2013-08-05

Co.Labs

Time Matters To Your Startup—But Not The Way You Think

This is a News Scrum, in which we dissect one of the day's top stories. Today we're talking about Chris Dixon's blog post entitled "The Idea Maze."



Today’s News Scrum Discussion: The Idea Maze by Chris Dixon

"Competition from other startups is usually just a distraction. In all likelihood, they won’t take the same path, and the presence of others in your maze means you might be onto something. Your real competition – and what you should worry about – is the years you could waste going down the wrong path."

This observation gets at something which isn’t often discussed in technology—fear of duplication. In the outset of the article, Dixon says it’s hackneyed to claim that "ideas don’t matter" because ideas dictate what you execute on over the roadmap of your company. But one reason that "ideas don’t matter" has become axiomatic is that it’s nearly impossible for two developers (or two designers) put side-by-side with limited visibiltiy into each others’ projects to come out with the same exact thing—even if they are given the same resources and the same problem to solve. That’s because, as he says further on, "theories" are a big part of what drive software development:

Theories. There are now decades of historical data on tech startups, and smart observers have sifted through to develop theories that generalize that data. Some of these theories come from academia (e.g. Clay Christensen) but increasingly they come from investors and entrepreneurs on blogs.

The apps and services that succeed in getting long-term traction are the ones based on debatable hypotheses, which Dixon refers to here loosely as "theories" about how people will use and react to your feature set. The "debatable" theories work because they inspire products that polarize people, and polarization is core to being recognized and remembered by people who see zillions of apps and services every week. The theory needs to be controversial enough that it’s non-obvious, but provable and tied to metrics. Once a small set of early adopters prove the theory can work, other people become believers.

An example that comes to mind is Airbnb; before that business started, few people would believe that homeowners renting spare rooms could ever aggregate to compete with the hotel industry. And yet that was Airbnb’s hypothesis, and it turned out to be supported by user behavior. (Chris Dannen)


Chris is right that testable theories ought to drive startups. But I’ll take it a step further. Taken together, what Dixon is really saying is that successful entrepreneurs have a worldview that informs their decisions and allows them to generate new hypotheses. This viewpoint allows good entrepreneurs to make the choice between success and death that Dixon outlines for a number of successful companies:

Imagine, for example, that you were thinking of starting Netflix back when it was founded in 1997. How would content providers, distribution channels, and competitors respond? How soon would technology develop to open a hidden door and let you distribute online instead of by mail? Or consider Dropbox in 2007. Dozens of cloud storage companies had been started before. What mistakes had they made? How would incumbents like Amazon and Google respond? How would new platforms like mobile affect you?

All of these companies have an overarching worldview. Netflix believes that personalized distribution leads to the best results for media consumers and producers. This worldview led to them embracing online distribution before anyone else, but it also led them to the disastrous attempt to spin off their DVD-only service into Qwikster—some hypotheses are proven false.

Their worldview also drives their fantastically successful data-driven foray into original content production. Dropbox is based on the idea that no one should be left out of the networked, collaborative information age. Their original product is about extending the benefits of GitHub and cloud storage to everyday consumers, which is why they focused on making their service as easy to use as possible, rather than trying to beat the industry leaders on features. The decision to acquire Mailbox was about making mail filters—typically for power users only—mainstream.

The combination of theory, history, analogy, and experience in Dixon’s article all add up to one key point: Have a view of the world that you can apply to solving the problems you face. Know yourself and what you value. Found your company on some underlying general principle that you passionately believe in. This worldview will allow you to make the right choices and stay focused, even as your product changes. (Gabe Stein)


Looking at other startups as distractions, it’s hard for me not to think of idea of music artists and bands "competing" with each other. Digital media editor at NPR Flora Lichtman talks about music sampling in this 2011 on-air interview, implying that copying and sampling just leads to new innovations: "...then that becomes the basis of a new piece of—a new song. And so, we have a musician, Sublime, which has sampled the ‘Funky Drummer’ beat and then created their own new piece." Startups are aware of the competition in their space and will all borrow ideas from each other.

In all likelihood, they won’t take the same path, and the presence of others in your maze means you might be onto something. Your real competition – and what you should worry about – is the years you could waste going down the wrong path.

Only your team with your experiences can create the product you’re producing. Time worrying is the only thing other startups can steal from each other. (Tyler Hayes)


Sure, time spent worrying is a crucial facet of entrepreneurial culture that is rarely discussed in mainstream depictions of startups—but it applies to both timing and time elapsed. It’s pretty clear that good ideas may not be recognized if they come before technology can really execute them or before the market is ready for them, as with AskJeeves or LoudCloud. But the amount of time a team spends working on a strategy, developing a product or service, and testing can have a major impact on their ultimate longevity and ability to adapt. I started thinking about this last year when I read a post by Jason Freedman about wasting time. From Freedman’s post:


Your startup, in the pre-product phase, is basically a ticking time bomb. The only thing that can prevent it from exploding is user delight. User delight attracts funding, enhances morale, builds determination, earns revenue. Until you get to user delight, you're always at risk of running out of money or, much more likely, losing a key engineer to something more interesting. Time is your most precious resource.


Similarly, at the end of his post Dixon says, "Your real competition—and what you should worry about—is the years you could waste going down the wrong path." But there are plenty of other ways to waste or lose time too, especially if people on a team are working on the project alongside day jobs or other startups. The "direct experience" Dixon talks about is immensely valuable, but if everyone has too much on their plates, a team can stagnate in even the most solid idea maze. (Lily Hay Newman)


I like Gabe’s comment that all great companies have a worldview, a set of values, that inform their actions but this is also where I take issue with Dixon’s views in this piece.

"Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes. Balaji Srinivasanc calls this the idea maze: A good founder is capable of anticipating which turns lead to treasure and which lead to certain death."

This is a very engineering-oriented way of looking at the world, as if the founder was Deep Blue mapping out all the possible chess moves of its opponent dozens of moves ahead. Startup founders, even those who succeed, are usually no better oracles than the rest of us. You can't analyze your way to predicting the future. The world is just too complicated for that. This also vastly underestimates the effect that luck and timing can have on a startup's fortunes, a fact which is rarely acknowledged by founders and is a classic example of survivor bias in action.

To use Dixon’s phrase, "a sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions" are all just starting points, like minimum requirements to creating a good business. In a way it’s about knowing the current rules of the game in order to decide which ones are worth breaking. The most important ventures will deliberately deviate from the received wisdom—the history, the analogies, and the theory of Dixon’s piece—at least in certain areas. The actions of truly groundbreaking companies are not always successful except as an expression of their values and worldview. (Ciara Byrne)

[Image: Flickr user Till Westermayer]




Add New Comment

1 Comments

  • Anthony Reardon

    Oh yeah, right on! This seems like a killer activity.

    From what I can tell, Chris Dixon is a technology investor, so he's breaking down the popular startup culture, suggesting there's more of a process to arriving at success than a spontaneous idea, pointing out that it is as much about navigating the complex environment of startup ideas, isolating the shortcomings of stealth vs. transparency, and no doubt this ties into his scope of venture capital investing.

    I've noted a trend in VC firms presenting themselves as superior mentors. They are competing for the best projects. At the same time, there's this huge competition for startup investment, so you've got all these developers out there trying to perfect elevator pitches for impressive ideas. I think part of the problem is the people with the best ideas in technology are not necessarily the best salesmen. As a VC firm, you do your stakeholders a disservice in encouraging a "buyer's market" where only the best sales pitches are getting taken in. You've got to break through the ingrained assumptions and barriers to discovery- and you can do that by welcoming startups- getting to know the developers as people, their stories, what their passions are, what they are trying to accomplish- and if not taking them onboard your supportive community, introducing them to others that may be able to help, or otherwise offering some sound advice.

    A good VC firm is going to be familiar with the underlying realities of taking vision through to materialization. So you check the pitch at the door and just get to know each other over coffee instead. You can rather gauge the maturity (readiness) of some developer through conversation on everything else other than their project, and of course, there's always time to get around to talking about that too. Maybe they have a strong idea but lack the right kind of experience. Maybe they have the right kind of insight, and their idea is perhaps premature. Both cases might be worth consideration.

    An experienced VC firm ought to have a good grasp of the competitive environment too. Perhaps the realistic approach to finding areas of greatest leverage is admitting that you don't know exactly what is going to be hot. Maybe you don't technically need a specific answer to a specific problem. Maybe it's better in principle to be able to navigate your way through to solutions for problems where answers are not yet specified. The pop culture view is generally what you see after the fact, but you may be better at matriculating to that kind of outcome if you accept it can be less intentional and more methodical.

    Finally, there's this assumption that you have to have a really innovative idea to deserve backing, and it's combined with another prevailing assumption that you need to keep it secret. So many startups are afraid to spill the beans, and it makes meeting and communicating with the people that can help them almost impossible sometimes. Consequently, a lot of good people with good ideas end up failing because they are overprotective and unwilling to accept help. So it only makes sense to dispel this belief, and to point out the merits of putting your project on the table. This not only applies to VC- startup relations, but is also a cultural philosophy for transparency that can involve end-users in determining whether or not an idea takes off. Not to mention, putting forward value first and basing incremental investment on the basis of "delight" as it comes in is simply a sounder investment strategy- especially in a complex and ever changing competitive environment.

    Best, Anthony