How I Created a $350M Software Company Knowing Nothing About Software
techcrunch.com
techcrunch.com
1. Want to make a lot of money? Find an out-dated system where grunt labor is worth a lot less than the technology the grunt labor uses, and target this gap mercilessly (call centers)
2. Act like every other shady, fly-by-night, asshole salesman and cold call people without a real product until some sucker from Provo, Utah cuts you a check ($40,000 should be a good amount)
3. Aim to arbitrage a stale technology like long-distance phone calls before any of the competition, pretend getting lucky in such an opportunity is a validation of tenacity ("blieve in yourself" is trite because it's trite)
>Believe that even if you do something stupid like quit your job without a clue, somehow you’re going to figure it out.
...or, you can study up on something called "survivorship bias" and realize most of the "wisdom" in the article is utterly useless.
Regarding your last point: nothing is a sure thing. Of course survivorship bias is a thing. Of course believing in yourself/ability to figure stuff out isn't a sufficient condition for success. But, maybe it's just a necessary one?
On the last point: Of course nothing is a sure thing, and not once has success come from "believing in yourself" trumped "talent and hard work" without straight up dumb luck. Whether starting a business, playing the lottery, or testing gravity by way of jumping off a large building, I think "believing in yourself" is flat out useless. Or, in a different way of phrasing it, "believing in yourself" is about as fundamental to entrepeneurship as waking up and getting out of bed - of course it's necessary, but that doesn't make the "you can do it too!" framing any less vapid.
It wasn't dumb luck or short cuts, it was smartly planned strategy. It was Agile if you want to get cute with it.
Perhaps the guy from Provo Utah, instead of being a sucker, really wanted to see something new and better succeed? Just because he paid for something before it was ready doesn't mean he didn't know what he was doing.
Finding such a system would require you to have some experience with it, knowing the current problems, and then build a solution for it. This is the case in the article. Which is not easy I'm guessing, at least as a developer.
I guess what the framing of the story reminded me of would be somebody looking at the modern shovel, used to dig ditches, and "invents" a new version that reduces the physical strain on the user just enough to get the US Department of Labor to change the mandatory break and lunch times mandated for manual labor, and realizing savings or additional profit through that channel.
I mean, sure, inventing new systems and devices is a really worthwhile avenue, no dispute here! This particular story though, it doesn't quite sit well. Maybe it's from years working as a wage slave and feeling a little bit exploited, but I think there's some implications worth considering outright.
There's loads of companies based on solving the problems developers face in their day-to-day. AWS, Heroku, New Relic....
> ...or, you can study up on something called "survivorship bias" and realize most of the "wisdom" in the article is utterly useless.
Maybe there's a correlation between people who believe that and those who make it long enough to have internet guys say their success is survivorship bias.
I'm just playing devil's advocate here. I'm an ex-poker-professional who's well aware that survivorship bias is a thing.
So true...I was thinking more along the lines of "How I Created A $200 Million Retirement Account By Buying the Right Powerball Lottery Ticket" but I like yours as well.
Just his ability to cold call so many people and secure a $40k angel investment over the phone shows he is miles above most when it comes to dedication and drive.
My point was..even with all that, it's still a total crapshoot to strike 9-digit gold.
The incumbents in the field won't want to drop their prices by an order of magnitude, even if the technology allows it. Especially if they have an expensive in-house sales force. This is a huge advantage for a startup.
This happened to copiers, computer printers, personal computers, graphics cards, word processing software, CAD software, point of sale software, encyclopedias... Up next, hearing aids.
Hearing aids might fall into this category, but unlike the others on your list you need to deal with the FDA. The FDA should really be called the IPA - Incumbent Protection Agency.
Compact in-ear selective audio filtering. For example, block all noises except human voice.
Or a simple noise attenuation mode that can be controlled from a smartphone.
the Theranos story i think clearly shows one more time why such protection from "disruptors" is necessary. Unfortunately we still don't know how to do it more efficiently though.
My personal favorite here is FAA - who basically stalled to the complete halt the aircraft development for the last half of century, yet even here i understand the rationale behind it.
I took so many pointless medications over the years. When I was younger, I just figured if the drug/devise was FDA approved; it must be efficient? I was wrong!
There are also huge classes of drugs that are obviously effective and beneficial (pain killers/nsaids, antihistamines, blood pressure medications, antibiotics,).
If the FDA was less strict then drug companies would develop drugs that actually worked, but also had side effects (basically we would tip the balance back in favor of effectiveness over safety). While it would always be ideal to have a drug that worked perfectly without side effects, it is always better to have a drug that works than one that doesn’t. You can always choose to not take a drug because of the side effects, but if the drug is not sold then you don’t have a choice.
I can appreciate what the FDA does, but sometimes there comes a point where it is preferable to provide warning and education to consumers but let them choose which product they wish to use.
You would also want to never plan to travel to the USA ever again - the penalties for ignoring the FDA are not minor.
Which implies the FDA doesn't ban them. If the quality of $25 aids is not good that's another issue.
TI graphing calculators for high school students?
Lots of students already use Wolfram for graphing, the problem is use in proctored environments.
>And I had the good fortune of Tooter, The Machine and my former boss eventually rallying around my vision with their considerable super powers. To this day, I’m so thankful for each of them.
So in this particular instance, he's much more akin to a record producer creating a hit by lifting samples from other artists and then rapping about himself over the track. You might see it differently, that's fine. I just don't buy the self-directed, "Look what I made" narrative being put forward as fundamental here. Oh sure, it's his "vision" and all, but vision without talent and skill is just daydreaming. So he got some real people do to the hard part, that's a great "leadership" example I suppose.
Only in this case, it was an employee of the same company. His job as the CEO was to get the best out of his employees. He succeeded in doing that. I think that deserves appreciation.
[0] https://en.wikipedia.org/wiki/Bitter_Sweet_Symphony [1] https://en.wikipedia.org/wiki/Ice_Ice_Baby [2] https://en.wikipedia.org/wiki/U_Can%27t_Touch_This
edit: Just looked at iHear. I'm skeptical: There's a reason pretty much all hearing aid researchers advocate outside-of-ear hearing aids. But I didn't look into it much so maybe there's something I missed.
I imagine I have to leave the house and talk to people but where do I go? To whom do I speak?
I figure as much. But how do I find them?
This is how I moved to SF. Talked about doing a startup with friends. Move out there and they'd all rather smoke weed and get drunk than work on our project.
Happens in every facet of life as well. People talk about going to Europe, but never go. Talk about getting in shape, but never exercise, etc.
Dreams are great, but if you act on them you might fail. Or it might actually take some thing to accomplish those dreams. Sad that more people don't follow through.
[1] https://www.youtube.com/watch?v=0sHCQWjTrJ8 (contains cursing)
Are you reading my mind?
I started a lot of projects that never took off because I wanted to use the best tools and in the best way possible.
Projects shmojects, the knowledge of these tools serves me to this day.
Is Five9's product the best in call centers? No, but it's about an order of magnitude cheaper than the top product and works most of the time.
LIMS - Laboratory Information Management Systems.
Here's the deal. Most manufacturing companies (think Big Pharma, Petrochemical, Chemical, Widget manufacturing, anything really) measure quality. Those quality measurements are probably done in a laboratory. Every laboratory generates data. All that data needs to be managed well so that the laboratory can maintain its accredidation.
Basically, LIMS systems manage samples and lab result data. In addition, they probably integrate with Instruments and instrument software to automate some of that data entry. Other industries besides manufacturing are Govt (waste and wastewater treatment labs), Third-party labs (labs that do testing for other companies), Healthcare (clinical labs), Forensic Labs, and more.
Bottom line, there are tons of laboratories and they all need to manage their data. The players in this space are downright stuck in the last decade. There is so much opportunity here for a few new players.
Let me know if you want to check it out.
http://www.limswiki.org/index.php/LIMS_feature
and here is a GREAT guide on Lab Information Management from an ISO point of view:
https://www.unido.org/fileadmin/user_media/Publications/Pub_...
For example, why don't they change the Air conditioner in the building? Or the coffee machine? Well, maybe because it really does not make a difference which one you get. It's still just fine.
So the issue is not replacing Windows XP with Linux or whatever or a better UI in Angular or [your favorite framework]. It is coming up with a better business process. But if the processes are restricted by regulation, then by definition then the process cannot change too fast in LIMS and other similar industries. Therefore, why replace Windows XP?
However, what about "doing better Lab-ing"? Whatever that means. What about better Marketing for Labs? What about better analytics to track folks who should be getting their next labs but won't because they forgot to go to the doctor? What about helping these Labs with problems I cannot seem to comprehend because I am not in the Lab industry?
Seems the issue is not in LIMS itself (the clinical aspects), but on what is around the problem of doing the business of Labs.
Great story about a successful business that gained tremendous value based on domain knowledge and grit. But you can't say you knew nothing about software.
Not an original strategy.
...and for everyone one of these success stories, there are probably 8, 10...12 or more stories of people who totally failed and ended up with $200k in debt still paying it off from failed startups.
There's a side not talking about on Hacker News and it needs to be.
>You just have to believe in yourself against all reasonable logic, as trite as that sounds.
"I’ve always wanted to make a lot of money, have people pay a lot of attention to me and do a lot of exciting things. I just never knew how."
1. Find great people to believe in your vision. Without the two amazing coders to help him, he wouldn't have made much headway in the project at the beginning. To be able to convince brilliant developers to quit their job, sell their house, and move across the country takes an incredible visionary to convince such a skeptical demographic as the brilliant developer.
2. Get people to buy the thing you want to sell before you make it. He had $150,000 from a wealthy financier before he had a product to show for it. To be able to secure capital and then worry about delivering on it is a much more tenable problem to solve than trying to build a business without some sort of capital to live off of while you develop it.
(And by "hazy problem" here I basically mean that Theranos is pursuing something that sounds like a problem (medical testing) but is actually a large number of only somewhat related problems. For me, going after a known problem would have been picking one test, or a small number of them and then nailing that before expanding to adjacent problems.)
> Then I called him back and asked him, as calmly as I could, if he knew of anyone else at his newly acquired startup that might want to create a software company with me. I reminded him that I was good at selling shit. He introduced me to “Tooter,” who, it turned out, was heading my way to go snowboarding in Tahoe.
Edit: Ok now that I've read it I can say I judged it fairly. Survivorship bias to the max... This guy got lucky and the article doesn't really touch on anything he did that you wouldn't already expect...
Inspiring and really like this. Sometimes, you just need that one person to believe in you if you don't have the means...
That day-trader didn't want to revolutionize call-centers, he wanted a fucking jet. As the business owner, recognize where his goals (getting rich) and yours (getting funding to grow the business) converge.
He could have sold all his shares before the IPO, but thought it was weird.
[1] https://www.sec.gov/Archives/edgar/data/1288847/000119312514...
The "believe in yourself" part is to help with point c.
Far as lessons learned, I agree with 6stringmerc on targeting anything where tools are overpriced and investing in aggressive, skilled salespeople. These are proven practices. The first can be tricky, though, because it's often other factors that keep that tech there. Resistance to change, preferrence to deal with mature businesses, integration with horrible stuff (eg mainframe stack), and so on. Not always the case but it can kill startups when it is. Healthcare systems are a good example as many HN posts show.
Wouldn't a more correct article title be "How I created a $10M Software Company..."? The $350M was after he left.
What's the equivalent of a clickbait headline when it's in the article?
Can someone please clarify why 3 and 2 connections are needed in each case?