Startup idea checklist
defmacro.org
defmacro.org
Product
1. What are you building?
<= 70 chars
As I'm sure others here have mentioned, fall in love with a problem not a solution or product. Usually it's best to find a narrow set of users who have this problem and explore around the problem to get a better picture of it. This can often lead to a different product solving a more key problem.
[1] https://medium.com/bloated-mvp/the-lean-mvp-flowchart-add48d...
While you still have the agility you can only get from zero operational overhead, worry more about finding something people want, who wants it, and why they want it. Scaling is less than worthless if what you're scaling is worthless.
[1]: https://maddo.xxx/thoughts/what-the-hell-are-you-doing.html
I'm planning to rebuild my deck and I've been thinking and brainstorming for days. But just the act of writing down the step by step order of what is already in my head made me discover all kinds of holes in my plan.
There's a magic there. You can be convinced you know something intimately but if you write it all down I almost guarantee you'll find holes.
It looks like there is an article talking about this specifically here on Wired if you want to dip your toes in: https://www.wired.com/story/adam-savage-lists-more-lists-pow...
Not one of them has passed my test..
Sometimes, what you think are, terrible ideas can be legitimately life changing for other people.
That he destroyed the Republic was something of a side-effect. If anyone was the entrepreneur in this analogy, it was Augustus, who both founded the Empire, having a brilliant command of public relations, denied having done so.
Bringing legions to Rome as part of political struggle had already been common practice for centuries, but it had never fully destroyed the Republic. Caesar himself witnessed several such occasions by Sulla and Marius.
Edit: responding to edit, my point is that Caesar was not fighting to gain. "Crossing the Rubicon" means taking a risk, but I don't think using it to describe creating a startup really fits.
He was fighting (illegally, it might be added) to defend himself against the political tactics of his Senatorial opponents. While he held an Imperium he could not be brought into court for his actions in holding it, but the Senate had voted to make him lay it down. Their intention was to bring him to the courts and ruin him politically and financially. Caesar was simply too proud and too arrogant to allow that ruin; that he was the foremost general of his age meant that he was in a position to pull it off.
Who knows? I believe you are right that he was forced into action when the Senate pulled him back from Gaul [1] with the intention of bringing him to court. If he did not have a plan to set himself up as a dictator, at least he pivoted beautifully once he saw the opportunity and Pompey folded. That at least was a true startup move. 1. edit: Gaul not Germany
This has been a fun side conversation, thankyou.
This is a bad checklist to start with, because your right. 99.9% of ideas start off bad. The founders of Airbnb originally required each host to serve breakfast and expected each host to use airbeds in their living room. That was the original idea. They went to investors and explained the market size by counting the number of airbeds sold.
There is a good YC essay on building a toy. Start by building a toy that has meaning to you. Then if it morphs into a real business and you think your ready to raise capital: this form will be useful. Also, play with this form now. It will help you think about ideas but don’t buy into it too early. Focus on meaning at early stages.
Almost any startup idea can end up being successful with the right team behind it as long as they can avoid bad luck.
Very few startups manage to both assemble the right team and dodge bad luck.
This!
Every successful thing I ever worked on was primed to succeed no matter how incompetent we were!
To half of the stuff there my reaction was "people actually pay for this?".
Your ideas might be better than you think.
Of course provided they aren't something like yet another time management app.
I understand this is just a mental test, but really... don't release buggy products. Don't create buggy products. Firstly, the line between forgivable bugs and unforgivable ones is too thin. Or sometimes N forgivable bugs become one big unforgivable show stopper.
Second, you will always have a competitor with more experienced engineers and a better choice of tools that they'll beat you at least at quality if nothing else.
People will put up with a lot of nonsense for a product that does what they want.
The thing about the ‘we’ll iterate on it later’ mentality is that your product has to be in pretty good shape to be able to benefit from small incremental improvements. If it’s a garbage fire then making the smallest changes turns into an arduous nightmare, that inevitably just ends up introducing even more bugs to your product.
But to be fair, for as many startups as I’ve seen go out of business due to these problems, I’ve seen just as many stagnate into a state where they have just enough revenue to cover their small payroll, and remain in that state for a very long time.
> A software bug is an error, flaw, failure or fault in a computer program or system that causes it to produce an incorrect or unexpected result, or to behave in unintended ways.
90% churn out rate is not a software bug...
If you mean there was a software bug that was causing that, it sounds like they had a bug that was completely preventing them from providing value.
It’s a given your product needs to be able to provide some sort of value.
My point is people place much more emphasis on provided value and utility over frustration from bugs
I’ve seen plenty of companies with ideas that seemed decent fail because they were unable to deliver an adequately functional product, for the sort of reasons I mentioned above. All of which I’d consider bugs.
My point wasn’t you can deliver an app that does nothing and succeed.
My point was bugginess is not what kills most start ups. Lack of bugginess is not a moat. Your competitors will not automatically fail because your app is the most stable one.
Think about how much crappy software there is out there that people use because it does something they need.
If “not having bugs” is literally your only moat, there were always bigger problems
I doubt it’s going to be long before my product fails, bugs are affecting the value users derive from it to an extreme degree, past what they can overlook.
I honestly can’t even think of a real-world example off the top of my head though.
But that’s probably just a testament to how badly you need to screw up for bugs to be the actual reason a product fails, and not some external factor that’s possibly exacerbated by bugginess
Then it doesn't do X
Buggy code is a huge drag on any codebase and any business built on that codebase - absolutely.
But if you list all the things you think you MUST fix in a codebase, they are all things that make you as a developers life harder.
The bugs that a user sees are the ones that take away the value they get - the ones you see are the ones that make it harder as a developer to work on the code base - they are rarely the same bugs
this is the cause of most tension
Spotify won because they had a large selection of music which was more important than the occasional frustrations.
Edit: from 'Twitter?' to the above.
Also, the question could be reworded to refer to not just bugs but also features since a startup will often pivot in some way even after launching which users will have to deal with.
There are also bugs that are rare and take lots of effort to fix. You can first see how often that bug actually occurs in the wild before prioritizing it.
Sometimes it never occurs or if it does happen, the user can recover from it easily so it doesn't break your product.
Software development is always about trade-offs. You can churn out way more features if you don't need to take quality into account. I would welcome any competitor in my field who is super focused on quality, since they will waste a lot of time and money that could better be spent elsewhere.
For example, I'm not going to make some code bug-free, when there is a 50% chance that that feature will end up in the wastebasket 2 months later.
Besides, you talk about unforgivable bugs, but what are they to your early adopters anyway? I had users lose half a day of work because the save crashed right in the middle of it. They weren't even angry. They said is was inconvenient and just remade the whole thing. When I fixed it they were happy. They are still users now. That's how "unforgivable" these are to early adopters.
So yeah, don't forget one of the bigger companies had a "Move fast and break things" policy. In the end it's the market that decides. And according to my experience, early adopters are super forgiving.
Creating quality code should not be at the expense of extra features. Just hire more competent, experienced engineers and there will be no need to sacrifice one for the other.
Quality is a function of experience and skill, it is not (or should not be) a function of development time.
Good engineers choose between the minimal acceptable quality vs high quality code.
Bad engineers struggle to get create minimal acceptable quality in the first place.
And as any competent, experienced engineer knows, those two are less related than a junior would think.
I agree you have to keep your code clean. But the absence of bugs is an entirely different thing.
I believe that the curves are different. In the short term, just-do-it coding absolutely moves faster. Sustainable practices cost noticeably more visible effort per unit of value created. However the cost of rework eventually catches up with just-do-it and the net value-per-time drops below sustainable practice.
I've seen different anecdotal statements of when those lines cross. I see it as happening within a few weeks, I've heard others say 3-4, some say months, up to 1 or 2 years; I expect these variations are due to many factors. In the most recent codebase where I deliberately prototyped without careful practices became bogged down in about 2 weeks.
While I do agree with the higher-level discussion that software quality is not the only factor affecting market success, I don't believe that it is always advantageous to sacrifice quality on the theory that it will be faster. Success takes longer than most people expect. Setting up a dichotomy between success-needs-quality and success-needs-speed just leads to a kind of stalemate where artillery barrages of anecdotes are exchanged from entrenched opinions.
So you can still move fast, have clean code, and end up with some nasty bugs.
Here’s my take: I worked on a project that arguably had the worst code I’ve ever worked on but still made $100 million dollars in annual revenue. And then I worked on an app with terrible UX that became a billion dollar company. In both cases we had terrible reviews and a huge customer support team to process thousands of complaints, but it worked for the majority of the millions of users.
And then I realized that terrible design and bugs don’t really matter if you have true product market fit. And vice versa you can have the best design and flawless error logs but still fail if you’re not creating something that people want, especially if it takes you extra time and resources to create that “perfect product” while your competitors bypass you with a shittier product, but with faster iterations.
Is your product a vitamin (nice to have) or a pain killer (a must have to improve quality of life)?
https://dondodge.typepad.com/the_next_big_thing/2008/03/does...
I used to work for a small company that made it big (you've heard of them.) We went from ~25k to ~250k users while I was there and the VCs were lining up to pound money up the founders' asses. Limosine rides and $500 steak dinners to woo them, the whole thing. I left, they eventually went public, and last I heard the Walton family owns it now or something.
Anyway...
The front-end guy "Chris" (not his real name) and the back-end guy were pals, and they would just push any old shit to production. The CEO had no clue, and I wasn't in a position to get them to stop. There was one other guy working remotely who didn't care or also had no clue.
So, "Chris" (not his real name) would shit out some PHP, bang on the new feature or whatever for a few seconds, and if it worked even slightly at all he would push it.
Shit broke all the time.
The poor dumb users would be on the support forums telling each other how the heroic Chris was working furiously to fix it, and I'm sitting there fuming because Chris is the ruthless asshole using them as unpaid QA.
That fucker is a millionaire now. Go figure.
If it solves a real problem, and allows companies to do 'xyz' , maybe it doesn't matter if there are bugs and glitches here and there.
If there is only 'one kind of car' and that's all anyone knew, nobody would mind that there were always leaky oil issues if the alternative was 'horses'.
The YC application has a question along the lines of "why is the thing you're building so compelling that customers will tolerate a buggy product?"
We could have fired Chris and replaced him the next day. We should have. We will never be able to know or quantify the loss accrued to Chris's irresponsible behavior. We got lucky.
It costs nothing extra to write correct bug-free code if you know how, and bug-free code will always be preferable to buggy code.
So far I'm 5 for 5 when asked for a 50/50 partnership (where I do all the dev work and my partner is the 'idea man') and then never hearing again about the idea after I asked they put together this document - all without having to say 'no'. There has not been bitterness on their part, because next steps are on them.
In the off-chance they will actually do this (and it hasn't happened yet), I will take it seriously and really consider it. But even if I decide not to pursue it, I feel like the exercise isn't a waste of their time as they will be able to use it when looking for funding or other partners.
On first blush, it seems to set an adversarial tone rather than a collaborative one. On the other hand, it's good due diligence and probably filters out the serious from the not so serious.
I mostly agree with your response. I think the only place where it may not work is when the person wants a thought partner to help think through these things. There isn't always a strict dichotomy of duties in the framing of a venture - I think all partners should be involved in that. Different story when it comes to execution, though.
For example, hardware and software that help teaching are usually chosen by the school or the university. Teachers may have a word on this, but in my experience they rarely decide.
Another example is products for children: some of them (e.g. educational games) clearly target the parents or relatives. Others (e.g. food) focus on the children, hoping they will persuade their parents.
This list seems very focused on that and seems to entirely miss asking questions like "is this cool or fun or entertaining"?
That's not right. People spend vast amounts of money and time on fun and entertainment hobbies education pleasure and leisure.
It's misguided to focus only on finding problems that need solving and pain that needs alleviation.
You'd think so but let me tell you - the hardest thing in the world is to convince someone to give you money for your product. You can easily get lots of compliments, lots of feedback, lots of positivity, but money? Oh boy. Just try and see how easy it is to find customers.
You are more like a musician.
As Rivierakid above says, it's kinda weird to frame it that way.
A common answer is that an existing product is great but it can be made even better or cheaper. It's weird to frame it as solving a "problem".
Lowering costs is solving a massive problem - for consumers and businesses alike. There are few greater problems to be solved for the majority of people, than lowering their cost of living - or cost of operations for a business - while providing the same or better quality of a thing.
That process has been a fundamental requirement for all of human civilization as we've known it the last ~5,000+ years. Without it, most of us are not here. It generates an incredible incremental gain spiral, a compounding of small surpluses that build and unleash bigger things over time.
For a business it frees up capital which can then be put into productivity, R&D, salaries and countless other things. For consumers it can boost savings or enable other purchases and investments that improve life. It enables new demand which will unleash new goods that were not feasible or viable previously.
It's all about generating a surplus that can then be directed toward some additional goal. Better and cheaper is one of the required tenets of mass standard of living progress.
A lot of ecommerce is basically this, your products are the same branded goods other retailers are selling, your website offers roughly similar experience and your pricing is roughly the same. Before the internet the differentiator was location, millions of store distributed across the world selling the same Nike shoes for example. Now a handful of ecommerce sites could serve the whole online market for Nike themselves.
One example is http://www.paulgraham.com/organic.html, but there are many others.
That things start out as toys can mean many things.
a) People create something for fun, it's fun and it turns out that after all, even if it wasn't intended, that thing actually satisfies a need better than current products on the market.
b) People purposely want to make something that's seen as mundane, boring, or annoying more fun. Lots of failed attempt at gamifying work here, but there must've been some successes.
c) People not so much create something that "starts out as a toy", but they create a toy, plain and simple. It's an entertainment product that is particularly well made and people like it because it's inherently fun.
The underlying idea is simple: if we take an optimistic view of things, things that people do not inherently enjoy will either be entirely automated (and "disappear") or be turned into things they inherently enjoy ("toys").
So, if you want endless sources of ideas, think about those:
a) How can you automate things people don't inherently enjoy (probably 90%+ of existing jobs)?
b) How can you make things people don't inherently enjoy enjoyable?
c) How can you make things people already want and enjoy (entertainment mostly), but better?
https://www.google.com/amp/s/www.nytimes.com/2019/01/11/tech...
I have three ideas I am working on and the one i like best is ... not passing that test :-(
I hate this question. I think it’s from the marketing from the past. Now you have one to one relationship with your customers. Who cares what marketing group they belongs to?
At SerpApi.com, we have this issue constantly from industry outsiders. If you have the need, you’ll use us. If not, you don’t and that’s fine.
1. Does this product/service exist and pretty much solve my problem? Then use that.
2. If not... I am the first customer... I am building it for myself because I want to use it. (If it's a network product, then find a partner for the idea.)
3. Evaluate MVP do I find it useful, am I using it regularly? Does it solve the problem for me?
4. Introduce someone else to your product/service maybe a friend or family and get them hooked.
5. Evaluate engagement is my friend still using it ... am I still using it?
6. Build features for you and them.
7. Evaluate ... do you guys both love it?
8. Get some more friends using it... if it's great maybe you even start to get strangers.
Now get to your questions... how can I grow... how can I make money.
Problem
What problem are you solving? What problem will be solved at the end of what you are doing? What do we expect the result to be? Can you state the problem clearly in two sentences? Have you experienced the problem yourself? Can you define this problem narrowly? Who can you help first? What can we address immediately? How do we get the first indication this thing is working? Is the problem solveable?
Customer
Who is your customer? Who is the ideal first customer? How will they know if your product has solved the problem? How often (frequency) does your user have the problem? Who is getting the most value out of your product? How intense is the problem? Are they willing to pay? How easy is it for your customer to find your product? Which customers should you run away from?
Product
Does your product actually solve the problem? Be truthful. How and why not? Which customers should you go after first?
How do you find people who are willing to use your “bad” first versions of your product? Who are the most desperate customers as how do you talk to them first? Whose business is going to go out of business without using you?
Are you discounting or starting with a super low price? Are you consider this approach? If so, why?
Performance
What are you using to measure how users are interacting with your product? What 5-10 metrics are you measuring to understand how your product functions? Why those metrics? When you build a new product or feature, what is the metric that will improve because of that feature/product? What number do you track to show how well your company is doing? What is your top level KPI (revenue, usage)? What are the underlying metrics that contribute to achieving your top level KPI (new users, retention of users, content created => DAUs at Social Cam)? Which of these metrics are you trying to move this development cycle?
Product Development
How long is your product dev cycle? What is causing it to be that long? Who is writing down notes at your product dev meeting? Which category does each of your brainstormed ideas fit: New features/interactions on existing ones; bug fixes/other maintenance; A/B tests? How easy/medium/hard are they to do? How can you restate the hard ideas (disaggregate idea into smaller ideas)? What parts of hard ideas are useless or hard? Are there other options? Which hard idea will improve act the KPI the most? Which medium? Which easy? What is the spec for the product/feature we want to build?
Problem
What problem are you solving? What problem will be solved at the end of what you are doing? What do we expect the result to be? Can you state the problem clearly in two sentences? Have you experienced the problem yourself? Can you define this problem narrowly? Who can you help first? What can we address immediately? How do we get the first indication this thing is working? Is the problem solveable?
Customer
Who is your customer? Who is the ideal first customer? How will they know if your product has solved the problem? How often (frequency) does your user have the problem? Who is getting the most value out of your product? How intense is the problem? Are they willing to pay? How easy is it for your customer to find your product? Which customers should you run away from?
Product
Does your product actually solve the problem? Be truthful. How and why not? Which customers should you go after first?
How do you find people who are willing to use your “bad” first versions of your product? Who are the most desperate customers as how do you talk to them first? Whose business is going to go out of business without using you?
Are you discounting or starting with a super low price? Are you consider this approach? If so, why?
Performance
What are you using to measure how users are interacting with your product? What 5-10 metrics are you measuring to understand how your product functions? Why those metrics? When you build a new product or feature, what is the metric that will improve because of that feature/product? What number do you track to show how well your company is doing? What is your top level KPI (revenue, usage)? What are the underlying metrics that contribute to achieving your top level KPI (new users, retention of users, content created => DAUs at Social Cam)? Which of these metrics are you trying to move this development cycle?
Product Development
How long is your product dev cycle? What is causing it to be that long? Who is writing down notes at your product dev meeting? Which category does each of your brainstormed ideas fit: New features/interactions on existing ones; bug fixes/other maintenance; A/B tests? How easy/medium/hard are they to do? How can you restate the hard ideas (disaggregate idea into smaller ideas)? What parts of hard ideas are useless or hard? Are there other options? Which hard idea will improve act the KPI the most? Which medium? Which easy? What is the spec for the product/feature we want to build?
Doc link: https://docs.google.com/document/d/1ungItAgriaQk_lDI4aEJNigm...
Under Bonus I'd like to add:
Exit - What might that look like?
If nothing else, I think it helps vet the previous assumptions.
I'd first ask, what would need to be true in 18 months to never have needed capital, and to be self-sustaining as a bootstrapped organization. Raising funds should be an option, but not the assumed path of all products.
dropped a translation here https://pastebin.com/raw/HdcUVn8c
it concerns mostly around not doing things that don't scale, consider it a rough draft because I've never shared it, only tested around a bit, it's not like it's the final truth about the argument or anything.
Phone text messages existed before, Messenger in desktop, even forums that work very similar to twitter.
I might be wrong but I think the need was there, they improve a similar product with more features and Voila!
Are you going to go at it full time or part time?
How many hours in a week can you dedicate to it without wrecking relationships (kids, partner, friends etc.)?
Do you see a path to raising funds or are you thinking of bootstrapping?
If going all in, how much runway do you have if no funding came through?
Did you know that the path to startup hell is paved with "but everyone told me it was a great idea"?
Especially if they are novel!
In fact:
1. Not everyone has a problem.
2. Not everyone is aware is having a problem.
3. People bear problems. Even the worst ones (ex. health).
So, why build your startup around a problem. Why don't you better build it around a "need". A need would be much stronger usage driver than problems.
The difficulty with going for a "need" that is not "I need to solve this problem" is that you have to convince people that they have the need, and that your product best satisfies it. General needs (Maslow hierarchy etc.) tend to be vague and served by many different product types. Sure, there are exceptions, but most businesses solve problems and if you're not explicitly doing that then you're either taking a more difficult road, or you're not building a business.
I'm building an alternative for Pocket/Instapaper because I find the current tools sorely lacking. No one needs it but it solves a legitimate problem in my life and hopefully those of others. Expanding onwards, no one "needs" a mobile phone, television, reddit or even HN itself but these solve legitimate problems in life. By the strictest definition, no one "needs" anything more than clean air, water, food and shelter.
So needs can be approximated to problems for the sake of conversation around startups, ideas, business etc.
2. OK, They are not your target customer.
3. They bear problems when there are no solutions. So give them a solution.
Ans as to points 1 and 2, those people are not your target customer.
Or, could someone create a lifestyle business and call that a startup? Where the goals might be simply to make a living doing what you love without working for some big company somewhere?
Or maybe could someone create a startup that makes the world a better place without concern for getting oneself crazy rich?
I am not a fan of the idea that the only driving motivation for establishing a small tech company is to make the VC's happy.
Paul Graham wrote an essay which differentiated startups from other new businesses based solely on growth:
Some people.
Lifestyle businesses, or companies not looking to grow very fast don't need VC money, so I really don't understand everyone's obsession with making "VC sustainable".
If you want to start a business and require initial capital then take out a bank loan. It's relatively simple. But...that's not a startup, again, by most accounts. If you want to use some random definition found on the internet go for it, but that's not status quo.
People might say otherwise, but that’s because they’ve been largely conditioned to react that way.
Startup is a word reserved specifically for exponential growth businesses usually juiced up with VC cash.
If that’s not what you want to do, then just call yourself a plain ol’ business. Or if you are on some world changing mission and don’t care about money then be a non-profit. And if you have no real business and just want to work on your own stuff and maybe make money later then that’s just a side project.
Of course, that’s not as sexy as calling yourself a startup and not as likely to get you on the cover of entrepreneur magazines with your arms crossed and a smirk on your face.
Perhaps you are the one that's been conditioned?
By embracing the fact that startups are purely about money I keep things simple and true. When the motivation is all about numbers there’s less potential for confusion and wasted time.
Given how small chances there are for startups to actually make you rich, if your only motivation in life is to become rich you really should choose another career path.
Also this apparently comes as a surprise to you but, yes, there are other motivations for starting a company. Some of them are listed in the comment you responded to.
Often it'll be both. Why not change the world in some way that you care about as well as make lots of money in the process?
I think the Google guys really wanted to empower people with information, and that Travis Kalanick really thought taxis were quite shit. A startup is probably more likely to succeed when the founders are at least interested in the subject matter.
"Changing the world" is the siren song startups sing to lure in starry eyed graduates out of college and hire them for cheap rates on the chance that maybe their stock options might someday be worth something, because even if you don't become a millionaire, at least you can still feel proud that you are a "world changer". Except that's a lie too, because startups that fail (which is most) don't change much of anything.
Real change doesn't happen with the heroic actions of a small startup sailing against the wind. A startup has to grow huge to first have the ability to make meaningful change in the world, and by the time it's huge it's just another drab corporation that people love to hate, and bears no resemblance to a startup. The change comes from the small actions of its employees toiling everyday toward a common goal. Not really something that makes for a riveting read.
And at the end of that dream day when you have changed the world, you might find the world will want to change whatever you did anyway.
The point is, if you care about making change so much, change lives on a small scale. Even with this post I may be changing someone's life, maybe some young engineer working at a startup will be sitting there with a thousand yard stare coming to a realization they are in a trap, and take steps toward a better life and career.
But please, let's not continue to disguise ambitions of making a ton of money with noble stories of how you want to change the world and making everything a better place. This is the same as an idea guy who pitches out "amazing" ideas for new apps and then wants someone else to do all the work. The true motivation behind what they say is clear, and their charade is insulting to those who simply want people to be honest in their interactions. When your goal is to make a ton of money it's easy to start piling in a bunch of extra goals that sound nice, but the tune will quickly change if you tell someone they can accomplish all their extra goals but end up dirt poor.
These things aren't just about money. Life is short. Spend it doing things that have meaning to you.
The bargain you're describing is a side project:
> And if you have no real business and just want to work on your own stuff and maybe make money later then that’s just a side project.
And you actually can take that bargain, if you have suitable qualifications - it's like being employed by a research lab of a big company, or an internal tech incubator, or an EIR position, or just being friendly enough with a VC that they give you seed capital to work on whatever you want. And yes, > 50% of big company employees, if offered that deal, would probably take it.
The reason why they're not taking it is because there're barriers to entry put up in front of it - a Ph.D in a hot field for research lab positions, previous corporate success for internal incubators, previous startup success for EIRs, and personal connections or pedigree for no-strings-attached seed funding. And the reason why you have those barriers to entry is that this deal is not economically rational for the person fronting the money unless there's a decent chance that the person they're sponsoring will come up with something valuable during the time period in question.
What? Reserved? I’m not sure where you are getting your info. personally I like Steve Blank’s definition:
“a startup is a temporary organization used to search for a repeatable and scalable business model.”
Startup is just a word that means different things to different people. I do agree that not everything seems like a startup to me. Then again, what anyone else is calling whatever their endeavor is really is none of my business.
The other more important reason is that startups (at least the ones I've built) are far more tolerant of "failures/mistakes" than large companies. And thats pretty much the only way to learn to build a successful enterprise. Experiment without fear of failure, and then adapt.
I'm not either. But arguing over words is a pointless waste of energy.
Around here (and in most places in tech), startups are understood to be a form of entrepreneurship which aims to create innovative companies with the aim of being large tech companies, almost always fueled by VC money.
It's not by any means the only kind of company one can start (mine isn't that!), and I think it's a bad thing that many people don't realize there are other forms of entrepreneurship (in most contexts, an entrepreneur can be someone who decided to franchise a McDonald's!).
But it doesn't really matter that the word startup is used to mean something different. It's just a word.
No. But it is a huge motivator for almost every founder - and all who say otherwise are lying. It isn't hypocritical to be motivated by wealth AND by doing good.
When you start getting investment, then ... yes. The expectation is that your investors will make a 10x on their cash. You don't have to be VC-funded, and bootstrapping is certainly reasonable.
>Or maybe could someone create a startup that makes the world a better place without concern for getting oneself crazy rich?
Usually people with that attitude end up doing non-profits. Having said that, there is nothing quite like the burnout and disillusionment you experience after working for a nonprofit for a few years. I actively discourage working for or starting nonprofits because I've talked to enough people. Competition for funding (government or otherwise) is horrendous amongsts nonprofits, and pay is almost universally lower than market rate or downright abysmal. Typically the social good you're doing is not scalable and a band-aid over an existing social problem.
I live in a university town with a big startup culture and over the last few years I've seen many more recent grads enamoured with nonprofits than with traditional startups.
In many cases, this search requires venture capital but in some it doesn't.
A startup can very well be a lifestyle business. For example, I'd consider many of the companies listed on Indie Hackers to be startups. Only a minority of those has taken venture capital.
- Startup is what I now call VC funded companies. A startup can and often does 'make the world better' for some definition of better
- A profitable side-business that could grow into a large stable company starts as a side-project/side-business.
This short Sam Altman "How to Succeed with a Startup" video[0] plainly covers why this is so.
You call it "a little Italian restaurant on the web". At least, @DHH (Rails and Basecamp founder) does:
Short compilation of his original talk, by Werner Vogels, Amazon CTO:
https://www.youtube.com/watch?v=fHHXddS0m14
Full DHH talk at Startup School 2008:
https://www.youtube.com/watch?v=0CDXJ6bMkMY
And it can give more than just enough profit to live. A lot more.
It's time to do hard stuff now
I remember seeing a silicon valley VC, in an interview, saying that he wouldn't invest in a startup if he couldn't see a path to a billion dollar valuation. Of course, this guy has the right to his own investment strategy, but it also seems kind of idiotic to suggest that every business that can't have a billion dollar valuation is worthless. There are plenty of niche business out theres that occupy smaller market segments that the tech giants will likely never come into. Personally, I wouldn't say no to owning a significant share of a 600 million dollar business.
90% of all companies funded by this VC will fail. Of the remaining 10%, some will be middling successes. One or two companies will be really great. But the VC has a problem: his LPs expect a return over 10 years (or whatever the lifetime is) that is as good as the market (simplifying, but this is basically true). If the one or two companies that succeed only become worth a few hundred million, he's actually delivered a sub-par return for his LPs. So the one or two companies that succeed must _really_ succeed, or else the VC is going to have trouble with their next fund. Someone did the math and showed that a 10x return on those successful investments is the minimum for the fund as a whole to provide a good return for its LPs.
All this means that when a VC looks for deals, he can't waste time on lifestyle businesses and the like. Billion dollar companies or bust. Keep in mind that this is not true for people who write smaller checks (like angels).
And they were called ten-baggers before they were called unicorns - roughly speaking.
Then that person would literally not be practicing Venture Capital.
Venture Capital is a very specific type of funding with a specific type of risk profile. If you don't like the implications, then don't seek Venture Capital.
This is what people don't understand. No one is forcing you to be a venture backed company.
Perhaps this blog post with slides at the end by Mark Suster?
https://bothsidesofthetable.com/how-to-build-a-startup-under...
http://reactionwheel.net/2019/01/why-do-vcs-insist-on-only-i...
The whole point of the notion of a startup is to separate out specific types of early stage businesses, because certain logic applies in these scenarios (such as being almost the only relevant early stage businesses to investors - to balance out the high level of risk the payout need to be a certain level).
Anyhow, it still baffles me a lot of people in the entrepreneurial community don't really know what a startup is. Hopefully this can enlighten a few so less energy and frustration needs to be spent due to this mixup and more energy could be spent on the discussing the differences in strategies and tactics that apply for each type of early stage business.
The answer is yes, if your working definition of entrepreneurship agrees with the one used by Lori Greiner: ‘Entrepreneurs are the only people who will work 80 hours a week to avoid working 40 hours a week [like everyone else]’.
People who believe in putting in twice the effort to reap exponential growth rather than (the less exciting) organic growth do so under the assumption that they can compress time.
For tasks that are amenable to time compression like running a startup, the only reliable way to compress time is to increase the number of man hours spent tackling the (perceived) opportunity, which of course means hiring people as fast as your war chest permits.
And because the size of your war chest determines the number of people you can hire per week or per month to allow you attain exponential growth, it is no surprise that a lot of founders seek out VC funding.
It seems that your interpretation of her quote doesn't match Greiner's own interpretation. I think the point she's making is simply that entrepreneurs are willing to work more hours on their own business to avoid working for someone else. Whether the business grows exponentially or organically doesn't matter.
I also didn't quite follow your interpretation, why does avoiding working 40 hours a week lead to spending more man hours to pursue an opportunity? (edit: thanks for explaining)
[1] https://www.businessinsider.com/lori-greiner-shark-tank-entr...
Disclaimer: my interpretation is in the context of the SV mantra under discussion, I have no horse in this race.
Working 80hours/week involves making a lot of sacrifices with respect to family, friends and (often overlooked) one’s health, so the people who do so think of the (outsized) reward at the end to drive their work ethic that is unsustainable for most people over the long term.
Also, there is only so much code one founder can write, ditto for sales, which is why hiring more people is a sensible strategy.
Almost 20 years old, but still relevant.
Nope, the main driver is the feeling of being on a mission.
Often a business is run solely to generate enough hype to externalize losses onto an acquirer or public retail traders or unwitting retirement plan holders, while creating space for personal profit for a small set of people.
(I disagree with the other post above that startup = VC and hockey stick on HN - there’s plenty of overlap between here and indie hackers, for example).
At current prices, which are unsustainbly low due to VC subsidy, people find value in the trade of money for the service. At a price that fairly reflects the cost of delivering the service unsubsidized and maintaining driver quality of life at a socially acceptable level, nobody would pay for it.
So the game was to lever perceived market value up very high with VC subsidy and hype, all the while knowing that they are selling a dollar for fifty cents, just long enough to be acquired or go public at prices that pay back the original VC subsidizers at a multiple allowing them to profit, while whomever bought in is left holding the bag when the company is left in an unsustainable operating position and there’s no more hype-profit carrot to attract new subsidy investors.
In any case, I am glad for the more efficient use of space and energy that Uber has provided over the congestion of roaming and standing taxicabs in the downtown core with service virtually nowhere else.
The real economics of taxi services, for example round trip costs for servicing lower density out-lying regions, implies much higher prices and lower ride inventory.
Uber and others providing an inflated amount of inventory at unsustainably low prices is not some sort of shift in transit patterns. It’s nothing but temporarily selling a dollar for fifty cents in order to compel all competitors out of the market, at which point it instantly goes right back to being just as hard to get an Uber in the suburbs as it was to get a taxi there in the 90s, because that’s precisely how the price equilibrium of that supply and demand always worked.