Every great company has been built the same way: bit by bit | Hacker News Reader

Every great company has been built the same way: bit by bit

fastcompany.com

32 pointstannerc10 comments

Joel Spolsky has an essay on fast vs. slow. It's thirteen years old at this point, but still worth a read, I'd say.

The takeaway of it is: Fast vs. slow isn't an absolute thing. It's about what your market is, and what kind of culture you want your company to have. You can be successful either way.

http://www.joelonsoftware.com/articles/fog0000000056.html

TL;DR: "The new fast company isn't fast at all. It's gradual, slow, measured, and organized. It's making small bets. Which, it turns out, is the fastest way of all to get back to where you want to be."

As I work on building my startup it is great to have this reminder, it is about calculated actions that over time become more efficient. I have been working on celebrating the small successes and managing my expectations on a daily basis.

I am betting on the long-term compounding interest of my calculated actions, be it writing a line of code, talking and connecting with customers, getting advice from other founders or relaxing with a beer to recharge.

I find the article a little superficial, but there is an underlying truth that can be valuable: sometimes the best way to be great at something is simply to become better and better at that thing, rather than hoping one or three bold and brilliant choices will reap a windfall.

I would cite the Wright brothers as an excellent real life example. They were very far from the brightest, best educated, hardest working, or best-financed. But they did do a lot of careful, incremental improvements. And most importantly, they chose to improve themselves: they decided that learning to become skilled at both flying and building gliders would be an important step, before daring to strap on a powerful engine to see what happens.

I don't disagree with the general argument that degradation happens gradually, and 'truly successful' companies are built gradually. That said, I hate statements like this: "A better strategy is to start doing smaller investments with longer time horizons. Just like chili, low and slow is the way to maximum flavor."

Why? The taste of chili is maximized by cooking it slow.. but the taste of french fries is maximized by cooking them quickly. There's nothing inherently good about doing things slowly. So please give us some evidence that investors should be making smaller investments over longer horizons? Perhaps there's data to show that longer horizon VC investments provide higher risk-adjusted returns.. but I haven't seen it.. and Seth's statement to provide any sort of weight, it would have to be included.

Way too pseudo-intellectual for me with nice meaningless platitudes.

I agree with your conclusion mostly, but can you name any examples of large investments with an immediate, greater return?

Not arguing, just looking for solid examples to go by.

That's the problem.. A few vivid examples shouldn't influence a view on this. Data should.

A little finance 101: The longer you hold an investment, the higher the return demanded. The riskier the investment, the higher the return demanded. To judge the wisdom of an investment strategy, one needs to weigh these against the potential return.

A successful small early investment (for example, Peter Thiel investing in Facebook in 2004) will return much more on a percentage basis than a successful large late investment (for example, Yuri Milner investing 200M in Facebook for 2% of the company in 2009), but they are also much risker and take longer to see a return. Even though Thiel made a billion dollars and Milner only made a few hundred million while investing 400x more money, based on these numbers alone it's hard to say which was a better investment on a risk-adjusted basis. We don't know what the expected value of each investment was (probability weighted terminal value of Facebook). We don't know what their cost of capital was (what else they could have been doing with the money). All of these matter.

My point is that it's hard to figure this stuff out. Real academics have a tough time coming up with definitive answers to these questions. Furthermore, the answer can change over time. The fact that chili tastes better when it's cooked slowly is of no consequence to this question.

Reminds me of the chapter in Good to Great regarding the pushing of the flywheel:

"Good-to-great transformations look dramatic and revolutionary on the outside but actually are organic, cumulative processes on the inside. There is no single defining action, no grand program, no one lucky break or miracle moment. Sustainable transformations follow a predictable pattern of build up and breakthrough – like pushing on a giant, heavy flywheel. Average organizations follow the “doom loop” pattern. They try to skip buildup and jump immediately to breakthrough. Then, with disappointing results, they lurch back and forth, failing to maintain a consistent direction."

Interesting read. As someone trying to build my own company it's nice to have Seth reminding us that the companies that have sudden surges in users is not the norm. For the ones that do have a sudden increase, most were working diligently for many months or years before.

This part rang particularly true for me: "The new fast company isn't fast at all. It's gradual, slow, measured, and organized. It's making small bets. Which, it turns out, is the fastest way of all to get back to where you want to be."

Particularly interesting because this was written ten years ago!

The transparency of the web makes it easy to fall into the trap of believing that many of the recent successes of businesses was "overnight," but that's hardly ever the case. Tumblr was founded in 2007, started before that, and only sold recently. But who was fully aware of those years of work?

Some find it the Hard Way(TM) that most lucky breaks actually require hard work.

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