And there goes the first month

Posted on February 6, 2007. Filed under: Uncategorized |

So we’ve been here for a month now – still find it surreal saying that as the time has just flown past at a ridiculous rate. I had the time distortion effect during university terms (or if you prefer – semesters) but not to the same degree as it has been out here. Now would probably be a good time to just take a step back and reflect a little on how the time has gone so far. Well there is no doubt that from a personal growth perspective being out in the Valley has been incredible. I’ve found my energy levels are increasing continuously – last weekend I decided I still had a couple of higher gears to switch into and upped the intensity for this week.  One effect of being on the Y Combinator programme, as a non-hacker, has been seeing just how intense building a product with a small team is.  A lot of the guys are literally coding every minute they’re awake (Steve Huffman of Reddit said that the highlight of his YC programme was a powercut because “it was the only time I didn’t have to work”).  When you’re around that level of intensity it forces you raise your game and that’s definitely what we’ve been doing.

In strange way when you shift to the mentality that you should always be working it becomes kind of liberating – if you know that you’re going to be working for the next 19 hours that gives you greater freedom over what you do at any particular point in time (time sensitive stuff excluded).  At the last YC dinner Joe Krauss talked about how professional althetes get themselves “into the zone” where they can just blank everything out and be uber-productive.  What it takes to get into that zone is different for everyone – for me I’ve realised it has a lot to do with exercise and sleep.  I need to exercise every day and make sure I’m just slightly sleep deprived to be at maximum productivity.

But anyway I digress – so to sum up the time spent here so far. Well one thing I’ve realised is that when you’re running your own company your perceptions of a company lifecycle become quite distorted. When I think we’ve been here for a month and not reached any “magic” milestones I get uneasy – it feels like we should have had more success. But then when you think about it when will you ever feel like things have been a real success? When you have exponential growth without doing any more marketing? When you get VC? When you get an acquisition offer? All these things take time and when you start to get swept away by the general rush of web 2.0 it becomes tougher to remember that building a real company takes time. Not every business is a facebook or a youtube that can just explode at an incredible rate. Even MySpace has been around since the last quarter of 2003 – it just didn’t have any serious traction (I’m basing that on the Alexa graph so correct me if I’m wrong). I remember reading a blog post from Allen Morgan (investment partner at Mayfield) who said that people have started forgetting that building a company takes at least 5 years. When you’re riding the wave of your startup and you’re convinced it’s the next big thing, it’s hard to imagine why everyone wouldn’t just start using your product the second they lay eyes on it. Unless you strike really lucky that’s not going to happen – realistically you’re looking at a hard slog where you have to fight against the odds to keep your thing growing.

So that leads me onto the next topic of this post – this weeks YC dinner speaker was Evan Williams of Blogger fame and now Obvious (he’s the guy we’re renting desk space from in South Park). So he talked about his experiences of starups and the one thing you instantly notice when Ev speaks is how honest or open he is. He was totally open about all the shit he faced starting up Blogger (there was a lot of it – his whole co-founder team walked out and left him to keep the company alive by himself. He taught himself everything he needed to know to keep a website up and running and kept it afloat for a year). What was amazing to me was that Ev didn’t even have a clearly defined path when he was running Blogger – there was no 50 page business plan or revenue model. He basically just figured out what people wanted as he went along and gave it to them. And that is another MASSIVE difference I’ve seen in starting up a business here compared to back in the UK – people don’t have some set in stone path that they walk along come what may. The attitude here is that if you get smart, motivated people together and have them launch something – sooner or later they will figure out what people want.

Obviously you need to start out with the core of an idea and know what general problem you’re trying to solve but there is a real feeling here that the first thing you launch is probably going to be way off base (Ev actually started out building project management software for big corporations – he then ditched it for Blogger which was the side project that showed more growth and promise). The trick is being able to accept that and continue iterating until you refine down exactly where the opportunity lies. The problem with this approach is the incredible level of stress it involves. People generally like stability and security so working in the an environment shrouded by that type of uncertainty and continual change is tough and requires a great deal of willpower and persistence.  But from a logical perspective I think it makes a lot of sense – take the idea of the wisdom of the crowds.  Now numerous studies have shown that when you ask a group of people to perform a task and collate their results, the group as a whole is usually smarter than any one person in it (that’s a very quick and dirty explanation of the theory).

That can be applied to startups I think – any one or two people trying to decide exactly what millions of potential users really want are always going to face a tough time.  But what if they just launched something and got a few hundred people to use it – that’s definitely achievable.  They could then use the feedback from those few hundred people to decide which direction they should go in next – with all that extra data they’re much more likely to find the right direction than when it was just two of them.  Maybe that’ll take them to a few thousands users.  Again they have more data than before and again can decide which direction to go in – if at any point they’re not picking up any new users then clearly they need to do something drastically different.  You can see why that’s totally different to spending 6 months writing a business plan, raising investment and then sticking to that plan no matter what happens.  It’s a big reason why the Valley has a much bigger hit rate than the UK – it’s not because people don’t have a clue what they’re doing when they start and frown upon thinking about revenue or financial projections.  The point isn’t that the Valley is full of laid back people throwing money at anything.  The point is that people here understand that change, and often quite dramatic change, is an inevitable part of business and they accept that.  They don’t get scared when something doesn’t work – they get excited because they’re now that bit closer to finding out what does actually work.

Another word of advice Ev gave was to always build things you actually have a passion for and enjoy using. Initially that sounds like the most obvious thing in the world but it really isn’t. Let’s face it people do startups because they’re ambitious and they want to be rich. There are a million other reasons to start your own company but that’s ultimately what it boils down to. That is inevitably going to lead to people jumping on ideas they think are going to make them money without really understanding the market or the product itself in any great detail. But building something people want is seriously hard. Building something one or two people want is simple enough but building something with such mass appeal that you can make a viable business out of it is bloody hard. The only way that’s going to happen is if you know what it is that those people want. No one can predict that exactly, it’s not an exact science and you have to put something out there and adapt to what happens, but if you don’t have any understanding of the market you’re really shooting yourself in the foot.

Being honest that’s a problem we have with boso – yes we use the site to sell things and buy them but the real market we need to go after (in the early stages) is the hardcore seller. The kind of person who makes a living out of selling online and knows the ins and outs of every single online marketplace there is.   I’m not an eBay powerseller and nor am I likely to become one any time soon but I do have a real passion for learning.  That’s why Kul and I are getting our hands dirty – we’ve offered to help out some eBay powersellers with their work for free. Will it be mundane/boring work? Yep but will it give us an amazing insight into how people trade online – of course it will. I really think that if you don’t know the ins and outs of the area you’re in you better be prepared to get your hands dirty and do a crash course in it. It’s amazing how much power you give yourself when you can approach your own product as a potential end user and instantly spot the flaws in it that are going to bug a lot of people (though you’re obviously never going to get them all).

Ok I should go to bed now – we’re having an online focus group with our boso users at 1.30pm Uk time which unfortunantely means 5am West Coast time.  Since it’s 2am now and I still need to write some more code (yes I’m actually writing real code now – with a lot of direction from Srini) tomorrow will definitely be interesting – the evening is a YC dinner which I’m sure I’ll be totally knackered for.  Oh well, I suppose that’s what this startup gig is all about.

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8 Responses to “And there goes the first month”

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You have hit the nail on the head. Startups are usually never researched. People get a ‘good idea’ or worse yet get scammed into thinking the business idea is going make them money and never actually do the research necessary to see if the business idea is even feasible to start with. There are a lot of reasons for this. One common reason is greed by those who jump on any get rich scheme that comes along, for a majority of the rest it is a lack of education on how to go about doing a feasibility study. They don’t understand that a feasibility study will help them determine if there is a market, who the market is, how to reach that market and so much more. Not of least is that is gives them a working business plan without going through the stuffed shirts and bean counters to develop a business plan. Of course I have to confess that this is the market I am reaching out to. Small and micro business owners who never have developed a business plan and feel left out when it comes to small business web sites. You can view my site to see what I mean.

http://www.businessplangold.com
Business planning designed for small and micro businesses.

Hey Elizabeth thanks for the comment. I was however trying to make the opposite point that startups don’t actually need to have a clearly defined path or feasibility study when they launch. You learn a lot more by just launching something and responding to what happens than you do by drawing up detailed business plans and spending money on market research.

Great post. Really enjoyed hearing about your experience with YC and a startup. Keep bloggin’!

I thought the boso team was made up of “hackers…” neither one of you is a hacker?

No I’ve mentioned this in my other posts – we’re very unconventional in terms of a YC company as neither of us are real hackers. We’re teaching ourselves and are appreciating what goes into building a web app a lot more now. Our core strengths will always be on the business side though.

From the startups that I’ve seen the “flexibility” is part of the key. Sure there are other attributes that exist to keep u going, make sales, operations, customer etc…
HOWEVER a lot of startups change (and the market/customer bases forces them to) the direction in where they are going.
For some its just a re-steering while for others its a completely different arena/focus.

Following a pre-defined business plan without listening to your customers (are they paying for the product, resigning up etc..) is folly

My 2c

Lal

Salaam!
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