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mooreds

This is a sobering look at what it takes to build a business vs a product (vs, even smaller scale, a feature).

You have to be willing to put in the long hours (err, years) and the schlepping to do all the business-y stuff:

* distribution

* monetization

* back end systems for admin users

* sales channels

etc, etc

Or, you can cash out and assimilate, err integrate, with a larger company that has done that hard work and lose control of your destiny. That's OK, most of us don't have full control of our destiny, and building product can be more fun. It's just a choice you should make with your eyes wide open.

I will say that I think he dismisses Snapchat's founders too quickly. Yes, they've been struggling, but they are trying to build a business rather than just integrate with an existing conglomerate.

It will be very interesting to see if Systrom et al can build another product, and if so, if they will try to build a business as well.

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I am a daily reader of Stratechery. It's a very "MBA" publication: the emphasis is always on strategy, distribution channels, markets, sales and marketing, etc.

It's a soberingly different worldview than product-obsessed, hacker/maker/developer-centric worldview you get on HN a lot of the time. HN definitely skews toward the entrepreneurial/business end of software, but there's still a real emphasis on building great products, talking to users, and faith in the idea that in the long term, the best product will win. Whereas the Stratechery worldview is more like, "figure out sales and do enough of that engineering mumbo-jumbo, and everything will fall into place". I think there's more truth to this than is commonly acknowledged on HN. Eng/product isn't always the center of the damned universe.

I find both views important. I think the best products do tend to win. But reading stratechery has also given me an appreciation for the difficulties inherent in fighting an entrenched competitor, and bootstrapping distribution (how customers discover/use/buy something) from scratch.

On the other hand, Ben (stratechery author) says almost daily, "It's not the technology that matters, it's the strategy". I don't think that's right. A big talking point that comes up over and over with Instagram was how well-built the app was. There was genuine craftsmanship in terms of usability, performance, and a lot of other things that made it a joy to use. That matters.

Ben also said in today's update that the "relative importance decreases over time as things like network effects and business models come to bear". This is another way of putting Marc Andreesen and Steven Sinofski's point that if you have product / market fit, then you can do almost everything wrong and it won't matter. I think Ben gets that the tech and product are the only thing that matters pre-PMF, but post-PMF, all the grungy business stuff becomes the high order bit in order to build a business.

I think I'd simplify even further, and say this this way:

If you assume a startup has the technology, as it's nothing without it, then by definition the differentiated recognition of business potential will be achieved through business performance, not technology.

IOW, you've got nothing without the tech, but you don't have a successful business if all you have is the tech.

"Necessary but not sufficient."

Yeah it was funny, I wrote this after reading about half of the update and saw that quote after the fact, which almost perfectly articulates what I said here (albeit better than me, as is most of his writing)

Very interesting perspective and glad you tied together the disparate lines of thinking. Merit in product is, unfortunately, a variable not predictive of success. The strategy component is critical - that is a beautiful, great product that is solving a non-existent problem is probably doomed. There's no path to riches designing the best roller skate wheel marketplace platform, but even a poorly designed gambling tool could probably find a way to profitability.

The only thing I think is outside both of these elements - product quality and viable strategy - is the component of luck be it right place, right time, or catching an unforeseen wave of buzz. The most well known success stories typically owe a non-insignificant amount of debt to good fortune out of the control of the product or strategy. It's a real elephant in the room and it's difficult for ego to acknowledge either in success or failure, but it's real.

I agree 100%.

Another point: we're actually talking about strategy (Stratechery/MBA worldview) vs. operations (build the best product, do things well -- HN view). This is a well-worn argument in business circles and it's funny to see it manifest here under a different name. http://www.davidralbrecht.com/notes/2018/09/strategy.html

Hackers are operators :)

I get the sense that strategy vs. operations matters differently depending on the characteristics of the business. I don't really have a coherent articulation of this point yet. It might change over time (something Ben suggests in today's post), or perhaps based on industry maturity or type of product, or market concentration. But it feels like something where people are arguing and are both right, because their arguments are insufficiently qualified/scoped (X is true vs. X is true when Y, Z are true).

Hackers are not operators, in the context of hn at least.

If there's anything you see every day on HN, it's people relentlessly arguing about "building what people want", and "solving problems". One of (the?) most popular HN member, patio11, got a lot of this massive amount of karma because he gives a pragmatic and clear view of generating sustainable revenue in business. This is what the HN crowd likes.

The old fairy tale of hackers only focusing of products and ignoring strategy is long gone, and most people here know this.

It's not necessary to differentiate hackers and strategy people.

Also a daily subscriber to Stratechery. Ben (Zuck?) under-indexes on the feeling of good will associated with a good product experience. But I agree that we over-index on it here on HN. IG won on speed, usability and UX over early competitors like Hipstamiatic and Flickr. But for sure the network was the addictive glue that brought users back, new users in and made the entire product grow. FB feels like the opposite experience to me - crappy product decisions, bloated UX, bad will. My best guess is FB pushed IGTV on Mike and Kevin. They did their best to implement it, but it feels tacked on, like a FB feature, and it became clear that more and more feature pressure was going to be put on the product until it too became bloated and incomprehensible. I don't think Ben sees this, but the poor product choices (in deference to business and strategy) will pile up and the vein will collapse, just as it is starting to do in FB's main product. IG had a good run, it's hard to imagine a future where it gets better from here.

An example of how little UX can matter:

Facebook ran an experiment where they intentionally crashed their Android app to discover the threshold at which users would give up and go away. But someone familiar with the experiment said: “The company wasn’t able to reach the threshold. People never stopped coming back”.

https://www.theguardian.com/technology/2016/jan/05/facebook-...

Isn't that sort of contradictory? The rest of the UX is so great that people want to use it despite the crashing.

That's when you know you're peddling a powerful drug, eh product I mean. & simply right there that's Facebook's moat. I don't use FB, but gotta give to them anywhere I peek at someone's smartphone in public spaces, they're using a FB product e.g FB, Whatsapp or Instagram. Hell, right now FB pays my rent, cause of the tools I make at work that integrate with FB

It's funny you call out FB for having a bloated product. Early in its history Facebook was the restrained option vs Myspace, Friendster, etc. The fact that you couldn't add custom CSS, sparkly unicorn gifs, and auto playing music was a major differentiator from the other personal homepage / social networks of the early 2000s. In a similar way, Instagram was very restrained compared to the other photo apps of the time. No albums, no video, no stickers.

I think this is a classic case of the Innovator's Dilemma: you start by making something worse than existing products on the market but that completely address the features your customers care about most. Eventually your customers demand more features and you have to turn a profit, so the product gets bloated and the p90 experience suffers.

I'm not sure he totally underindexes on experience. He was long Apple at a time it was very common to think that Android + OEMs would soon be "good enough" and thus price would be only factor and Apple would suffer. He recognized the importance of user experience and that "feeling of good will" more than most industry analysts.

> FB feels like the opposite experience to me - crappy product decisions, bloated UX, bad will.

Which almost feels ironic given that they tend to hire some of the best designers around the world.

> "It's not the technology that matters, it's the strategy". I don't think that's right. A big talking point that comes up over and over with Instagram was how well-built the app was.

Yet that wouldn't have mattered if they hadn't pivoted from a location based app to photo sharing. Technology/product matters to get your foot in the door, but it's strategy/execution what ultimately makes it or breaks it.

But strategy/execution are not orthogonal to technology/product. Strategy is about which buckets are important (product, tech, sales, marketing, etc), and execution is about filling those buckets with the right people. Technology/product may matter a lot or not at all at any point in the lifecycle depending on the strategy.

That was a product decision, not a business decision. They did what is preached by HN - they built something people wanted, then listened to them when their users told them they didn't care about the rest of it.

> I think the best products do tend to win.

Ah, you optimist, you! :)

I think that if you expand the definition of product to include sales and marketing, the answer is yes.

But if you don't, the world is littered with great products that lost to better competition: betamax to vhs, apple to windows.

Though I can't think of any modern examples, so maybe the world has changed.

information dissemination with the internet is drastically better than when MacOS lost to Windows, or when Betamax lost to VHS. Nowhere is this more apparent than in cars, where manufacturers are held accountable by numbers, reviews, and even interior design decisions that might have been ignored 20 years ago when a magazine wouldn't spend the pages to complain in detail about why you shouldn't have highly reflective chrome trim on the dashboard.

I think good, differentiated products have a better chance now than ever, but the differentiation is where things fall flat. Barriers to entry are lower across the board, but having differentiation is the key to funding/pipeline, which is the key to scaling.

I generally agree with this, but it really depends on the consumer not being lazy. We all have the friend that scours the forums, but 10x more friends that just buy the highest rated item on Amazon.

Even the ratings on Amazon are more than a single article/ad in reader's digest, or just hearing about it from a friend.

I think some of these businessy folk see real-world examples of boring enterprise-y companies that most developers aren't passionate about as proof that it really is about sales. And I also think that's how you end up with completely tone deaf business-folk based startups like Juicero.

The incumbent/legacy/first mover advantage is the one thing in tech that allows you to overcome better competition. Yes, as a mature company with a large integrated software suite, sales are extremely important. This does not apply to early stage companies.

> there's still a real emphasis on building great products, talking to users, and faith in the idea that in the long term, the best product will win

There is a gap in "the best product will win". Where is the revenue come from?

    > "It's not the technology that matters, 
    > it's the strategy"

Gross. That's the kind of meaningless ass-covering thing consultants like to say. It's a great claim because nobody can falsify it: "See, you don't get it! The increased clock-speed was part of their over-all strategy!"

Can you think of any examples where great technology or product compensated for bad strategy? I can't. But I can think of MANY examples of where great strategy compensated for bad technology or product.

    > I can think of MANY examples of where great 
    > strategy compensated for bad technology

Well, there's never a compelling argument that someone had a bad strategy once their product is a financial "success." They may have simply won a lottery, by the argument won't sound convincing.

Another thing that bothers me is: if you're making a shitty project, what is the point? You become what you do. If your project is bullshit, and you're spending all day strategizing, you'll wind up attracting idiots as customers, and scumbags as employees. Why bother... easier to go into banking or something.

> if you're making a shitty project, what is the point? You become what you do

This is silly hubris. Facebook seemed like a "shitty" project before it was a multi-national conglomerate.

> idiots as customers, and scumbags as employees

Everyone deserve a chance to earn a living. Your opinion of the worthiness of a project doesn't really factor much into peoples considerations.

    > Facebook seemed like a "shitty" project 
    > before it was a multi-national conglomerate.

Facebook is a shitty project. What Zuckerberg gained in the short term he is paying for now: he will spend the next decade of his life dodging tomatoes as Facebook craters.

And honestly, that might be worth it for him. He'll also be extremely wealthy. My argument isn't so much that "it's not strategy that matters" instead of "it's not technology that matters" but rather that making pronouncements like that is bullshit.

Apple comes to mind. Using Ben's logic, Tim Cook's Apple is superior to Steve Job's Apple. The new Apple cares more about strategy and more MBAs work there. The new Apple has made more money. But at the end of the day, for a lot of people, it was more rewarding to work at SJ's Apple. And SJ's Apple still did plenty well financially.

    > Everyone deserve a chance to earn a living. Your
    > opinion of the worthiness of a project doesn't really
    > factor much into peoples considerations.

No, but my opinion exists in the world, as do many other opinions: Ben's personal preferences do not suit everyone. What his maxim assumes is that the only metric for "success" is his. I think for many people, it is better to do work of which one is proud. Not all people, but enough that Ben's advice is BS. For people like me, it's like saying "making 2x more money from your business, and wind up 10x less satisfied with your work."

> Facebook is a shitty project.

Hard to take you take this seriously with a comment like that. It's a technical marvel what they've accomplished and at the scale they've been able to take it. I'm not a fan myself, but I'm not going to crap on what they've pulled off because I don't like the service.

I don't even know what we are discussing at this point. As far as I can see, it would be a debate over various meanings of the word "shitty." If we brought it back to something tangible, I doubt we've even have any real disagreement. I don't like just bickering with people on the internet for its own sake. Cheers

No product controls it's own destiny.

You initially lead with a use case, but end up following how people actually use your product, or competitive products, and iterate on them in order to retain and attract users.

--------------

The broader point here though is that, at least with consumer software, you will not be able to compete with Google AND Facebook AND Snap AND Amazon in any category.

Maybe your product can beat Google+ at social networking, you won't beat Facebook and they'll either buy you or siphon your users. You might be able to build a better enterprise messaging system than LinkedIn but Microsoft will bleed you dry with a better enterprise sales team.

Even new categories that are subsets of broad categories eg. Social/Ephemeral Messages have no chance of surviving, as they are features to existing products that have BN of users.

So the best chance you have as a software startup to compete is to sell to the Cartel (Facebook, Google, Apple, Amazon, Microsoft), and hope that you're given enough lattitude to see the product that you're ruddering play out as long as possible.

>I will say that I think he dismisses Snapchat's founders too quickly. Yes, they've been struggling, but they are trying to build a business rather than just integrate with an existing conglomerate.

From yesterday: https://techcrunch.com/2018/09/24/snapchat-amazon-visual-sea...

I am aware this is not the same as acquisition or total assimilation, but I think it speaks directly to your comments about how Snapchat is trying to create it's business side of things.

Is there any good book/resources covering some of or all the 'business-y stuff' that people recommend?

The Innovator's Dilemma would be my first choice. There's 30 more that would be worth reading after that, but that will change your view of the industry.

Instagram was huge even before Facebook took over. It has gone from strength to strength in the 6 years since but I'm pretty sure that would've been the case without Facebook's involvement (see also: Twitter and Snapchat).

You seem to be doing the founders and the team behind Instagram a huge disservice here by accusing them of not being willing to put in the work and riding on Facebook's coattails.

They definitely did a huge amount of work. But did they have a business model before they sold? I don't know, but the author states that they didn't.

I don't think it is a disservice to say that being acquired and integrated into a larger company means you don't have to focus as much on the business schlep. I think that is the truth.

His comment is merely a summary of the article.

Just as a thought experiment, do you think without FB the Instagram team would have copied and integrated their version of Snapchat stories to hold the (at the time) rapidly growing Snapchat threat to their business?

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