New ventures should focus all their efforts on problem-solving
review.chicagobooth.edu
review.chicagobooth.edu
To succeed as a business, you have to do something that others can’t do or won’t do. If you have a tech advantage, you can do stuff that others can’t. If you don’t develop a tech advantage, you have to do stuff others won’t. In these two cases of AirBnB and Uber, it was breaking the law.
I'm not discounting their UX, I'm sure it was a big part of their growth.
What impression?
>> the pedestrian would not have survived with a human driver either.
Car meets pedestrian at speed causes death often. I don't think this is questionable.
>> They crossed the road in pitch black darkness.
The circumstances of the incident were well publicized by the media, and the video released shows this is obvious.
>> The only reason it was news was because it was a self driving car.
All the statistics around pedestrians being injured or killed ... how many of those stories result in reports across the country in most media outlets?
Which part requires citation for you?
You can make what you will of the first point - uber had their reasons for disabling automatic emergency braking (who knows how many times erroneous stops would have caused accidents). The second point is fairly clear, though - the pedestrian in fact had every reason to feel very visible.
[0] https://www.ntsb.gov/news/press-releases/Pages/NR20180524.as...
[1] https://arstechnica.com/cars/2018/03/police-chief-said-uber-...
"the pedestrian was dressed in dark clothing, did not look in the direction of the vehicle until just before impact, and crossed the road in a section not directly illuminated by lighting. The pedestrian was pushing a bicycle that did not have side reflectors and the front and rear reflectors, along with the forward headlamp, were perpendicular to the path of the oncoming vehicle. The pedestrian entered the roadway from a brick median, where signs facing toward the roadway warn pedestrians to use a crosswalk, which is located 360 feet north of the Mill Avenue crash site. The report also notes the pedestrian’s post-accident toxicology test results were positive for methamphetamine and marijuana."
I don't know how you derive that the pedestrian had every reason to feel visible.
The main part of AirBnB's success is that it fixes/fixed an imperfection in the market: In the places with demand, AirBnB took the low priced housing and made it available for short term lets. Yes, long term renters were the beneficiaries of the old model as it gave them a larger and thus cheaper supply of housing, but the real price is the post-AirBnB price. The old model had externalities too, they were just paid by different people like landlords and people who seek short term stays.
From a social point of view, for the long term renters, AirBnB does have an impact but the ways to combat it are similar to other phenomena that drive up rents: simply build more cheap housing. In many places in the world, there is a massive immigration wave of people from the countryside into the cities. China has recognized the problem and built housing. In the west, people are more skeptical and rather prefer the value of their homes to increase instead of people getting cheap rents. In the period after WW2, it was much different, at least in europe. Back then, we built lots of houses, for everyone, poor included.
I am all for putting the interests of long-term residents of a city over short-term tourists.
Most of their business people weren't too good either in terms of leading a company or such things, working at those companies was horrible!
The only thing they were good at was finding people with problems.
It seems to me the only thing that matters.
If you find enough people bothered by something, the will throw money at it like no tomorrow. You can't imagine how much money makes up for bad tech and shitty leadership.
But somehow this is the hardest part for me. Solving problems is one thing, but finding problems worth solving is another discipline.
It's certainly the bulk of the matter. Your average convenience store is nothing special, it's not a remarkable operation, it doesn't have geniuses running it, it has no overly interesting technology, it's not very innovative, it's not inventing the next great thing. It's doing nothing other than meeting a simple need - solving a problem - that its customers have, and frequently that's a boring, uninspiring business. There's definitely nothing wrong with that, the world functions because of tens of millions of uninspiring, boring businesses.
That is your average start-up, too. Tech founders - in my experience and observation - merely like to believe they're special and doing something exceptional versus the typical business. It's almost entirely a false sense of place in the universe, comically inflated ego (and it's why a show like Silicon Valley works so well).
People talk about Silicon Valley like co-founders are using raw genius to solve impossible problems. But the reason untrained twenty year olds can run startups is the problems they're solving ultimately aren't that hard. Building a web application is something people in offices do every day.
Now, once those web applications start scaling up and your core product fundamentally works there are certainly hard problems to be solved, but at that point you can start hiring adults, PhDs and people with deep technical expertise.
Theranos got into such hot water because you can't just jazz-hands your way out of solving deep scientific problems, like you can cover up the fact that your web application barely works (but will totally work in three months).
Dropbox is a good example here - developers were largely perfectly happy with rsync for a decade, but your run of the mill mom wanting to keep her Word documents synced at home and the office doesn't even know what Linux is, let alone how to run a terminal.
If you want to find non-b2b problems that are worth solving and which people will pay you to solve you generally have to step out of the tech bubble, talk to non-tech people at length, and imagine a solution that your mom could use.
I agree though it is hard for developers to find useful problems to solve. I too tend to get distracted from solving real-world problems when I find a technical problem that's interesting enough. There's a whole world of technical complexity which is easy to get lost in, and I start to care less about the real world problems that relate to it.
"Oh man you should make an app/website to do X! God it'd make my life/job so much easier."
"Cool, yeah, great idea"
Then I unlock my phone, check the app store, and yep, there are already 25 complete solutions to this exact problem on just this one platform. Oh but they would totally pay for it and it'll definitely make me rich, never mind they haven't even bothered to google for a solution, which already exists in exactly the same form I'd make it, and is free or cheap. Ok. Toss that one in the ol' round-file.
I'm aware of the ability to out-compete existing solutions on quality and UX and such, but most of the time when this happens, there aren't really any clear pain points in the existing solutions that I'm being told about, the person suggesting it is just totally oblivious to their existence, and they sure appear to do exactly the thing they need.
I do like the affiliate link suggestion from the other poster, haha.
But yes, the opportunity cost is super high. Either way, if you're going to be an entrepreneur you'll figure out a way. https://www8.gsb.columbia.edu/articles/lang-upload/launching...
It doesn't contradict the point of focusing on problem-solving, it just contradicts the click-baity title
In this paper, we present Google, a prototype of a large-scale search engine which makes heavy use of the structure present in hypertext. Google is designed to crawl and index the Web efficiently and produce much more satisfying search results than existing systems. http://infolab.stanford.edu/~backrub/google.html
They were solving a problem - a very common problem in the days when internet content exploded.
Can you hear the creaking sound as cryptocurrency startups shift uneasily in their chairs?
"Forgetting the technology" is dumb. Advances in technology enable novel ways of tackling existing problems. Keeping an eye on technology advances, and raising the question "Which problems can now be solved in better ways?" is an excellent starting point to find problems to center your company on.
The point being that great entrepreneurs can repeatedly find problems to solve and create value from.
For example, the author of this article was a successful entrepreneur in his own right. "Previously, the Chief Executive Officer of The Tie Bar - the #1 e-commerce destination for stylish men's accessories. Prior to The Tie Bar, Alter was a co-founder and President/CEO of SurePayroll, a SaaS technology company that is now a wholly owned subsidiary of Paychex®. Alter co-founded SurePayroll in 2000 after six years with McKinsey and Company, where he was a co-founder and leader of its Service Operations Practice."
The mention of Steve Blank's methodology is interesting. The best work I've seen done on this phenomena of customer-value-driven entrepreneurship is from https://www.effectuation.org/....basically that entrepreneurs start with what they have and the problems they know and go from there.
The counterargument is the Steve Jobs/Mark Zuckerburg argument for having a concrete vision and stopping at nothing to achieve a goal. But let's not forget that Apple started selling the Apple I which was primarily for hobbyists, and the Apple II didn't blow up until spreadsheets came out. Zuck was about to dedicate as many resources to Wirehog as he was to Facebook in the early days. Not to mention YouTube started as a dating site and many more classic examples of entrepreneurs having to figure it out as they go along.
I wonder what Keith Rabois would have to say to this. He has an interesting perspective in that he thinks founders will their companies into existence with clear visions that are often unwavering, and doesn't believe in the "lean" approach to building companies. Interestingly enough, Khosla where Keith worked earlier is the namesake of Vinod Khosla who does like the Effectual model of entrepreneurship (which is basically "lean" customer development based entrepreneurship). Another interesting thing to note is that most academic research into the age-old management question of what makes a good entrepreneur has far more to do with an individual's unique approach and perspective in the world, than it has to do with technology. Very few researchers are looking into "technology driven entrepreneurship" as much as they are personality, disposition, persuasion techniques, idea generation techniques, macroeconomic factors. This might change, but if anything when researchers look at entrepreneurial skill, technology skills are not the main focus. Again, this may be changing.
Personally, I think the only type of entrepreneurship that makes sense is very bottoms up. Look at the U-Haul story. The founder of that company simply did things none of his competitors would do because they thought it too risky.
About a decade later that same CEO was writing a check to them for $100M+.
They didn't even know how to design the algorithm for calculating payroll. They put the site up and had some elderly ladies who loved doing payroll calculate everything by hand and then send it back to a user within 24 hours. This went on for two months until they had figured out the algorithm.
When I wanted to blog, I signed up at a blogging platform and wrote stuff. People started to read it and I got a book deal and some dev-rel jobs.
It just took me a few hours a week and I could start right away.
How do you start discovering problems of people that are worth solving?
If you are a Tech startup, do not forget the technology.
At Qbix.com we took the exact opposite approach. We are just in the Web / social networks apps space. But we reinvested half our revenues in new technology, for years, since 2011. Tortoise, not hare. Now we have superpowers. We can build anything, quickly, and we don’t need venture capital.
On the other hand, we have heard no from like 20 VCs over the years. We had 7 million downloads now, $1M in revenues but we were still “too early” ;-)
In the last few years we made pretty “altruistic” or “anti-capitalistic” moves. We open-sourced it (https://github.com/Qbix) and are exploring alternative financing to VC (ie actual paying clients worldwide). We are trying to build a micropayment network (https://qbix.com/token) that helps everyone, not just us.
So basically it seems totally backwards from the current VC model but is actually compatible with it. I remember being inspired partly by DHH from Basecamp, and others. Remember — this is your startup. Do you want to change the world? Innovate!
Of course, I am happy to learn why this is not welcome on Hacker News. Someone already down voted this particular comment. I am not opposed to getting more information, but a silent down vote doesn’t tell me very much.
A startup that has actual early revenues, has been around for years with millions of people using its apps and doesn’t need VC to survive is called derisively a “lifestyle business”.
You’re right, most VCs wouldn’t invest in such a startup. But if I spin off a “hot” NEW company with a cofounder growing 10% week over week with zero friction (no revenues) then the hockey stick looks attractive even with tens of thousands of people and a series of rounds can be closed before any revenue is made.
Why is having revenues and years spent developing in-house code less likely to produce exponential growth and a unicorn? Why is that worse than two college dropouts who cobbled together a solution and went viral for a while, such as Lantern or Shyo or Videology? Or a viral sensation flash in the pan like Down to Lunch? I have never heard it articulated well.
At any rate, we have a factory for making VC-attractive companies, if we wanted to go that route. Companies that do one thing, grow the userbase exponentially with no revenues, etc.
As for the numbers... yes we did spend most of our revenues on development. The team is in Russia and Ukraine, I live in NYC.
To answer your original question... we put out apps that have generated $600K very little upkeep, from 7 million downloads. We got additional money revenues and from angel investors. The platform is all about reusability — money spent on it is money spent on our projects and core business. But we open sourced it also. Just like Basecamp open sourced Ruby on Rails, or Fabien open sourced symfony etc back in the day. Just because we give it away doesn’t mean it improving it isn’t directly tied to our core business.
The entire VC business model only works if they invest in companies with high risk/high growth prospects and the potential to be unicorns. To answer your question, the answer is statistics - VCs have a large history to draw from and have seen that viral companies and flash in the pan businesses either grow to massive exits or fail completely in a short time far more often than businesses like yours. On average, businesses like yours will continue a slow growth trajectory and have mediocre exits, if any exit happens at all, after the expected fund payout period has already passed. Basically, it's a drag on the fund portfolio and time/resources of the VC, so they won't invest - it's better that a company fail quickly while trying for unicorn status than it is that it chug along in sustainable small business mode for a decade.
On the flip side, there is an entire industry of funding available to you that isn't available to startups with awful financials - banks love to loan money to small, sustainable businesses with decent profitability. If you need growth cash, get a small business loan.
Also, a PE shop would likely provide some sort of advisory support. Which, even if it is minimal, can have immense value for you.