Three hard startup milestones

Long way

How hard is it to start a company? Not hard at all! You just send in the papers to your local government office and in most cases you’re done. It’s not the starting of the company that’s hard, it’s other things. Here’s three of them that I know you will struggle with.

1. The name
The name is hard because it is on the surface a very simple decision but with wide reaching consequences. It’s also one of the first decisions you make. Should you name it what you do as in “Programmers Inc.” or should it be more generic as in “Purple Scout“? Is it easy to pronounce and spell? Are the domains available? Does anyone else have the same or similar name? Can I say it over the phone so that people hear what I say? Should I SEO-optimize it?
The name is also something everyone can have an opinion about. It’s a “roof on the bike shed”-decision, you don’t have to be an expert to have an opinion, you will get name suggestions from everyone.
The name will be with you for a very long time (hopefully) so this is a big decision. That’s why it’s hard.

2. The first customer
You don’t have a business without customers. Period. The first release of your software, your first employee, your first office these are all internal milestones with no real significance to your business. The fact that someone pays for your product or service is a proof that you have something other people want. This is a big step and a major milestone.
Of course now the trick is to set the price at a level that makes you profitable too, but that’s another story.

3. The first million
Depending on how fast this takes, the first million is proof that your company scales – this is a very important milestone because it should mean you have a system, not a product.

So there you have it: the name, the first customer and the first million. This is the hard stuff. Actually starting the company or having an idea for a business are both the easy parts.

Updated: when I studied math and computer science I was taught that on a large enough level there only exists 3 numbers: 0, 1 and infinity. These are the only three numbers you need to care about for your startup.

Another way to put it:
0) get started .
1) first customer.
infinity) scale it.

Idea vs execution: are ideas worthless?


Where’s the local maximum, the highest hill? Photo: garry61

This is a favorite topic on the tech entrepreneur site Hacker News. It keeps popping up every other day, just recently in this thread about disruptive ideas.

The notion that “ideas are worthless” is sort of a counter reaction to the instinctive approach of most beginner entrepreneurs, who think that their idea is the best ever (and must be kept secret so no one “steals it” – aka stealth disease) and if only they could get funding, find a team, wait for the economy to bounce back, wait for spring to arrive and wait for the moon to be aligned with Venus THEN they will most definitely succeed because the idea is so good.

You might as well give them the exit money straight away because, you know, it such a great idea.

As you might suspect, I disagree. I do think that ideas should be treated as though they are worth close to nothing.

The article linked above, about disruptive ideas, describes different ways to find holes in existing markets by thinking out of the box. Aha! you say, see, the idea actually is important!

Well. I’d like to think of it this way: execution is the active searching of the problem space until you find a local maximum of customer value. The idea is only the starting point.

Sure, you can get lucky and find an idea that is already on a local maximum – but you wouldn’t know that without verifying it.

Simply thinking “what if you sold socks that didn’t match?” (an example in the article) is far from enough to prove that it’s a good idea. If you gave it just five minutes you would probably come up with a hundred similar seemingly weird ideas.

Some examples:

What if TVs were not boxes but bubble-shaped?

What if cars bounced like rubber balls? Would that make them safer?

What if pants had four legs? Of different lengths.

What if shoes were glued together?

What if I had an internet connected computer in my sight of vision constantly?

What if books never ended?

What if people could grow all their food, including meat, at home, in a box like a micro oven?

I can go on like this forever. How do I know which ideas are the good ones?

By testing them in the real world – searching the problem space for a local maximum – that’s the only way. And that takes execution and effort. Thus: the idea, by itself, is worthless.

“Books and apps” is the new “brick and mortar”

A “brick and mortar”-business is a business based in a physical store. It sells goods of some kind. The name comes from the building material used to build houses and the name represents something different than a virtual store, an e-commerce site.

I’d like to propose a third kind of store: “books and apps”.

A “books and apps”-store sells virtual goods that’s purely digital. Primarily e-books and mobile apps – thus the name.

A “books and apps”-store doesn’t have a physical store or even a warehouse because it doesn’t sell physical goods.

The cool thing about it is that you can start one yourself with minimal investment. Write a book, sell it as a PDF – or a mobile app. It’s never been easier and that’s why we will see plenty of small “books and apps”-shops where writers or developers work on their own to build and sell virtual goods.

A “books and apps”-shop is not a startup – or at least it doesn’t have to be. There’s nothing magical about it. Anyone can do it. It’s a new way to build a lifestyle business, made possible by the mobile app stores and the Kindle – with the added benefit that you can work on it from anywhere.

Books and apps – you can do it too.

What’s your SQL-index? [Sustainable Quality of Life]

Fishing at Sunset - Pacific Ocean , Californiaphoto © 2005 moonjazz | more info

 
No, I’m not talking about databases (SQL is a language used by programmers to fetch data.) I’m talking about Sustainable Quality of Life and how much of your income is coming from a meaningful, fun and qualitatively sustainable income. That’s the SQL-index.

Sustainable – as in, I can do this until I’m way past my retirement age. I can do this because it’s rewarding, meaningful and fun. Not work because I have to – work because I want to.

Sustainable – as in balanced. I have time to spend with my family and friends. With people who matter.

But also sustainable in an ethical sense. I’m adding value to society. I’m making the world a better place.

Listen to this TED-talk by Jane McConigal. At about 10 minutes in there’s a great quote. She says:

“We are optimized as human beings to do hard, meaningful work.”

Think about that for a second. It’s true – isn’t it? Hard work is the most rewarding activity you can do – if it’s meaningful! If it brings true value to yourself, your family, friends and society at large. Why spend your life doing anything else?

Making money is (relatively) easy. If you’re reasonably bright, strong or talented it’s basically just a question of quantity. Work a lot – make a lot of money.

The truly difficult part is doing it and keeping your SQL-index high at the same time. Making money and having fun and making meaning at the same time.

There’s actually a shortcut to achieve this: passive income – making money while you’re sleeping. But still, you have to produce something that generates the passive income and the optimal way to do this is while keeping the SQL-index high (because then you can produce a lot of it).

Don’t measure your life in the number of gadgets you have or the size of your bank account or the fanciness of the brand of your car. Those are just external attributes. Measure your SQL. That’s what matters.

Update: someone who decided to raise their SQL-index:

“I concluded that I’d rather live poor and hungry than work in a large, bureaucratic and political environment where I personally couldn’t see how my efforts created value.” – Bryan Johnson

Are you passionate about your job?

Of course you are. It’s the hot thing to be. This is the new status symbol. If you’re not working with something you’re passionate about, you’ve lost the game.

Worth noting, though: the word “amateur” means “lover of” or “love doing”.

Someone who is “professional”, on the other hand, is a person who gets consistently the same result from doing the same work. This is generally what people pay for.

Now would you rather want to be someone who loves what they’re doing or someone who’s basically a working machine?

Going from passionate amateur to passionate professional is extremely difficult. Just keep that in mind.

Wings in the air

What do you need to succeed with your startup?

You need persistence, because it will take a long time. Longer than you expect.

You need passion, to endure.

You need the right kind of money. Most often this is money from your customers. Not VCs. Not banks. Not your friends. Customers!

You most definitely need to get started.

But in order to succeed the most important thing is to get your wings in the air.

You know how ducks sort of run on the water before they take off and fly away? Running on the water takes a lot of energy. It makes you less agile – and you may run out of water to run on even if you don’t collapse from exhaustion first.

The duck running on the water is you.

It’s you running your startup without sufficient revenue to support yourself. It’s you without “porridge money” (enough money to buy porridge to live on).

Make sure you can take off and get your wings in the air before the water runs out. Once you’re flying things are completely different.

What Apple did “wrong” with the iPhone

Apple is now the largest mobile phone device manufacturer in the world based on value. When the first iPhone was released, I worked for one of their competitors and it’s striking how much Apple did “wrong” according to the practices in the industry in 2006-2007. This list can probably get much longer.

The name. You’re not supposed to give your phone a name. It’s supposed to be called a letter and a number. Yeah, the RAZR was cool, but that was it.

One device. You’re not supposed to have only one device. That’s madness! You should cover every possible segment of the market with various flavours of the same platform. In fact, you should use many platforms and OSes just to be “safe”.

No buttons. Users don’t understand a phone without buttons. You have to have buttons. If you have a touch screen it has to use a tiny pencil. But the phone should still have buttons.

No MMS. When the iPhone was released I worked for a competitor with operator requirements for Java ME. The end user never sees this, but each major operator sends thousands of pages of requirements that the device manufacturer is supposed to live up to. MMS is one of the most important ones. The iPhone didn’t have it. It seemed to be not based on operator requirements at all. Insane!

No video calls. How can you make an expensive smartphone and not include the coolest mobile technology of them all: video calling? You’re not supposed to do that. What? No one uses it? Don’t care, it’s cool, OK? And the industry spent billions developing it.

Lousy camera. The mega-pixel race was on but the first iPhone contained a 2MP camera. You’re supposed to max out the mega-pixels. That’s how you do it.

Poor bluetooth support. Another telecom favourite technology that you’re supposed to implement in a smartphone but that the first iPhone didn’t do very well.

No 3G (first generation). Now this is truly insane! The first iPhone didn’t even have 3G.

The price. The iPhone was too expensive. Everyone in the business knows that in order to get volume you have to handle the price pressure. You have to have volume or else the operators don’t want you in their deck (they sell subscriptions and want your phone to be as cheap as possible so the customer can buy an expensive subscription instead). You also have to prepare for being able to sell your phones in Africa and then they have to be super cheap. Remember the key word: VOLUME!

The size. Too big. Phones are small, OK? Small with lots of features!

The AT&T deal. The device manufacturer is supposed to do what the operator tells them to. The operator is supposed to be in command. Not the other way around.

Installable apps. This one’s a favourite. As I mentioned, I worked with Java ME and we (as in “our team”) could clearly see where the market was heading: the phone you buy in the store is only a starting point. The buyer should be able to customize it and install new features developed by third party developers (aka “apps”). There were some attempts to go in this direction but when we tried to push this harder everyone said the same thing “there are no operator requirements for this”. Oh well.

Yeah, the first iPhone didn’t have this either but when they finally did it they did it exactly right and created a whole new ecosystem. So this is actually two “wrongs”: first, not having downloadable apps at all and then when they did add it they added it completely outside the control of the operators. They even implemented their own payment mechanism.

Insane…