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Do Not Start A Startup: Or, What I Learned At Startup School 2011

167 points by andrewpbrett 15y ago

dchuk 15y ago
I think one of the major reasons a lot of tech startups are failing is because so many of them don't even begin to focus on monetization and are still stuck on being acquired with a big exit. Even with the whole Lean Startup movement, I think so many startups are still far from thinking the way they need to to make a profit in a reasonable amount of time. MVPs and customer interviews and everything else are great, but at the end of the day, what's most important is that you target a market large enough to sell to enough customers to make for a sustainable business model. Even a perfect product can fail if a market is too small or worse, completely non-existent.
- vaksel 15y ago
  another part, is that selling is just plain hard(especially B2B)...and many of the startups don't have the market of customers who'll actually pay to scale their numbers.
- rick888 15y ago
  Exactly! I also think that building something cool in the hopes that you will get bought out by a large company is the hip thing to do. Selling and marketing is boring to many of the people that want to start a company.
- Sato 15y ago
  I think it's time to take such an advise seriously. Today's investments go to either successful late stage startups or seed ones[1]. And this trend is likely to continue for a while. Also, there was a good discussion about profit[2] a week ago. I recommend to take a look. [1] http://www.reuters.com/article/2011/10/30/us-venture-bround-idUSTRE79T17220111030 http://www.reuters.com/article/2011/10/30/us-venture-bround-... [2] http://news.ycombinator.com/item?id=3147487 http://news.ycombinator.com/item?id=3147487
- gregw100 15y ago
  That is a very good point. Monetization is key. Unless you have very deep pockets as a startup, if you don't focus on monetization in the early stages, you're more than likely going to fail due simply to the high cost of launching and maintaining startups. Building a startup simply because it's a cool idea or has future potential is almost a sure way to keep it from succeeding. It seems like this simple fact often gets overlooked when people begin startups. Money is king.
jmonegro 15y ago
It's been said before in another thread, but Ashton Kutcher blew my mind at this Startup School. Goes to show how good an actor he is too - I never would've imagined that the same person who played the doofus Kelso in That 70's show, or the guy from punkd would be giving solid, down to earth business advice at such a young age.
- epi0Bauqu 15y ago
  I cannot find the video for that part of the talk -- does anyone know where it is?
  - jules 15y ago
    It starts here around 1:55:00: http://www.justin.tv/startupschool/b/298670703 http://www.justin.tv/startupschool/b/298670703 and continues into Part 2: http://www.justin.tv/startupschool/b/298680010 http://www.justin.tv/startupschool/b/298680010
  - deleted 15y ago
    [deleted]
- gameon87 15y ago
  The advice he gave was general, and anyone who has done a startup for a year and learned from their mistakes would be able to give the same advice.
  - alexwolfe 15y ago
    The whole point is not having to do it for a year and messing up before learning those things. One of the truly undervalued assets in this world is learning from other people's mistakes instead of having to learn from your own. It can be the difference between winning and losing.
    - PakG1 15y ago
      The problem is that head knowledge and heart knowledge are different. You can take in a ton of knowledge and be able to recite it on call. But for some people, if they don't experience it, they're not able to take the same knowledge to heart. I was in a business simulation competition once during university. At the end, when they were about to announce the winners, one of the judges got up and said, "Business is like sex. If you've never tried it, it doesn't matter how much you read about it, how much you know about it, etc. Until you experience it, you don't really understand it for real." It made for a laugh afterwards, because some people weren't happy with how he had judged their teams. I guess it's because most people are not good at managing their own psychology, ala this post: http://bhorowitz.com/2011/04/01/what%E2%80%99s-the-most-difficult-ceo-skill-managing-your-own-psychology/ http://bhorowitz.com/2011/04/01/what%E2%80%99s-the-most-diff... Head knowledge is hard to remember when you're in the fire. Heart knowledge is instinctual.
gameon87 15y ago
I think its ironic and hilarious that Ashton Kutcher preaches startups should solve a problem, and not jump to goal of being a billion dollar company, and then he invests in Likealittle, the company lambasted here http://techcrunch.com/2011/03/13/the-city-by-the-meh-thoughts-on-falling-out-of-love-with-the-valley http://techcrunch.com/2011/03/13/the-city-by-the-meh-thought... Likealittle, with zero revenue model, exemplifies what everyone is complaining about.
- andrewpbrett 15y ago
  See footnote ;-)
- robryan 15y ago
  It's a high risk bet, very little chance of seeing any return from that investment but if you have the funds no reason not to mix in a few high risk bets you feel are capable of paying off.
  - count 15y ago
    Or maybe it's a friend or family member?
- arihelgason 15y ago
  That judgement looks like it's based on a very brief conversation with one of the founders. Carr seems to dislike his attitude more than anything. Hardly a convincing condemnation of what Likealittle are doing.
- crystalis 15y ago
  If there aren't enough startups solving problems, there's room in the portfolio for a few "$BCs".
Hrothgar15 15y ago
Make things. (Hat tip Caterina Fake.) And if those things need a company as a vehicle, make that, too.
- andrewpbrett 15y ago
  I really like that, thanks. It would have fit well, and I remember reading that post, so I'm a little disappointed I didn't weave it in somehow.
- alexwolfe 15y ago
  Way to sum it up. "Make Things" is a good mantra, that's the fun part anyway. Pretty sure financials, legal work, and HR are not the exciting part of any endeavor :)
dlikhten 15y ago
I have a better question: Imagine you have at least 15 competitors. Some of whom have been around for years. All of whom have more money than you, and same amount of reach (no... more than you). However you think they all suck and you can do better. Why? If you can answer the why, you have a solid idea. That why is what everyone is looking for. Side note: When joining a startup you ask that question. Basically think Google. Google was the first search engine to make search fast and accurate. They had probably 10 competitors, 1 of which, yahoo, was thought to be immovable.
- timr 15y ago
  "Imagine you have at least 15 competitors. Some of whom have been around for years. All of whom have more money than you, and same amount of reach (no... more than you). However you think they all suck and you can do better. Why? If you can answer the why, you have a solid idea. That why is what everyone is looking for." You know what's funny about that, though? Larry and Sergey wouldn't have had a great answer for that question when they started. They had a relatively primitive technology demo, and were taking on massive competitors with deep pockets (hell, even they tried to sell the idea before they gave in and started Google). There's absolutely no reason that one of the major search companies couldn't have focused their resources on search, come up with something similar to PageRank, and smothered Google in the crib. They just didn't. Oops. Frequently, the correct answer to your question is: "our competitors are bureaucratic and slow, and while our approach could be replicated by any good, two-person team, history suggests that won't happen"...but that always seems to be the hardest answer to sell. Everyone is looking for the deterministic solution to the problem of innovation, when the solution is actually stochastic.
  - stellar678 15y ago
    I think this might be because it's only with the hindsight of having access to good-quality search that we see how important search was going to become. If you're solving a problem that your stronger competitors could be solving, and everyone knows that it's a valuable problem that needs to be solved, they'll probably squash you. Or be willing to buy when you offer up your solution.
nl 15y ago
<RANT> Why can't Justin.TV fix their platform so that people can find the videos? Every single time there is a startup school thread on HN, there is a sub thread of Justin.TV urls passed around like dodgy bittorrent urls. Surely the platform should support this? The titles on the URLs make it even worse: "Broadcasting LIVE on Justin.tv" - hours & days after it isn't being broadcast, isn't live and is only on Justin.TV because they happened to record it. </RANT>
- nl 15y ago
  Judging by the upvotes on that, I'm not the only one who has that problem. I'm pretty ambivalent about the public display of votes on HN, but it might be useful for the Justin.TV people to know how many people agreed with my complaint.
- colonelxc 15y ago
  I agree with you, though I think that a big reason they haven't done that is that the streamers who use justin.tv the most don't actually demand that feature (though they probably wouldn't mind it either). I don't have any hard stats, but I think that a majority of justin.tv's traffic is gaming related. In my observations, a single gamer can produce hours of content a day, most days of a week. For these types of streamers, it is more of the exception than the rule that someone will go back to watch the stream. In the case that there is an interesting game that people want to link to or whatnot, they do end up passing around crazy urls and mentioning time offsets. If it is a really popular thing, someone will rip it off of the site and post it to youtube. One commonality that I see (at least for the partnered streamers) is that in between games, they will run a commercial (they have the ability to choose when commercials happen). That would be a natural point to split the video on justin.tv's side, and then you could at least directly link to a particular game. Giving the ability for streamers to title a video after it is completed would help discoverability as well.
- mark_l_watson 15y ago
  I had never used justin.tv before but I just tried searching their site for "startup school" and got a lot of hits, but not for the latest talks.
deleted 15y ago
[deleted]
alexhaefner 15y ago
I read about whether or not to start a startup on hacker news often. In these discussions there's always the 'startups fail', 'billion dollar company'. I can say 2 things about these two things. For myself, failure is quite okay. I spent the entire weekend at a hackathon where I failed to have anything to demo. My teammate and i were the only ones there to fail to have a demo. I had had success at other hackathons so this hurt. Ultimately it doesn't scare me though, as I'll explain later. And on the billion dollar company, I have to say I can't relate. My friend and I come from middle class (blue collar working town middle class) families, so we've never had much money and we don't really chase it. So for us, it's not about the money, it's always been about building great things that we want for ourselves. And with each failure and each success, we learn more, and what we make becomes better and better from our learning. I like the idea of failure because it's only ever made the things that I make better, and helped me to be sure that I am doing what I love. Ultimately every time I ready one of these articles, and I realize that I embrace failure as an opportunity, and see money as a distraction, i feel more right with myself that we should indeed be starting a startup. Disclaimer: I am a student who has no idea what I'm talking about.
mark_l_watson 15y ago
Great writeup. BTW, I like it when I hear people (usually customers) talk about building a company that they want to run for a long time, wrapping their life around it (and vice-versa).
- deleted 15y ago
  [deleted]
Gotttzsche 15y ago
what are smart-ish jeans?

167 points by andrewpbrett 15y ago

dchuk 15y ago

I think one of the major reasons a lot of tech startups are failing is because so many of them don't even begin to focus on monetization and are still stuck on being acquired with a big exit. Even with the whole Lean Startup movement, I think so many startups are still far from thinking the way they need to to make a profit in a reasonable amount of time. MVPs and customer interviews and everything else are great, but at the end of the day, what's most important is that you target a market large enough to sell to enough customers to make for a sustainable business model. Even a perfect product can fail if a market is too small or worse, completely non-existent.

vaksel 15y ago
another part, is that selling is just plain hard(especially B2B)...and many of the startups don't have the market of customers who'll actually pay to scale their numbers.
rick888 15y ago
Exactly! I also think that building something cool in the hopes that you will get bought out by a large company is the hip thing to do. Selling and marketing is boring to many of the people that want to start a company.
Sato 15y ago
I think it's time to take such an advise seriously. Today's investments go to either successful late stage startups or seed ones[1]. And this trend is likely to continue for a while. Also, there was a good discussion about profit[2] a week ago. I recommend to take a look. [1] http://www.reuters.com/article/2011/10/30/us-venture-bround-idUSTRE79T17220111030 http://www.reuters.com/article/2011/10/30/us-venture-bround-... [2] http://news.ycombinator.com/item?id=3147487 http://news.ycombinator.com/item?id=3147487
gregw100 15y ago
That is a very good point. Monetization is key. Unless you have very deep pockets as a startup, if you don't focus on monetization in the early stages, you're more than likely going to fail due simply to the high cost of launching and maintaining startups. Building a startup simply because it's a cool idea or has future potential is almost a sure way to keep it from succeeding. It seems like this simple fact often gets overlooked when people begin startups. Money is king.

jmonegro 15y ago

It's been said before in another thread, but Ashton Kutcher blew my mind at this Startup School. Goes to show how good an actor he is too - I never would've imagined that the same person who played the doofus Kelso in That 70's show, or the guy from punkd would be giving solid, down to earth business advice at such a young age.

epi0Bauqu 15y ago
I cannot find the video for that part of the talk -- does anyone know where it is?
- jules 15y ago
  It starts here around 1:55:00: http://www.justin.tv/startupschool/b/298670703 http://www.justin.tv/startupschool/b/298670703 and continues into Part 2: http://www.justin.tv/startupschool/b/298680010 http://www.justin.tv/startupschool/b/298680010
- deleted 15y ago
  [deleted]
gameon87 15y ago
The advice he gave was general, and anyone who has done a startup for a year and learned from their mistakes would be able to give the same advice.
- alexwolfe 15y ago
  The whole point is not having to do it for a year and messing up before learning those things. One of the truly undervalued assets in this world is learning from other people's mistakes instead of having to learn from your own. It can be the difference between winning and losing.
  - PakG1 15y ago
    The problem is that head knowledge and heart knowledge are different. You can take in a ton of knowledge and be able to recite it on call. But for some people, if they don't experience it, they're not able to take the same knowledge to heart. I was in a business simulation competition once during university. At the end, when they were about to announce the winners, one of the judges got up and said, "Business is like sex. If you've never tried it, it doesn't matter how much you read about it, how much you know about it, etc. Until you experience it, you don't really understand it for real." It made for a laugh afterwards, because some people weren't happy with how he had judged their teams. I guess it's because most people are not good at managing their own psychology, ala this post: http://bhorowitz.com/2011/04/01/what%E2%80%99s-the-most-difficult-ceo-skill-managing-your-own-psychology/ http://bhorowitz.com/2011/04/01/what%E2%80%99s-the-most-diff... Head knowledge is hard to remember when you're in the fire. Heart knowledge is instinctual.

gameon87 15y ago

I think its ironic and hilarious that Ashton Kutcher preaches startups should solve a problem, and not jump to goal of being a billion dollar company, and then he invests in Likealittle, the company lambasted here http://techcrunch.com/2011/03/13/the-city-by-the-meh-thoughts-on-falling-out-of-love-with-the-valley http://techcrunch.com/2011/03/13/the-city-by-the-meh-thought... Likealittle, with zero revenue model, exemplifies what everyone is complaining about.

andrewpbrett 15y ago
See footnote ;-)
robryan 15y ago
It's a high risk bet, very little chance of seeing any return from that investment but if you have the funds no reason not to mix in a few high risk bets you feel are capable of paying off.
- count 15y ago
  Or maybe it's a friend or family member?
arihelgason 15y ago
That judgement looks like it's based on a very brief conversation with one of the founders. Carr seems to dislike his attitude more than anything. Hardly a convincing condemnation of what Likealittle are doing.
crystalis 15y ago
If there aren't enough startups solving problems, there's room in the portfolio for a few "$BCs".

Hrothgar15 15y ago

Make things. (Hat tip Caterina Fake.) And if those things need a company as a vehicle, make that, too.

andrewpbrett 15y ago
I really like that, thanks. It would have fit well, and I remember reading that post, so I'm a little disappointed I didn't weave it in somehow.
alexwolfe 15y ago
Way to sum it up. "Make Things" is a good mantra, that's the fun part anyway. Pretty sure financials, legal work, and HR are not the exciting part of any endeavor :)

dlikhten 15y ago

I have a better question: Imagine you have at least 15 competitors. Some of whom have been around for years. All of whom have more money than you, and same amount of reach (no... more than you). However you think they all suck and you can do better. Why? If you can answer the why, you have a solid idea. That why is what everyone is looking for. Side note: When joining a startup you ask that question. Basically think Google. Google was the first search engine to make search fast and accurate. They had probably 10 competitors, 1 of which, yahoo, was thought to be immovable.

timr 15y ago
"Imagine you have at least 15 competitors. Some of whom have been around for years. All of whom have more money than you, and same amount of reach (no... more than you). However you think they all suck and you can do better. Why? If you can answer the why, you have a solid idea. That why is what everyone is looking for." You know what's funny about that, though? Larry and Sergey wouldn't have had a great answer for that question when they started. They had a relatively primitive technology demo, and were taking on massive competitors with deep pockets (hell, even they tried to sell the idea before they gave in and started Google). There's absolutely no reason that one of the major search companies couldn't have focused their resources on search, come up with something similar to PageRank, and smothered Google in the crib. They just didn't. Oops. Frequently, the correct answer to your question is: "our competitors are bureaucratic and slow, and while our approach could be replicated by any good, two-person team, history suggests that won't happen"...but that always seems to be the hardest answer to sell. Everyone is looking for the deterministic solution to the problem of innovation, when the solution is actually stochastic.
- stellar678 15y ago
  I think this might be because it's only with the hindsight of having access to good-quality search that we see how important search was going to become. If you're solving a problem that your stronger competitors could be solving, and everyone knows that it's a valuable problem that needs to be solved, they'll probably squash you. Or be willing to buy when you offer up your solution.

nl 15y ago

<RANT> Why can't Justin.TV fix their platform so that people can find the videos? Every single time there is a startup school thread on HN, there is a sub thread of Justin.TV urls passed around like dodgy bittorrent urls. Surely the platform should support this? The titles on the URLs make it even worse: "Broadcasting LIVE on Justin.tv" - hours & days after it isn't being broadcast, isn't live and is only on Justin.TV because they happened to record it. </RANT>

nl 15y ago
Judging by the upvotes on that, I'm not the only one who has that problem. I'm pretty ambivalent about the public display of votes on HN, but it might be useful for the Justin.TV people to know how many people agreed with my complaint.
colonelxc 15y ago
I agree with you, though I think that a big reason they haven't done that is that the streamers who use justin.tv the most don't actually demand that feature (though they probably wouldn't mind it either). I don't have any hard stats, but I think that a majority of justin.tv's traffic is gaming related. In my observations, a single gamer can produce hours of content a day, most days of a week. For these types of streamers, it is more of the exception than the rule that someone will go back to watch the stream. In the case that there is an interesting game that people want to link to or whatnot, they do end up passing around crazy urls and mentioning time offsets. If it is a really popular thing, someone will rip it off of the site and post it to youtube. One commonality that I see (at least for the partnered streamers) is that in between games, they will run a commercial (they have the ability to choose when commercials happen). That would be a natural point to split the video on justin.tv's side, and then you could at least directly link to a particular game. Giving the ability for streamers to title a video after it is completed would help discoverability as well.
mark_l_watson 15y ago
I had never used justin.tv before but I just tried searching their site for "startup school" and got a lot of hits, but not for the latest talks.

deleted 15y ago

[deleted]

alexhaefner 15y ago

I read about whether or not to start a startup on hacker news often. In these discussions there's always the 'startups fail', 'billion dollar company'. I can say 2 things about these two things. For myself, failure is quite okay. I spent the entire weekend at a hackathon where I failed to have anything to demo. My teammate and i were the only ones there to fail to have a demo. I had had success at other hackathons so this hurt. Ultimately it doesn't scare me though, as I'll explain later. And on the billion dollar company, I have to say I can't relate. My friend and I come from middle class (blue collar working town middle class) families, so we've never had much money and we don't really chase it. So for us, it's not about the money, it's always been about building great things that we want for ourselves. And with each failure and each success, we learn more, and what we make becomes better and better from our learning. I like the idea of failure because it's only ever made the things that I make better, and helped me to be sure that I am doing what I love. Ultimately every time I ready one of these articles, and I realize that I embrace failure as an opportunity, and see money as a distraction, i feel more right with myself that we should indeed be starting a startup. Disclaimer: I am a student who has no idea what I'm talking about.

mark_l_watson 15y ago

Great writeup. BTW, I like it when I hear people (usually customers) talk about building a company that they want to run for a long time, wrapping their life around it (and vice-versa).

deleted 15y ago
[deleted]

Gotttzsche 15y ago

what are smart-ish jeans?