There are a few things I wish I knew when I first started side-projects and companies. Below are four particularly important concepts that those in the startup world take for granted, but having spoken to people in other industries, I realised these concepts are not that widely known across sectors, or at least they are not given labels. Considering how useful they are, I think others would benefit from them. Hence this blog post.
There are exceptions to #1 and #3 on the list. Some companies stay in hiding whilst doing R&D (exception to rule #1, Figma), don't talk to customers when developing a product, and some companies in traditionally difficult business models grow quickly and large (exception to rule #3 Web Summit). I think #4 is a solid concept that rules entrepreneurship. But the exceptions do not disprove the rule.
Proving the concept ASAP
The idea of iteration
Not all business models are created equal
-
Effort does not equal results
1. Proving the Concept
The startup crowd, and particularly Indie Hackers, have jumped all over this one: “if you are not embarrassed by your fist version you did not launch quickly enough” is a common refrain, and it is the problem the Minimum Viable Product (MVP) seeks to solve.
The idea is in the name: launch quickly, and get your product in front of consumers ASAP. This aims to kill the perfectionist / procrastinator / fear in all of us that buries so many projects.
Another phrase that comes to mind here: “You are 95% done, congrats - you only have 50% left!
Get that initial version out in the world with just enough to solve the basic problem you are trying to solve, without it being perfect or fully automated. Try to charge money for it. Whatever service or product you are create can be done manually in the background with a nice lick of paint up front to make it look good. Prove the concept first before spending more time on it.
2. Iteration
This is one that I was fairly oblivious to. If Silicon Valley has given the world anything it is this concept.
After showing your product to customers, collect feedback, try to read between the lines because otherwise you will end up building a Homer Simpson car, implement those changes on the product and release it again. Then the cycle restarts.
This is a lot of work and you need to be very proactive - no one else is going to do it. But this is generally seen as a key to the success of many startups. The trick is knowing how to implement changes without running off in disjointed directions.
This concept mostly applies to software - it is hard to iterate on a 120-storey building when you have the fist 60 storeys finished. If you are in software, or you provide a service, take advantage of iteration.
3. Not all Business Models are Equal
During university I started a business - bottling and selling organic argan oil. What I did not know was that not all business models are created equal. I thought that entrepreneurship is entrepreneurship. If you had a bit of gumption and were willing to do the work everything would even out in the end. You would become a big success no matter what industry you started off in.
The naive mind of 21 year-old me was not for this world. It turns out some businesses take less effort to build, have less risk, and pay more did not realise this.
People learn this by first trying the “worse” business models, and then moving upstream.
When I look back at the projects & companies I have started, I fell into this typical ladder of entrepreneurship (someone first said something similar on twitter, if you know who send me the tweet and I'll link it) that goes something like the following.
- Run events
- Start an import/export business.
- Do freelancing / start an agency
- Start a software business
There are trade-offs in every case.
Events
Running events is easy to get into and it is exciting - you create amazing memories for people and are the central node for a cool event- but you will pay the piper in spades with stress, pain, endless emails and phone calls with vendors and acts.
Import/Export
An import/export business takes a lot of capital, you pay your suppliers upfront and get paid on credit (there was a 60-working day / 3 months cashflow gap in my business), and the margins are low.
Freelance/Agency
For freelancing/starting an agency the margins and lifestyle are much better, but your upper limit is more capped than a software business.
Software Company
A software business is the most lucrative business of these, but it is the hardest to start.
For a software company you can design your work life to mitigate stress as much as possible, work from anywhere, and have no immediate deadlines. But it won't be as adrenaline inducing as starting a concert, you will not meet as many interesting artists. But the margins are greater and wealth you can create is unlimited.
4. Effort does not Equal Results
We can break this into two parts:
A) From a high level, putting long hours into building a company may not increase your chances of success.
B) On a task-level, spending a lot of effort on the wrong tasks will not guarantee success.
A) Starting startups is complicated and unlike a lot of other activities, like tennis or surfing or chess. If you put a lot of effort into one of those activities, you are sure to improve your skills enormously.
The same is not true for building companies, where you are at the whim of the market. You can work 100 hours a week on a company that makes bendy screwdrivers, but will not be any more likely to succeed than if you spent 50 hours per week on it.
You may learn little, apart from now knowing that it is a bad idea to start a bendy screwdriver company. Contrary to a lot of startup advice, success probably teaches you more than failure does, and importantly, gives you more momentum.
This is all to say that you can put in many hours and much effort into building a startup and have shockingly little to show for it. Surf or play chess or practice tennis if you want to see results that correspond to your effort.
B) We can dig down a bit into and apply this rule to individual tasks. Some weeks I have spent 10 hours in a week answering emails as they come in, and I have also spent 2.5 hours in a week answering emails in two different sessions; the result was the same - emails got answered and the recipients were satisfied.
A startup person framed this in the urgent vs important paradigm. Some tasks are urgent while some are important, and these are two different things.
Emails are kind of urgent (in that they should be answered in a reasonable amount of time), but they may not be important (in the sense that completing that task will not have a massive impact on your business). They just require a reasonably quick response.
Some tasks are important but do not seem urgent. Such as doing that refactor that will open up more opportunities further down the line that could 10x your business. These are the tasks that people put off, as there is always an excuse to delay a painful taks like this, whereas the little “Gmail (1)” on your tab in Chrome needs to be answered now.
Instead of wasting time answering emails consistently, I could focus on tasks that may not seem urgent, but are undeniably important, like that refactor.
If you are not careful you can fill up your week with urgent but unimportant tasks that take a lot of time and effort, but will ultimately not yield results. This is a common but dangerous trap in business. Again, this is harder to do with things like tennis practice, or surfing, where you will get some payback for your efforts.
Follow me on Twitter: https://twitter.com/_ronanmc
