Hard Startups
blog.samaltman.com
Hard Startups
1–10 of 331 posts
Re: Hard Startups
#2> for the most part talented people want to work on something they find meaningful
Is this really true? I would hope so but apparently the definition of meaningful is different for everyone. From my point of view funding and talent has been allocated poorly in recent years.
Re: Hard Startups
#3This seems very related to the blog post that introduced me to Paul Graham, and in turn Hacker News, about a phenomenon he calls Schlep Blindness.
http://www.paulgraham.com/schlep.html
I would be curious what people think today's most obvious schelps or hard problems are? Nuclear Fission as in OPs post is cool, but Im thinking more along the lines of something a team of competent developers could do.
Re: Hard Startups
#4Before I started Submotion, I did a fairly thorough analysis of what kind of startup I wanted to create.
I decided that I wanted to create something that
- was B2B. Consumers are fickle, things can explode but they can also go out of style just as fast. It's more sexy and makes for better smalltalk but my assessment is that they are much more difficult to grow predictably.
- targets SME's. I am somewhat extroverted for a developer, but I will never be the type who goes golfing with CEO's to close deals. Million-dollar deals is not my game, I will go for higher numbers of small ones.
- targets tech-savy businesses. Because I speak their language, I understand their needs and I stay in the loop of their world out of curiosity, not because I need to keep up with my industry.
The problem is neither hard nor easy, by the definitions of this article. It's deterministic; there's just a bunch of work to be done. I'm doing it. It's slowly evolving. This is definitely a reflection of me being 40 when I started it, it's somewhat boring but that suits me perfectly :-)
Re: Hard Startups
#5I get his point, but it’s not expressed well. It’s not “easier to succeed.” The chart effort/time has a different shape. Upfront effort is tremendous, and if you can get past that then it gets easier.
Re: Hard Startups
#6Before I started Submotion, I did a fairly thorough analysis of what kind of startup I wanted to create. I decided that I wanted to create something that - was B2B. Consumers are fickle, things can explode but they can also go out of style just as fast. It's more sexy and makes for better smalltalk but my assessment is that they are much more difficult to grow predictably. - targets SME's. I am somewhat extroverted f…
I agree with this, except we decided on closing CEO deals, we sucked at SEO by comparison.
Re: Hard Startups
#7The problem with startups building hard tech is it takes a long time to fail. Failures that take decades doesn't work in the startup model. Image working on a fusion reactor. It might take 25 years to fail. The failure may not be that your idea doesn't work, but because some other kind of reactor comes along that is a better business (ie, cheaper). At this point, you are now a world class expert at a technology that is not economically viable. But, you can't transfer that knowledge, or at least most of it. You are also now 50 years old, give or take. You don't have 25 years to work on the next hard problem. You certainly don't have time to fail again. Back in the day when lots of people worked on hard technology, they were paid well to work on the problem; their life time earnings did not depend on creating a viable business. Because of that, they usually earned a pension, too. Because if you failed, you could retire comfortably, or, at least have enough to choose a second career that didn't pay as well. That model doesn't work for startups.
Re: Hard Startups
#8This seems very related to the blog post that introduced me to Paul Graham, and in turn Hacker News, about a phenomenon he calls Schlep Blindness. http://www.paulgraham.com/schlep.html I would be curious what people think today's most obvious schelps or hard problems are? Nuclear Fission as in OPs post is cool, but Im thinking more along the lines of something a team of competent developers could do.
I feel like one of the hardest problems in tech is making search engine that credibly competes with Google.
It's not just because the tech is hard (and it is), but also because they have some of the strongest network effects, user lock-in, and distribution deals.
It sounds almost dumb/crazy for people to try, but there is a newer effort from Europe that I saw on HN recently (i.e. they've been working for ~5 years and are just starting to publicize). And I think PG has mentioned it a few times -- i.e. encouraged people to take on Google :)
BTW I think "schleps" are different than "hard startups". I think schleps are about raw effort where you kind of "know" you'll succeed at the end. It seems like most companies are hard because you don't know if what you're building will succeed, even if you build it.
edit: "new" search company is cliqz: https://news.ycombinator.com/item?id=21724191
Re: Hard Startups
#9It’s odd (read: motivated by self-interest) that he didn’t make any attempt to establish the failure rate of these startups and the distribution of outcomes for employees.
Further, he didn’t even argue for a referendum on equity comp. He’s blatantly peddling the same broken model of “sell them your fugazzi so they can’t tell their talent is being plundered for (founder/investor) economic gain”. It’s downright insulting. I’d like to read Altman’s thoughts on making the cap table transparent to startup employees. I’m sure it’d be a riot.
So why is Altman saying any of this? Because he relies on the portfolio model. He doesn’t care if 99 companies fail and the employees within them end up with squat as long as the 100th is an earth-shattering home run. And he needs the world to start taking more massive risks on YC’s behalf, so they can keep making piles of bank. This is the incentive structure dictating EVERY single VC’s calculus. No one should ever listen to them without understanding this. Incentives. Incentives. Incentives.
The “mission” doesn’t matter to a rational person, for a very simple reason: the opportunity cost is the significant amount of wealth (reliably made somewhere like Google) that will afford you the cushion to do whatever you want later in life.
These guys need to get real. The highest EV play is to first get wealthy and THEN do what you want. And it doesn’t even have to take that long (most competent engineers could be there by age 35-40).
Don’t fall for their “mission” nonsense. It’s a monstrous lie designed to keep funneling tremendous amounts of money to the people at the top.
Re: Hard Startups
#10This is an interesting perspective, but not one I found to be broadly shared by the dozens of VCs that I interacted with during fundraising. That we were doing a hard thing, despite having an experienced, capable, and "battle tested" founding team, as well as early revenue that was nothing to sneeze at, was very often a knock against us. Early on, it was kind of hard not to take this a bit personally, but that quickly gave way to shrewd calculating reality.
I think this is a perspective that's afforded to the VCs who have either the pockets or the connections to carry out the strategy that's called out in the OP. Namely, that the startup is probably going to need a lot of money to get to clear product-market fit/readiness before being able to really scale.
For the throngs of early-stage VCs out there who can't write Million Dollar checks more than a couple times a year, there's a built-in risk aversion to going after something "deep tech" shaped because they literally can't afford it.
What worked for us at the end of the day was essentially having larger, later-stage funds who'd been exposed to or burned by the problems we're solving go to bat for us, and also to find very focused & targeted VCs whose thesis about the future of the world aligned very strongly with ours. We're very happy with where things ended up.
One conflating problem I observed during fundraising was that as it became clear that finding thesis alignment was essential, many VCs go out of their way to appear very generic in their thesis. Though others are great about being very specific. When you find a fund that invests in say biotech, they're often really up front about that in numerous obvious ways from their website, to the background of their partners, to their investment portfolio. As a founder not explicitly targeting biotech it is then easy to filter out.
However, when it's not so cut and dry (I assume because many VCs want as much deal flow as possible), it actually makes the problem worse for both parties. Founders waste time targeting VCs that don't make much sense, and VCs waste time talking to founders that don't make much sense, but there's a natural tension because you're both living & dying based on matchmaking with each other, and so it feels like you're doing something really irresponsible by clearly signaling and constraining ahead of time who you'll talk to. Because, "What if...?"
I learned a ton from the process. It's a really odd knowledge base to have that's useful in almost no other situation.