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Hard Startups

blog.samaltman.com

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Re: Hard Startups

#131

Post by jariel »

I find these 'Valley Koans' popularised in the last long while to be a little troublesome.

Things like 0->1->n Do things that don't scale Andreesen Horowitz bit on 'The Good Ideas That Seem Bad' Paul G's essays.

They all have nice little nuggets of wisdom, but what the almost always lack are good examples and concrete evidence.

Funny that many HN comments are better researched than a lot of these 'Deep Thoughts'.

Since these guys have access to startup data like nobody else, golly, wouldn't it be nice to see examples and break-downs?

i.e. here's 1000 YC startups, and how they categorise in terms of 'hard/simple' problems. Here's their trajectory. Here's some mitigating factors etc..

The reason I write this is because of my flinch on this note from Sam. He's worth listening to, absolutely, but that doesn't mean we can't disagree.

The problem with his thesis is that YC makes all their money from very regular businesses.

There is no 'magic' to Stripe. It's a really great product that did mostly what previous products did, with a much cleaner API that devs loved. This is not koolaid/AI kind of stuff. For pragmatically minded people, yes, it does seem like it could 'really help change the world', but really ... it's not sexy.

AirBnB because it's more consumer, yes, I can see some koolaid about 'sharing' etc. but again I don't think it's in the category of 'tough problems'.

DoorDash, Instacart, Dropbox, Faire, Brex, Flexport, Checkr, Mixpanel.

So many of the big YC companies are solving regular kinds of business problems, in big market places.

The 'heady' startup would be 'Cruise' but that was an odd man out for a few reasons.

All the things it would seem to me that Engineers would really like to solve are not quite on that top list. The 'coolest tech' YC startups aren't really the big hits.

Re: Hard Startups

#132

Post by crankylinuxuser »

Hard startup, huh?

Well, that's what I'm doing. I'm doing a SigInt startup to prevent PII breaches and things like this from happening: https://www.zdnet.com/article/hacked-tornado-sirens-taken-of...

I've got a lineup of hardware with specific industry use cases. Right now, I'm the designer, hardware engineer, software engineer, and more. And right now, Only have around $2k of my own money in it, with possibly more on its way from grants and funds. All equity is ours.

Re: Hard Startups

#133

Post by ttul »

A colleague of mine more than a decade ago started a company in the alternative energy space with very interesting yet extremely difficult and unproven technology. It took them a decade to find out that the performance of the technology was not quite good enough to be commercially successful.

He burned perhaps a third of his working life grinding away on something that won't succeed - perhaps at all. Yes, there is some chance of a base hit OEM deal for a very niche application of the technology. But it's definitely not making anyone rich after so many years.

Hard startups are exciting and fun, but unless you are already rich, it may not be worth the risk. Comparatively, you could spin up and fail five times at an "easy tech" startup and perhaps have a greater overall chance of winning the one time that you need to win to make it all worthwhile.

Re: Hard Startups

#134

Post by im_down_w_otp »

ablekh wrote: post #47
im_down_w_otp wrote: post #10

This 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 quickl…

Interesting thoughts. Since you apparently have significant experience raising VC funding, I'm curious about your opinion on the following (others, of course, are welcome to chime in). If you were working on a deep tech (science-based) startup and considered using venture capital, would you prefer pitching your idea(s) to VCs, who happen to have relevant domain expertise (most likely, as their educational background)…

You want to pitch to VCs who you can get to believe you're solving a real problem that exists (or will obviously exist) in the market, the solution to that problem that you're providing scales super-linearly when money is added to the pot (i.e. is a product, not a service), and that the actual market opportunity is huge in total Dollars.

It helps then if they're familiar-ish with the markets you're addressing so they'll be aware of some of the challenges and sizing considerations (we talked to many, many VCs who just had no idea how big markets were outside the ones they were familiar with, like the enormity of the "Operational Technology" market compared to the IT market), and also that you can clearly articulate what you're making is an actual repeatable product to sell.

The most important thing to remember is that VCs want to make money, your ideas are just a path to making money, so your #1 job is to show them how they're going to make lots of money, not show them how clever your ideas are.

Re: Hard Startups

#135

Post by matchagaucho »

It's also true that "easy startups" can iterate into solving progressively harder problems.

The "hard" idea doesn't need to be the mission day one. Amazon was just an online bookstore at one time.

Re: Hard Startups

#136

Post by ttul »

jkubicek wrote: post #49

I feel like the money quote was buried in the postscript. > Another solution to this problem is to think about startups that can become quite successful with less than ten people. As compensation packages from the giant tech companies continue to increase, I suspect this will become a trend. As cash comp at big public companies grow and the future value of startup options plummet, we need to start thinking about diff…

These days - and assuming you think the high salary trend will continue unabated for years to come - working at a big tech company will guarantee you a very comfortable lifestyle in perpetuity. No startup can offer the same risk/reward trade-off.

But if you do want to start a company and have a high chance of becoming modestly rich, there is no shame in working on a niche problem that doesn't require piles of capital. If you grind away long enough, you can have a slowly growing, profitable business that makes you very comfortable.

Re: Hard Startups

#137

Post by pinewurst »

cbhl wrote: post #75
marcosdumay wrote: post #37

Earlier quoted context omitted.

> Ugh, can you imagine how bad TCP/IP would have sucked if it had been developed by venture capital funding? It was. Several times. It was developed by a lot of large companies too. Nobody remember those, for obvious reasons, but people used to use them.

Novell had NetWare and IPX. Apple had AppleTalk. There was also Token ring...

Though IPX and friends are children of Xerox’s XNS.

Re: Hard Startups

#138

Post by lastres0rt »

kortilla wrote: post #128
SolarNet wrote: post #116

Earlier quoted context omitted.

> The Valley is now the new East Coast people, the new Madison Avenue. Doing a hard startup in the Valley now is like trying to start Intel in 1960 New York. Hard startups are hard enough, without trying to do that. I think places like Detroit are promising for this. Lots of cheap real-estate, a local history of technical skills, and serious problems to solve (urban farming for example). Also due to the internet age,…

How is urban farming a serious problem to solve?

Food deserts ARE a serious problem.

Growing [X] amount of produce locally would provide a much-needed source of cheap produce and/or revenue to the local community. There's also general health benefits of the added greenery consuming excess CO2. Even better, captured rain runoff goes back into the soil sooner rather than becoming further concentrated with toxic chemicals before it reenters the ecosystem.

Re: Hard Startups

#139

Post by fogetti »

whack wrote: post #130

> If you want to start a company working on a better way to build homes, gene editing, artificial general intelligence, a new education system, or carbon sequestration, you may actually be able to get it funded, even if you don’t have a degree or much experience. Is this actually true? I have plenty of "hard startups" that I would love to work on. But these hard startups require far more investments and manpower, eve…

That's a fair point. My impression is that most hard startups are started by founders who come from academia.
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