There are two questions that early stage founders are asked all the time. The first is: “how is ‘that’ going to scale?” That can mean the entire idea, how you execute the idea, your operational process, a feature you try or an experiment you are running. The second is: “aren’t you worried about [fill in the blank] stealing your idea.” Both of these are the wrong questions. Here is why…
How is [fill in the blank] going to scale?
It’s okay for a start-up to do things that don’t scale. Over the last year, I learned how hard it is to build anything the market will actually value. Most “great-on-paper” ideas never achieve product-market fit. I learned how big the gap is between a product with a logical value proposition and a product humans habitually use. Entrepreneurs run hundreds of experiments hoping to find just one that “works.”
At first, a startup needs to learn how to actually add value in the market. That’s it, that’s all that matters. Worrying about scaling before there is anything valuable to scale is a waste of time. Not trying experiments because there is no fleshed out scalable solution can be a death sentence. It limits your ability to learn, drastically decreasing the chances you will ever find product-market fit.
Here is my favorite example. AirBnb was dying, they were barely making $200 a month. Failed experiment after failed experiment produced no tangible results. One day, they noticed the pictures of the apartments for rent were extremely low quality. Paul Graham suggested they rent a professional photographer, to travel to the apartments and take pictures. They did, and the apartments rented.
Is this a scalable solution? Can they travel around to take pictures of every apartment? Of course not. But they learned how their service can add value.
In retrospect, it seems so obvious, of course you try this without worrying about scale. It wasn’t obvious. AirBnb needed a mindset shift to understand the value of trying non-scalable solutions. You can read about it here
It only seems obvious because it worked. It only seems obvious because they did find a scalable solution. I guarantee they tried hundreds of ideas – with equal potential – that all failed. What if they worried about how each of these experiments would scale if they succeeded? Well that would be a huge waste of time…If they never ran experiments because the experiment would not scale? If the mindset shift never occurred… the hotel industry can only wish…
Founders are always afraid to try anything that doesn’t scale. Founders spend too much time worrying about how anything will scale if it succeeds. Smart people always ask founders of early stage startups, “how does [blank] scale? It’s the wrong question. For an early stage startup it doesn’t matter. It is a challenge you hope to one day tackle, because that means you actually found value the market once scaled.
Aren’t you worried that [fill in the blank] will steal your idea?
It can happen, it has happened – but I never worry about it happening. First, the obvious…if you are an entrepreneur worried about this scenario than you are likely in the wrong job. Second, big companies rarely actually “steal” ideas from startups.
Big companies are machines that utilize vast resources – talented employee base, years of data, client relationships, external parties – to set their strategic agendas. Let’s say we are starting a company and are concerned Amazon is going to steal our idea. Is Amazon really going to alter their strategic priorities based on the mere launch of a startup?
If you believe the answer is yes, you also need to believe you can call up Amazon, tell them the idea and influence a change of their strategic priorities. If you, a person completely unaffiliated with Amazon, can actually do this 1) can you please come work for 10Thoughts and 2) you should probably start your own consulting firm, but do 1 first.
Now let’s say our startup actually gains traction, this may in fact catch Amazon’s attention. Playing out our concern, let’s say that based on our traction, Amazon wants to enter our space. At this point multiple paths can play out:
1) Amazon makes an offer for our company because it is much easier than building from scratch. YAYA!!! We weren’t worried about this happening, were we?
2) Amazon is not interested in buying our company, but offers us jobs to run Amazon’s initiative in the space. This happens all the time. Elon Musk offered George Hotz, a hacker who built a self-driving car in his garage, millions to work on his creation at Tesla.
How do we feel about this scenario? Maybe our dream is to do it ourselves, and we consider it “selling out” to go to Amazon. But working on our startup for millions of dollars with the resources of Amazon is not exactly an outcome we fear, right?
3) Amazon decides to enter the space and run us over. This is allegedly the branch we fear. Our hypothetical company is up against Amazon. But, Amazon’s entrance legitimatizes our market, it drastically enhances the credibility and likely the visibility of our startup. It’s a battle, Amazon needs to catch up to our innovation before we can achieve broad distribution. While Amazon’s distribution advantage is massive they are a big company. We can innovate faster
in our space and we are singularly focused on our market. We can beat them, us versus the behemoth, the glorification of entrepreneurship. If this branch does not excite you than entrepreneurship definitely is not your path…
I don’t see a scenario where I am worried about a big company stealing an idea. If branch three plays out that would be a lot of fun. If the gorilla wins, so be it, they out executed us, they deserve it!
Not convinced, here is an example of an “easy to steal” startup that was never stolen.
Nuzzel is a service that combines every article posted by your Twitter followers or Facebook friends. Since twitter is heavily used to find article content, and Facebook is used to keep up with people you know, Nuzzel targeted twitter power users.
How easy would it be for twitter to steal Nuzzel’s idea? Essentially, at any point, Twitter could create 90% of Nuzzel by adding one button that filters our twitter feed by posts containing links to articles. That’s it. To the best of my knowledge, Twitter never tried it.
There are no article links in this example because I came up with it all by myself.
I am so proud that it only just occurred to me that 10Thoughts probably should not be promoting a content discovery site generated by peers…But the point remains, people worry too much about ideas getting stolen, they rarely do.
Like any job, there is a difference between perception of what matters and reality. It is an interesting intellectual exercise to think through how an early stage startup might scale. It is interesting to discuss who might enter your space. But ultimately these are not the most relevant questions for early stage founders.
George declined, but still a pretty cool offer
At least I think we can. Generally big companies move really slowly and startups have the advantage of speed. But I’m not exactly sure if that same logic applies to Amazon, one of the most innovative companies in the world. Someone will need to answer that for me…maybe Amazon was a bad example.
They probably did experiment with it. But for whatever reason it never worked for them. Maybe it didn’t fit well with their service, maybe they could never figure out how to make it work, maybe they didn’t want too many buttons and other buttons were more valuable so they didn’t want to waste pixels on it
So hopefully it’s actually a good example, I could be wrong about something