Hacker News Reader

Comment by cperciva | Hacker News Reader

I think PG describes the distinction quite well:

To be a startup, a company has to be a product business, not a service business. By which I mean not that it has to make something physical, but that it has to have one thing it sells to many people, rather than doing custom work for individual clients. Custom work doesn't scale. To be a startup you need to be the band that sells a million copies of a song, not the band that makes money by playing at individual weddings and bar mitzvahs. -- http://www.paulgraham.com/startupfunding.html

View on HN

I understand the distinction, but bands haven't turned out to be the best analogy. Thanks to P2P, etc, most bands now make little from CD sales, and have to pin their hopes on touring and merchandising - things that look a lot like "playing individual weddings and bar mitzvahs." And there was always the Grateful Dead, and Phish, The Black Crowes, etc, etc, which build a loyal following through their concerts, and encourage taping, thus in essence giving away millions of copies of their songs in order to promote their concerts and merchandise.

Likewise, for startups, the distinction isn't always that cut and dry. If you're an Oracle or a Salesforce.com (both of which were once startups) you probably had to do customization for every one of your first n clients in order to make the sale.

I think there are obviously businesses that let you scale easily, and ones that don't, and the quote above is a good starting point, but it's not a 100% clear line. And often what looks like a scalable business turns out not to be so, and vice-versa.

I think you may have missed the point. Playing a wedding or bar mitzvah is custom work on contract with a single client who to some extent directly dictates your set list, etc. Playing a giant stadium concert is you putting out your product and thousands of individuals autonomously buying in.

I'm just trying to muddy the point. Most of those bands playing giant stadium concerts started out playing maybe not bar mitzvahs, but small clubs, and doing cover songs. The distinction between products and services is not as clearcut as pg describes.

yeah, look at starbucks - they offer a service, but they've standardized the experience and packaged it into a product. I think the key is replication, not service.

Reply on news.ycombinator.com