You’ve got to be the best. Disrupt the market. Break new ground. Turn the industry on its head. Shoot for the stars. Create the new normal.
This is the goal of most tech startups. It’s a noble and exciting sentiment. Imagine the rush of power and control and importance you’d get by becoming top of your game. All eyes on you as you dictate the color and shape of the future.
But it’s a trap.
I’m sick of working for startups. I’ve contracted for quite a few over the last several years and one thing that I can say for sure is: once the founders/investors realize what they’ve gotten themselves into, they all wish they could back out.
The naivety and optimism they had at the start soon falls away as Murphy’s law takes over. Once things become twice as hard and take twice as long to complete, the grind begins.
What is the grind?
This is the moment when they realize that instead of plugging a gap in the market that no-one has been smart enough to exploit, they’re actually attempting to plug a hole that no-one would be crazy enough to go anywhere near. There’s no market or the cost, risk or rewards just don’t add up. That’s when they realize they’re not the genius they previously thought they were. Ouch.
Not to mention that building anything even remotely complex takes a large expensive team of professionals at the top of their game. Trying to manage an underfunded team of creative, flakey people to create your vision is like being a high priced babysitter. Ugh.
The smarter founders (the ones that didn’t take the early venture capital money and instead bootstrapped their way up) can back out with only the loss of time and dignity. The dumb ones, who are locked into using other people’s money with massive personal liabilities are, sadly, fucked.
What blows my mind is that people rush to “innovate” with no real idea of what they’re actually doing. They buy into the belief of their own competence and just muddle through in the misguided hope that it’ll all work out in the end. Because of course, it’s a great idea. It’s going to revolutionize everything. The world will be different.
I think it exposes an inbuilt fault in the kinds of people that want to be in charge. It’s their complete inability to ever question themselves. You’ll never hear the words “I don’t know” or “I guess I was wrong” or even “I need help” come out of their mouths. The truth is that, statistically, most of us are pretty average. The likelihood of you or me being an actual real life genius is pretty slim.
There’s also the role of dumb luck which is never factored into the equation. Okay, so you might have a pretty decent idea on your hands and a competent team, but there’s a million and one things that can go wrong between here and the metaphorical pot of gold at the end of the rainbow.
Sometimes, shitty ideas succeed against all odds and great ideas fall flat on their face. It’s incredibly difficult to predict.
Given the role of dumb luck in the equation, what’s does a high cost, high risk but potentially high reward startup idea actually represent?
It’s a gamble.
If you love to gamble then go for it but don’t dress it up. It’s a roll of the dice and if you win, you got lucky, that’s all. Congratulations, you’re now an “innovator” and can backward rationalize your success like all Silicon Valley rockstars love to do. Write a book. People love that shit.
How to succeed in tech.
In the real world, tech money is made as follows: take an existing thing that is being done and shave a little cost or complexity or grief from the process. Make it cheaper, simpler and easier for your clients to use. Reduce the amount of moving parts and cut out the reliance on any one person or organization.
Now pick another small thing that’s being done and do the same. Double, triple, quadruple the amount of ideas. Keep them small and move fast. Expect lady luck to come in and destroy most of your ideas before they can make a return on investment. The market was saturated, you couldn’t get the right team in place, the marketplace changed while you were building it or a thousand other reasons that are completely out of your control.
It doesn’t take a genius to work like this. You’re just throwing spaghetti at the wall in the hopes that something will stick. It’s not very smart, but it doesn’t have to be. You just keep throwing cheap pasta until something starts paying off.
Now you have your one or two ideas that are turning a profit. Awesome.
The next thing you need to do is optimize. Take a good hard look at the center of the market. Not the cheap end or the high, enterprise end but the mid tier clients. Those ones that are easy to service and have lower expectations. Optimize your product and your business in a way that is destructive to that market.
What I mean by this is that every market has a certain level of efficiency. This is the difference between revenue and cost. The higher that gap, the less efficient the market is said to be. You want to increase that efficiency by making a better product for cheaper, to the point where it becomes useless to even get involved in that market in the first place. The costs are too high, the rewards too low.
Scorched Earth tactics. Milk it for all it’s worth and ruin it for everyone.
Sounds a bit harsh? Get the fuck out of here. This is business. You’re not here for anyone’s benefit except your own. It’s not just business but tech business. Things are replaced and changed so quickly that any ideas about building foundations for the future are sheer folly.