Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.
By Richard Luck
Startupday 2010 is quickly approaching. For those of you who think you might like to start a company, the following is a crash-course on what you need to know before you dive in. Caveat lector.
Starting a company is easy. Everyone should try it once or twice. These days all you need is a computer and a good idea …
Good ideas are even easier. I typically have 3 or 4 good ideas each morning during the drive into the office. Some mornings they come so fast and furious I have to pull over and write them down before I …
Hey — someone really should invent an interface for the iPhone Evernote app so that all you have to do is say, for example, “Idea” and it starts recording without you having to take your hands off …
Oh look—an opossum. Walking along the edge of the freeway. That’s not a good idea.
By now you’ve probably figured out that I suffer from a mild case of shiny-object-syndrome. My mind is constantly skipping forward to the next big thing, whether that thing is a new product feature, a new revenue stream, or a new company.
In my experience, most aspiring entrepreneurs are, with only minor variations, entirely the same. Their minds are bursting with ideas. Their excitement is contagious. Their energy is intoxicating. They’re going to change the world for the better. They have a million reasons why their idea will succeed beyond anyone’s wildest dreams. They’re going to make their mark. I mean, how could they not?
Right? Right??
Let me rephrase that earlier statement this way:
Starting a company is easy. Actually running a company day in and day out is not. It’s a slog not meant for the faint of heart. It will suck your energy, eviscerate your enthusiasm, steal away your youth, and basically consume your every waking thought.
As Elon Musk, CEO of Tesla and SpaceX, recently commented: “[Entrepreneurship] is like eating glass and staring into the abyss of death. …So if that sounds appealing…”
A couple of years ago I put together a list of “5 Things I Wish Someone Had Told Me (about starting a company)”. At the time we were trying to spin Bluyah off as a stand-alone company, secure funding, and land customers. We failed completely on all fronts. The endeavor nearly bankrupted our services company but in the end taught me 5 More Things about running a company.
In no particular order, they are:
No Idea is Truly Unique
Personally, I still believe there are some truly unique ideas out there. They’re just astronomically few and very, very far between. Most revolutionary ideas (the printing press, the automobile, the telephone, the commercial internet) are, in hindsight, extensions of previous ideas (monk-drafted text, the horse-drawn carriage, the telegraph, ARPANET). The ideas seemed revolutionary at the time (and in retrospect) not because of their technological leap forward, but because of their psychological leap forward. Someone had to imagine something that not only did not exist, but did not seem possible at the time.
Most of the ideas I hear from aspiring entrepreneurs are not revolutionary. Most are not even all that good. A handful are pretty decent. But very few of them are wholly unique.
The quickest way to gauge the uniqueness of any idea, in my opinion, is to tell a group of entrepreneurs about it. If you’re not immediately given a list of half-a-dozen companies already doing the same thing (each with a more mature product than yours), or given the standard “Meh – I can already do that in Excel” response, then you might just have something worth pursuing.
Running a Company is a Full-Time Job
I know several entrepreneurs with part-time jobs. I, myself, have in the past had to consult a few days a week with another firm in town — just to keep the lights on. As a CEO your first priority is to keep cash coming into the business. And sometimes this means you’re selling your personal assets, liquidating your 401(k), taking a second on your house, selling your plasma, or hawking that Rolex you inherited from your grandfather. You do all of this and more for no other reason than it has to be done.
Where I see many entrepreneur trip and fall is not with taking that second job, but when that second job becomes their primary job. Startups are like toddler children in many ways. They require nurturing. The environment in which they live has to be modified for their unique nature. They require (near) constant supervision. You take your eyes off of them for one minute and they’re wandering off naked down the street. As a CEO, you’re job is not to “hover”, micro-managing every aspect of the company’s growth. Instead, as any great parent will tell you, it’s to lead by example, gently redirecting course when needed.
As CEO you are setting the bar for everyone else who will join the organization. If you’re going to start a company, in the beginning it begins and ends with you and your commitment. If the example you give to your co-founders and employees is that the company is your second priority, they will treat it as their second priority as well.
Staying Focused is a Constant, Never-Ending Battle
Running a software development company is wonderful. We can build what ever we want to, whenever we want, and can iterate over product designs at a speed unparalleled in any other industry. As a result, we’re waging a constant battle to do none of those things and instead stay focused on our core mission.
In software, breadth is a sexy mistress. It’s very tempting to add new features and tangential bolt-on products to our core offering. Doing so would, in all likelihood, expose us to a larger target market. But it wouldn’t make us any more relevant (or appealing) to that market.
Depth is unsexy. It’s a slog. You spend a lot of time working on arcane aspects of your product that users will never see, let alone admit that they even care about. You performance tune, you rewrite code—and rewrite it again—to squeeze out that extra bit of oomph. You monitor, you analyze, you do a hundred little boring things that, if you focus on them with enough effort, will reveal their secrets to you in a way that helps you transform your unoriginal little idea into a truly unique product. It’s this laser focus on depth that makes you essential to your target audience.
Generating Revenue is Job 1
If you want guaranteed income, start a government. It’s probably the only entity on the planet that can guarantee it’s own revenue stream. The rest of us have to earn our keep.
Earning money for any company is hard. To begin with, you have to have something that people actually value enough to use on a regular basis. Secondly, the value has to be great enough for your users that (a) they’re willing to give you some of their hard-earned cash for the privilege of using your product, or (b) the value of the audience you attract is great enough for advertisers that they’re willing to pay you for access to that audience.
Either way, you have to have something of value for an audience. And it has to scale.
If you’re any good at what you do, you will immediately attract copycats and competitors that will want nothing more than to take every penny you earn and put it in their own pocket.
As your company begins to get some legs beneath it, you’ll find that revenue becomes exponentially more important. A greater portion of your time will be focused on how to generate increasing quantities of cash out of your product offering. Conversion rates, costs of acquisition, life-time-values, RPU: these will all become values that are as familiar to you as the names of your own children. Resign yourself to this fact now. And know what the numbers are when asked.
The Work is Never Done
Up until the point where you (a) sell the company or (b) die/retire/walk-away, the work you have to perform daily just to keep the company going will not stop. In my experience, running a company is like running on a treadmill. As the company grows, the treadmill speeds up. There will always be some emergency to address, some competitor to analyze, some customer complaint to redress, some opportunity to explore, some revenue stream to optimize. If you slow down for a moment, the gears will gum up and the damn thing will throw you right off.
In other words, if you want a vacation that doesn’t involve lugging your laptop along with you, you may want to consider another career choice.
But, hey … that sure beats eating glass and staring into the abyss, doesn’t it? Doesn’t it??
Richard Luck doesn’t eat glass for a living, nor does he stare into the abyss all that often. But he can usually be seen lugging his laptop along on whatever trip he might be taking.
When not busy running Loudlever, Richard can be found online at AGuyWithAnIdea, or off-line wherever fine coffee products are sold.
