closing_brace

Karma: 28

closing_brace 10 Feb 2014 7:08 UTC
0 points
in reply to: Adam Zerner’s comment on: Why don’t more rationalists start startups?

All “execution means”, is 1) raising the money I need to pay for people to answer questions at all schools on the site, 2) market this to high school students, 3) get enough momentum to raise a series A, and 4) hire the right people to help me expand. At least that should get me to be a player in the market.

Yes. And these are all challenges with significant risks. My claim is that is that it will be hard to build significant momentum prior to getting a level of design and marketing which is significantly beyond your current ability as someone with a programming background. Even if you pay people to provide your site with good content, your visitors will not appreciate that content if is housed in unattractive design, except perhaps for some viewers who find your content so compelling that they are willing to overlook the design.

I could be wrong about this, of course (and your analytics will tell you the answer), but if I am right, then you will need to get help with design and marketing prior to steps 2) and 3). Getting either training, or significant help, or contractors, or co-founders, would need to be incorporated into your plan sooner rather than later.

I agree that I’m no expert in design/marketing, but I think I could do a good enough job at them to get me to a point where I could hire experts.

This seems like an empirical question… and leaving it up to chance sounds like a risky prospect when your money and time is on the line. Given that you admittedly lack experience in design and marketing, it seems like you would be uncalibrated to estimate how much experience in those areas you need to attract funding and co-founders.

To give you some more background about why I emphasize marketing and design so much: in some deals where I’ve seen companies get funded, a big part of the funding was showing design documents and marketing strategies to potential investors. Also, I often see experienced and serial entrepreneurs worrying about the marketing success of consumer products they are working on. Being scared is a rational attitude given the uncertainty of the mass market and what people will respond to, which is why I’m trying to scare you a little bit about the risks you are facing.

Becoming good at either design or marketing (let alone both) coming from a tech background is at least 6+ months of work to produce non-amateurish work. Perhaps there is some way that you can get help or guidance in those areas in the very near future.

closing_brace 9 Feb 2014 8:27 UTC
0 points
in reply to: Adam Zerner’s comment on: Why don’t more rationalists start startups?
I skimmed the pitch. I think you are probably correct that there is a business opportunity in this area. Nevertheless, my main view is that a good idea or business opportunity is only a small part of building a business.

Consequently, your pitch seems a bit more like a theoretical paper on a business case, such as in a class project as school. That’s different from attracting consumers (who require good marketing and design, not spreadsheets) and investors (who need to believe that you in particular are capable of executing on your idea).

I will continue to recommend that you learn more about design and marketing, and ideally work with other people in those areas. Unfortunately, to fully argue this point, I would need to give extensive feedback, which would take me too much time and space to write up. I concur with the critical feedback that others have given in the thread.

A big challenge is the fact that if you are the type of person who posts on LW, then your mind is quite different from the average consumer, and you will not be very well calibrated to understand what they find attractive, usable, hearable, and valuable. Bridging this gap in perspective will take considerable work.

As for the article you link to, I agree with you there is a good expected value for you in a risky project. I will still emphasize the execution risks involved in this project. Ultimately, I think that even if you fail fast at making a successful business, you will still gain value from this project, as long as you don’t burn too much time, capital, or other resources. You can always go work at someone else’s startup and build skills and connections for a future startup of your own.

closing_brace 24 Jan 2014 5:36 UTC
3 points
in reply to: Adam Zerner’s comment on: Why don’t more rationalists start startups?
Yes, it’s probably true that there are successful startups who began with less resources than the incumbents in their industries. Yet these companies may start out with more resources than you seem to have available.

There are many business models other than launching a multi-million dollar mass consumer website that monetizes from advertising. In my view, such a business is relatively risky and resource-intensive. It seems to me that you have chosen an especially challenging business model for your first startup.

Bringing a product to a mass market is a challenge; see the examples edanm and I raised of restaurants and movies flopping because they fail to resonate with the market. The wider the market it is that you are aiming for, the harder it is to make a product that resonates with them.

So, I did not intend to sound like I was making a fully general counter-argument. I want to specifically caution founders where there is a large gap between their current resources/experience, and the demands of their business model, especially when their business model requires targeting a mass market, and they have no experience marketing to even a small or niche market.

closing_brace 23 Jan 2014 10:54 UTC
3 points
in reply to: edanm’s comment on: Why don’t more rationalists start startups?
But the other, MUCH BIGGER issue, is that you might not know what people want. If you’re building something for consumers, there’s a problem in that most people don’t know what they themselves want (imagine describing Facebook to someone years before it existed).

Yes, it’s very difficult to predict what people want and will actually use, especially for a solo person. Asking your friends isn’t enough because they will just try to make you feel good.

To underscore your point, and try to help us calibrate risks, let’s examine the risks of significantly smaller projects:
- Start a blog with 500 visitors a day
- Run a Facebook page with 500 likes
- Sell 100 copies of an eBook, handmade product, or piece of art
- Create an open source software project with 100+ users
These goals are much more modest than starting a company with a mass market product, but they can still be tough for smart and talented people, and can easily use up all of someone’s free time for months. And it’s not guaranteed at all that someone will succeed at all in their first try at these projects.

Because executing and delivering something people give a shit about is hard. A real business is orders of magnitude more complex, risky, and time-consuming. If it’s tough to make something that a couple hundred people care about, then try to imagine how tough it is to make something that tens of thousands of people care about.

Remember—Some people fail at startups built to serve an industry, after working for 30 years in that industry. They still don’t manage to create a product that’s good enough.

Yes. Execution is hard. Production is hard. Design and marketing are hard.

There is a big difference between class-project level execution, or demo-level execution, and professional execution that will appeal to a consumer market, especially a wide market. I believe this point has not been sufficiently emphasized in the original poster’s entrepreneurship education.

Your product (rhetorical “your”) is not the platonic ideal of your idea. Your project is the execution of your product. It’s inseparable from the design, UI, marketing copy, and other presentational and aesthetic elements. The medium is the message.

Eventually, real consumers will face the real execution of your product, and there is an immense amount of variables involved in how they perceive it, which are really hard to predict in advance, involve the interaction of the features with design, UI, writing, etc… Predictions become really hard to make, hence, risk emerges.

And yet, restaurants fail ALL THE TIME. Because the execution of any business is hard. Hiring is hard. Understanding your market, TRULY understanding it, is hard and takes years of experience. Understanding how to hire and manage people is hard. The thousands of little things you do every day, are all amazingly hard. Each one takes time, each one takes experience.

Exactly. As another analogy, the author is like an unproven writer with a script who believe that they can make a popular movie. Or a solo game programmer believing they can make a hit game based off an idea and a demo. Yes, it’s possible, but it’s mega, mega risky (even creating a hit at an indie level). Even big studios with immense resource often fail at creating hits, because giving people something they want is hard, and execution/production are hard.

closing_brace 23 Jan 2014 9:47 UTC
3 points
in reply to: Adam Zerner’s comment on: Why don’t more rationalists start startups?

My overarching point though, is that it could be monetized, not that advertising is the best way to do it. My evidence is that all my major competitors are multi-million dollar companies, and that I think I could out-do them (more users, more engaged users, better information, more brand recognition...).

But you can’t put yourself in the same reference class as these companies, because it’s most likely that they started out with more resources, bigger teams, more experienced founders, and/or more connections than you.

closing_brace 23 Jan 2014 9:42 UTC
2 points
in reply to: Adam Zerner’s comment on: Why don’t more rationalists start startups?
Ask yourself: once you break a demand down far enough into its components, is it still hard to say whether or not those components are things people want?

The problem is people don’t want things independently of how they are presented and packaged. Design, UI, and marketing matter.

Regarding other things (hiring, cofounder, investors...) keep in mind that you just really need to satisfice, not optimize.

How do you know this? How do you know what level of optimization you need, and when satisficing is good enough?

It’s good that you acknowledge that you lack experience, and that you are trying to create the starting point for a discussion. Nevertheless, a lot of your claims and hypotheses sound inordinately confident given your current level of experience and evidence. Perhaps this explains the skepticism and cautioning you are facing here.

It’s possible for even rational and hardworking people to fail at execution, or to run out of money or time before they can get far enough. If you don’t see why that is, then I would say that your estimate of the risks is miscalibrated. See my previous posts in this thread for more discussion.

It’s also possible for rational people to be badly miscalibrated, or to start off with incorrect information, in which case their rationality is heavily bounded. As you note, there are significant cached thoughts on the subject of startups.

I’m talking about the chances you raise money given that you have a good idea and successfully built it.

OK, but how do you build your idea to a level of execution that someone will want to fund you? That’s the challenge. Here are just a couple examples:
- You might need a site redesign before you want to show your project to a potential investor. This will entail you bringing in an outside designer. Do you know designers who want to work with you? Do you have any ability to evaluate designers and make a good choice? Have you worked with designers before? If the answer to those questions is “no,” then you have a risk of a roadblock or a subpar result. Also, you will need to spend programming time integrating with the redesign. This is time that you aren’t spending developing some other aspect of your business.
- You will probably have a slide presentation to show your investors. Who is going help you make it? Let’s say that your designer works on it (more hours), and then you show it to a couple friends for feedback. That’s still a considerable outlay in resources, and it will take time.
- Need photography on your site? You either need to work with a photographer, or acquire stock photos. This requires money, taste in photography (or an advisor who does), and time spent picking photos. That’s not super expensive, but it all adds up.
Merely getting a basically acceptable presentation and demo will cost a significant amount of your time. Either you need to make your designer a co-founder (which would be a tough sell since the project is so green and you have a lack of experience), or you need to pay them. You have a limited budget of time and money.

I’m sure you are motivated and enthusiastic to spend those things, but it is risky to throw money into a project that has significant team risks (since you have no team, no experience building teams, and you yourself are inexperienced at development), and market risks (just having a good idea doesn’t mean that your execution of it will appeal to a market: see edanm’s restaurant analogy).

Can you see why I say that it’s at least plausible that you will run out of resources before you can peel back enough layers of risk to sufficiently impress co-founders and investors? It’s possible for you to pull it off, sure, but the execution risks are much greater than you think, because execution is way more important than you have been led to believe. If you show that you underestimate the significant execution risks in a project like this, that itself would be a red flag to a potential investor, who can’t count on you to surmount risks that you don’t fully appreciate.

I would encourage you decide a point where you will cut your losses if you don’t succeed, put your site on your resume, and then go be a web developer at someone else’s startup until you have the skills, knowledge, and connections to try your own startup again. Your enthusiasm is a good quality, but realize that it’s very possible for you to run out of resources before you can satisfactorily execute on your project to get the next level of co-founders or investors.

closing_brace 23 Jan 2014 8:53 UTC
4 points
in reply to: palladias’s comment on: Why don’t more rationalists start startups?
I came to similar conclusions. Seriously attempting a startup would be very time-consuming and stressful. The original poster doesn’t understand why this is, because he miscalculates the execution, production, marketing, and team risks involved in his project. But unless he has a serious financial safety net, he will soon start burning through the limited resources of his money, time, and energy, which could hurt his social development.

Personally, working at an early-stage startup has a much higher expected value for me than trying to run my own thing.

closing_brace 23 Jan 2014 8:46 UTC
0 points
in reply to: Adam Zerner’s comment on: Why don’t more rationalists start startups?

I’ve considered it, but I figure that the value of having it outweighs this. I don’t see it as something that is strong enough to draw too many people away from the site.

I would caution you against the Typical Mind Fallacy and believing that other people will perceive writing the way you do.

In projects I’ve seen, the founders and marketing people worked on marketing copy, and spent a lot of time fine-tuning the messaging. As as programmer and a LW reader, it is unlikely that you are well-calibrated about marketing and messaging (similar to how the typical marketing person would be miscalibrated about web development). Getting feedback from others is important to avoid biases in this area.

closing_brace 22 Jan 2014 10:38 UTC
13 points
on: Why don’t more rationalists start startups?
I am a web programmer / designer. I work at a startup, and I have attempted several (failed) website projects. I will offer an “inside view” from my own experience.

My main failed website was a cool idea. Everyone said it was cool. Everyone said they would use it. So I spent months building the functionality. Then I started working on the design and UI. As a newbie to design, the web design and UI sucked. The site was useable, but nobody cared except a couple friends. The Facebook page got around 5-10 likes. I realized that the design sucked and it would take a rewrite to improve it, but I couldn’t justify the time expenditure.

I tried a more content-oriented site as another project. My graphic/web design skills were better, so I was no longer embarrassed to send the site around to people I knew. Most of my friends read anything I posted on the site, but I couldn’t very far outside my friend circle in audience. Ran out of energy to promote the site to a wider audience. Final metrics: 70 likes for the FB page, a few Twitter followers, 100 hits a day from Google (mostly bounces), and a few cents from affiliate links (and this was not because someone bought one of the products from my site… it’s because they happened to buy a washcloth and I somehow got affiliate credit for that).

In the end, these projects weren’t total failures. I picked up some great skills, and they were good for my resume or showing friends. Could I have pushed them further with more effort? Yes, but I couldn’t justify that investment. Similarly, seeking funding would have been silly because even though the ideas were cool, any investor would have (correctly) perceived that I didn’t have the experience/skills to execute. For instance, I didn’t know much about marketing or design. Even if an investor threw money at me, I wouldn’t even know how to get good value out of hires. An investor would probably prefer investing in a team who already has made at least some progress in nailing down the design and marketing.

Theoretically, I could have sought co-founders to do some of the work (e.g. designers, writers, other developers), but why should someone talented want to work with me on a project that wasn’t their own vision, where I didn’t have great skills at execution, and when I didn’t have the budget to hire them? Personally, I wouldn’t want equity in someone’s solo project that’s really not very far along, unless some of these are true: (a) I know this person’s ability to execute beyond demo-level, (b) there are other talented people involved, (c) I’ve had input from the start. Even if the idea sounds good on paper.

Like you, I absorbed lots of optimistic messages about startups, and “minimal viable products.” Though some other friends told me that “execution” of an idea is necessary: a good idea is not sufficient.

I failed in the early stages of execution. My first project failed (mainly) because of the execution of the design and UI. Those turned out to be pretty hard. Design is a serious business. For me, it took a learning curve of 6-12 months to create anything that wasn’t ghastly and broken-looking.

My second project (mainly) failed because I couldn’t promote it and create content in a time efficient way. Writing content was time-consuming. Then posting it places was also time-consuming. Yet it I didn’t promote the site, then I didn’t have motivation to create content, and if I didn’t have content, then I had nothing to share. The lack of motivation was not a lack of willpower, it was me correctly observing that I didn’t have any remotely time-efficient way of converting my time into users.

In the end, I realized that for the projects to be successful, I not only needed good ideas, but I needed high-level execution. But professional-level execution in the area of graphic design, web design, writing, and marketing is serious business. There were simply not enough hours in a day for me to learn all of those disciplines at a pro-level. This was not a problem that I could have solved with a little more willpower or time.

If it was so easy for for full stack / backend web programmers to throw up brilliant minimum viable products and create million dollar companies, then this would happen all the time and there would be no need for professional designers and marketing people to exist. But those people do exist. That is evidence that those disciplines are serious business.

There are people on Dribbble who spend all day making colored buttons. Users will want to click on their colored designer buttons, not on the ugly buttons designed by backend developers. There are people who spend all day writing copy and agonizing over wording and getting it just right. The average web programmer simply doesn’t have the background or taste to evaluate design and writing unless they invest some time into learning those disciplines, which is hard when the backend has bugs that need fixing (just like the average designer or writer would be lost if they tried to make a web service).

Yes, a small team of talented people can wear multiple hats. But to get other people (either co-founders or investors) interested, they have to believe the project has some chance of success, not just success at sounding cool.

My conclusion is that people other than close friends do not give a shit about demo-level website functionality, unless the idea immensely out-of-this-world amazing. It takes design (graphics, UI), and marketing (copywriting, messaging, social media, promotion, etc...) to get people to give a shit.

In addition to a good idea, you need to show proof of execution/production/connections to get people to join your team. Then your team collectively must hit another critical mass of execution/production/connections to get funding (assuming, of course, that the tech/functionality is great). Why would a talented designer or marketer want to join the team unless the other parts of the production/execution are going well? A good idea is NOT enough.

My experience here is consistent with the “outside view” being correct: that many startups will fail or never get off the ground. Despite being a talented and motivated person, and despite making some demos of cool ideas, I ran face-first into a wall, and that wall was execution, production, and marketing. I decided to pull the plug on those projects instead of trying to rope co-founders and investors into projects that were unlikely to succeed. My projects weren’t at the execution/production level to attract the right sort of people to improve the execution/production.

Nowadays, I work at an early-stage startup. I get to work on a team with other talented people. And I’m learning about the other sides of business, tech, marketing, design, and media where I lacked experience. I’m also making connections with people who could potentially advise me if I tried to start my own thing in the future. This is a much better use of my skills than trying to build a business myself.