribbean), that's awesome (really -- I mean that; I always feel a bit of envy for people who take this path). It's just not what I would do if I started another company.
As for RethinkDB augmenting the human condition, this is a lot simpler than it seems. Thousands of people take time out of their day to learn Rethink and build cool things on top of it. In many cases RethinkDB is crucial to their livelihoods (because their products depend on Rethink working). Instead of spending their time on thing X, they spend it on Rethink, which gives everyone here a tremendous sense of joy. Since the adoption is growing extremely rapidly, it's giving us a great platform to reach more people. We have lots of things in mind that will allow people to do things they can't feasibly do today. That's augmenting the human condition.
(You can't look too far out. We're not inventing flying cars, but if we can make scalable web apps accessible to people that couldn't do it before, well, that's augmenting the human condition for them.)
In that context that's a perfectly reasonable piece of advice. Without an "enormous potential for growth" you're likely not going to get substantial interest from investors or have the kind of outcome that folks joining your "startup" would expect.
If that's the case then your critique is off-point. He was deliberately excluding the those kinds of businesses from his analysis.
I think the author is describing the vision a startup should have, even before it starts tackling the problem its trying to solve.
Using your coffeeshop example, if the owner's goal is to, one day, change the way people drink their coffee (in a better way that the owner believes), then yes, this vision is worth pursing, and he/she might need to start out as a corner cafe at first. If the owner's goal is to have his/her own corner cafe and have a stable income from it, then its not a startup.
But, as you said, "a huge number of people" and "augment the human condition in a meaningful way" is pretty vague wording, but the intend/meaning of his statement seems reasonable to me.
i think @beachstartup's point is that the problem with treating this as a "lesson" is that you're imposing a value judgment on other peoples' value creation by saying that what they're doing, possibly their LIFE'S WORK, is NOT WORTH DOING just because they may not "augment the human condition for a huge number of people in a meaningful way".
For example, any failed venture could probably be said "not to augment the human condition for a huge number of people in a meaningful way". Goodbye scientists who are trying to cure cancer but haven't succeeded yet. No offense, patio11, but bingo cards? Come on... try to augment the human condition a bit.
It just comes off as judgmental and moralistic bs.
1. Getting to ramen profitability with a team of 2 – 4 within six months to a year, AND
2. augmenting the human condition for a huge number of people in a meaningful way.
Well shit... if SV is a community of 2-4 person creating profitable products that augment the human condition every year...
"augment the human condition", "a huge number of people", and "a meaningful way" are really subjective and arguably VERY few people are doing things that meet those criteria.
those criteria aren't offensive, but the part that flips me was "it's not worth doing". Granted its 4 words in an otherwise insightful piece, but I have a problem with it when people tell others that their life's work is worthless.
People pursue all sorts of activities in their lives, personal and professional, that, by this metric aren't worth doing.
i'm aware, of course, that you've written opinionated pieces that narrowly define "startup" as well, so maybe all those things just aren't startups and don't apply.
but of course this (i believe false) line of reasoning then raises the question of what tiny business couldn't be considered to be potentially an augmenter of the "human condition for a huge number of people", doesn't it?
There is some good stuff in here, but it's not all right all of the time. The part about firing people is interesting. Maybe there is friction because the manager/CEO is doing something wrong and the employee is merely agitating to make things better for the business? The ability to self-evaluate and take criticism/recognize the difference between "difficult" employees and employees who are trying to fix things you are doing wrong seems important and missing from the "people" section.
Every idea begins with a constituency of one. There’s probably one or two times a year that I turn to our very top leaders and say, “we’re going to do it my way.” Do that too often and good people will leave. But if you never do it, nothing ever happens.
I almost had Bingo.
In my personal experience, for each Cassandra who correctly nails the company's errors, there's more self-important kiss-up-kick-down types who think their critiques are gold. (People who punch-up-kiss-down are far more respectable, but tend not to last long...)
That probably makes perfect sense for some random SaaS app or consumer facing app, but for an enterprise startup, I'll argue that it's off the mark. Just doing market research, a few rounds of customer development interviews, and building the product out to prototype phase could burn up the better part of a year, and enterprise sales cycles are often slloooooowwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww.........
Pick the initial team very carefully. Everyone should be pleasant to work with, have at least one skill relevant to the business they’re spectacular at, be extremely effective and pragmatic. Everyone should have product sense and a shared vision for the product and the company.
That's one of those things that is on every one of these lists, and for good reason. But, by the same token, you could spend the rest of your life looking for the "perfect" co-founding team, never build a god-damned thing, and die peacefully in your sleep, of old age, at 97. By the same token that "good is the enemy of great", one has to realize that "perfect is the enemy of good enough".
That said, I worked alone for quite some time before inviting anyone else to join up, because this does matter. But you can't wait indefinitely... in the real world, the environment around you is changing, and windows (of opportunity) come and go. You could easily miss one trying too hard to find the ideal co-founder(s).
That said, this is all pretty subjective and hard to measure anyway. I mean, do you really know that a "great" co-founder is "great" from day one? Or that someone you think is just "good enough" actually is "great"? Of course, that fuzziness is part of why I say "just pick somebody and get started already" to some extent.
Good point. I know I went that route, recruiting a co-founder from among the group of people I had worked with at Lulu.com.
* Product sense is everything
* Product comes first
* Sales fix everything
* Development speed is everything
* Do everything you can not to attach your self esteem to your startup
I'm reminded of a former CEO who, after careful analysis of a failing business, decided there were nine critical areas of focus for the company. (She was eventually fired.)
* Make something people want
* Ship it on time
* If you screw up everything else but still manage to sell
your product somehow, you'll be ok
"A successful startup is easy: simply build the right product in the right market with the right team, and don't forget to build it at the right speed!"
I've heard the exact opposite from VC's -- fact is, the engineer or product founder might be bringing way more value to the table than the business guy. Or sometimes it's vice-versa.
And that "unfairness" in an initial even stock split will come back to haunt the company, since certain founders are not being rewarded justly for their contributions, and will come to resent it later. And that VC investment can be contingent on founders adjusting their ownership stakes beforehand to match the reality of what each founder is actually bringing to the table.
Obviously, if someone is ready to join part-time or come more as an early employee with more salary, then the variable changes. I'm talking here about the "I start with 60, you get 40 because I've got the idea first and I've been working on it for 2 weeks". That's a recipe for trouble.
The thing is.. look at the stats, most startups fail. Having an equility split really make both co-founders committed and started in the right direction, which goes a long way about making the startup succeed. How would you feel about starting a startup where you don't have equal split with the person who'll spend all your days with?
If you ask that question, I think it's because you haven't found the right co-founder. I.e. Let's say you have a selling book website for a year with some revenue, and then you can have Stephen King joins you as co-founder. Would you hesitate to give him 50 if he fits the role? Now, obviously you don't have a book business and this is not Stephen King.. but still, the idea applies. If you think it's not worth 50, it probably isn't and you should try to find someone else. Otherwise both party will be unhappy. Your co-founder won't feel equal and you'll find that you gave too much.
That's my 2c (and to explain a bit the lesson from OP)
if you're considering a cofounder who you don't want to give equal stock to, do you really have the right cofounder?
I meet far more second or third time entrepreneurs who wouldn’t do a 50/50 (or 33/33/33) partnership ever again than you would image.
I am one of them.
Based on my experience, I'd recommend finding a co-founder you want to split equity evenly with before you start up as you recommend.
I think the hard case is when you start off with equal and then down the track one founder has a different level of enthusiasm and expectation on level of time involved. If down the track you are working long ours and just about every day and your cofounder is treating it as a 9-5 there is bound to be friction.
For 9-5 vs. long hours -- you need to have this conversation up-front. If there's any doubt that you aren't on the same page or just agree with differences (and compensate fairly), then this is not a good match.
I'm probably just confused. Would you mind elaborating?
I think even is different to any other split in the same way free is different to any other price. It creates an implicit definition of "fair." A 60%-40% split is implicitly valuing founders' previous contributions, potential value, experience, etc. These are very hard things to estimate. If you ask everyone to quantify their contribution to a success and add up all the percentages, you will usually get a total >100%.
An even split avoids all those problems by putting them aside and agreeing to a definition of fair. Humans understand egality intuitively. They are usually emotionally comfortable with it.
Given that, I'll propose a 58th: be formidable enough to overcome any of the other 57.
I thought the rule of thumb was a lot higher than this. Any good references this one?
Not a good rule. I know many guys that are making serious money because they improved something that already existed.
I have a funded startup. I can list 5 counter-rules for every rule he lists. For example: "Don’t build something that already exists. Customers won’t buy it just because it’s yours." Living Social, anyone?
The phrase, "There is more than one way to skin a cat" comes to mind.
I don't get this, though:
> Watch Jiro Dreams of Sushi, then do marketing that way. Pick a small set of tasks, do them consistently, and get better every day.
How is that marketing? That's getting good at your craft and improving your product.
I watched the movie, but I'm not sure that Jiro is good at marketing. Apparently he's very good at making sushi, but it seems he became successful (and later world famous) despite being bad at marketing.
Incidentally, his shop's average ratings at Tabelog (one of the biggest Japanese gourmet websites) is only 3.8 out of 5, with quite a few "bad" reviews.
I can tell that you have all honest intent for writing this, but from experienced accounts I have read (a lot from PG and this forum). Many startup veterans strongly advise against this.
> 33. Watch Jiro Dreams of Sushi, then do marketing that way. Pick a small set of tasks, do them consistently, and get better every day.
I've seen this and I love it. I love how you tied it in to startups too. That man is an inspirational model of a life long determination to be the best at what you can be.
I really recommend reading The Founders Dilemmas. It covers many of these issues in detail. Here's a link: http://hbr.org/2008/02/the-founders-dilemma/ar/1
Above all, understand who your customer is, what they need and how they value that need before you begin to think of your solution...
By all means, start with a hypothesis and "big idea," but conduct thorough qualitative research with your prospective target customer before you start building in any real sense (beyond simple prototypes).
As a marketing research consultant, I've worked with too many companies (large and small) who flail around to find target segments after not spending the appropriate time upfront understanding and qualifying their target audience.
Despite seeing so many companies fail at it, it's even tough advice for me to follow on my own personal projects because I love building things and just want to get started right away...
Today, I'm releasing my product's 3rd alpha version for testers and then leaving for a small break. My main goal will be to read the two books that are waiting for me for a long time and, to the extent possible, NOT think about anything work related. I could do some productive work these 5 days, but in the long run it'll cripple my stamina when things get rough in a few months. So, it's time to restore balance.
How do you know if you have it? How do you learn it or improve it?
Are they trying to build a small idea into a great company, or are they trying to build a giant idea into a giant company?
There are huge advantages to having a small idea. There's a clear MVP, a clear short term goal to achieve. This has a big effect on morale: the developing team has a series of short development bursts ending with an achievement and the vision of the company in eyesight. The quality of the product tends to be higher sheerly out of being simpler.
A small idea can have very wide reach, and can be an essential need to users, or a new pillar of infrastructure. Often after building a small and strong product, a company has the freedom to apply and maximize it for the full range of possible use cases. The easy example is Google, but I like to use the StackExchange network. They started with a Q&A site for software engineers, and once that was successful they expanded to a huge range of fields.
Huge ideas often send startups down a path to failure. Morale gets drained over time as features get completed but the vision remains too far away. Complexity increases greatly, and the core product gravitates to unmanageability as it grows. Even a best in class engineering team can be toppled by the exponential complexity of a large product, there's a potter's field of large products being built by awesome engineers, in big companies and small.
I could go on and on for each side, but the main point is, having a company vision that is the MVP is amazingly powerful, and opposite, having a company vision that is massive even with an MVP that is a stepping stone on the way to the massive vision, is a swamp to trudge through for years.
How do you do the first part?
You use a sales technique called "qualifying", and when you figure it out, you do it all the time, and not just with potential customers, but also with potential investors, candidates, and even reporters.
(This is part of the art of sales that many founders today refuse to learn.)
To qualify a prospect (potential customer), at the end of every interaction, you should determine from them what has to happen from here for them to pull the trigger. You do this by asking questions, and testing the answers -- have them lay out their process for making the decision, have them identify the steps that have been reached and the steps that have not, have them identify other people in their organization who can block the purchase, and so on. And you do this over and over again until you get the sale.
If the prospect can't lay out the logical sequence of steps from here to close, then you need to qualify them out and stop spending time with them, because they're not going to buy.
Two interesting corollaries:
* Yes, there are a LOT of people in a LOT of companies (as well as a lot of potential investors, potential recruits, etc.) who will spend a lot of time with you even though they can't ultimately pull the trigger. A lot of people like to windowshop, and a lot of people have nothing better to do.
* Like a lot of sales techniques, this sounds to engineers like it might be hard (will the potential customer tolerate all those questions?) But any serious potential customer will have a very easy time answering the questions, and will respect their potential vendor for being professional in the sales process.
During an interview last week with Entertainment Tonight, Winfrey was asked if she had personally experienced racism. She responded with an anecdote about a clerk at a shop in Switzerland who had recently refused to show her an expensive bag, even though she repeated her request multiple times.
"That one will cost too much, you won't be able to afford that," Winfrey claimed the clerk told her.
That shop assistant, identified only as Ariadna N., spoke to Blick on Sunday, and denied Winfrey's version of events. Ariadna said she showed Winfrey the Jennifer Aniston range of bags, explained that they come in different sizes and materials and pointed out a less expensive alternative when Winfrey expressed interest in the 35,000 franc (more than $37,000) purse at the top of the display.
"Believe me, normally people are excited when I come to their stores," Winfrey said. "It's very unusual when I'm not practically dragged into a boutique. Dozens of people will be pressing their noses against the windows to get a look at me shopping."
"The woman at the shop said that it was the Jennifer Aniston bag that Tom Ford had created especially for Jennifer," Winfrey told Blick. "It crossed my mind that maybe I should give Jennifer or Tom a call. I know both of them very well."
(a) Very cheap products -- the problem with very cheap products is that you can't afford to spend very much money selling or marketing them unless you are selling them in gigantic volume.
We see this a lot in raw startup land (including YC). Company X has a product Y and it's selling for price $Z. But product Y actually costs $A to sell (a single instance to a customer) -- fully loaded -- including cost of marketing, cost of sales, cost of implementation, etc. When Z < A, you're in real trouble as you try to scale. (This is called "selling dollar bills for 90 cents"... or 50 cents, or 5 cents.)
The answer, of course, is to raise price until Z > A. If you can't do that, they you have a bigger problem (people aren't finding value in your product).
The number of product founders these days who will engage seriously on this point is shockingly low. They would do much better in their businesses and in their fundraising if they did.
(b) Ad-supported products. If you are direct selling your ads, then you're in the same boat as any company selling product -- one of the ironic twists of the big ad-supported Internet companies is that they're actually enterprise sales companies at their heart (selling ads to businesses). For example, the salesforces at Google and Facebook have more in common with the salesforces at Oracle and Cisco than you'd think.
If you outsource ad sales to an ad network, you can sidestep this... but then the ad network needs to actually perform for you, which generally they don't, at least as a sole source of revenue.
The best thing to do, if you can, is go on the road with a really good salesperson. I really encourage technical people (including founders) in companies to do this, it's highly educational about how the "real world" operates and how big businesses get built.
Marketing should always come first, in terms of what you do.
Don't build a product and see if anyone wants it.
See if anyone wants your product and then build it.
That statement is misleading. It's not an "or" situation. You need to market to both your existing users and your prospects (users or customers). You can't just rely on viral and word of mouth for growth. Yup, good marketing is not easy- you need to figure out your segmentation and reach your prospects cleverly.
I worked as the first employee at a now successful start up. They were 5 founders with each 20% of the shares. What I heard from them after several investment rounds is that investors don't like evenly split stock and prefer that one of the founders has the most stock, even if that's just a single stock more than the other founders.
"most" == majority == N/2 + 1
which is it, is it just that VCs want to see that there is a designated leader among the founders, or do they want the relative amounts of stock to not ever become an issue for the viability of the startup ?
mere plurality is risky, because any of the founders could sell their share to another, creating an ownership crisis where the nominal head of the company has a minority share.
Here are my top picks by number referring back to the article, for some of the sections (YMMV of course!):
PRODUCTS: 24 (and 27 which to me is a subset of 24)
MARKETING: 32, 31 (I wonder how RethinkDB or companies like it can do 32??)
DEVELOPMENT: 45 (and 46 which is a subset of 45)
Is RethinkDB a YC company?
There's gems in there, but lots of bad, bad advice.
>"Assume the market is efficient and valuable ideas will be discovered by multiple teams nearly instantaneously."
That's just irresponsible and unrealistic advice.
Splitting stock evenly and governing yourself as a "final say" CEO seems a bit self-contradictory, to say nothing of whether or not you should be a "final say" CEO in a startup (debatable).
This is also deplorable:
Yeah, it's wonderful to "augment the human condition...", but don't be a condescending prick about it. Things are perfectly worth doing even if they don't impact a large number of people.
The trouble with this is, Slava inherently claims superiority to his audience when he declares (not suggest, declares) that things are not worth doing just because they aren't up to his self-defined standard of ambition.
Such a statement is not for him to make; it wouldn't sound right coming straight out of one of Paul Graham's essays, so on what authority does he get to make this statement?
However, that's a distinction you're making, gruesom. The OP doesn't say it's not worth doing as a startup, he says it's not worth doing in general. There's no qualifier. Had there been, I wouldn't take the same issue with it. This is something other commenters have pointed out down and upthread as well.
He did not. It's you who read that in and became indignant at it.
"There's no qualifier."
Certainly there is—the title of the post. Plus its whole context, which is obviously that of a classic Silicon Valley venture-funded startup.
Look at it this way. When people in this context say "You should go after a big market", do they mean that anyone going after a small market is an inferior person? Of course not. What they mean is that if you're going for a classic high-growth startup, you'll need a market big enough to support that. They're communicating a distilled lesson about startups, not the world in general. Same with Slava's post.