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Startup = Growth

paulgraham.com

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Re: Startup = Growth

#131

Post by tubelite »

Consider an alternate universe with far worse odds: 1 startup in a field of 100,000 makes $100 billion, the rest make zero. Expected value is $1 million.

Should you be one of the 100,000 founders who "rationally" choose to buy a startup lottery ticket for $100b?

Well of course! If you could live for long enough to run through thousands of iterations of the startup game, that is.

In the real world, - Founders are typically limited to 1 startup at a time - It takes time - years perhaps - for a startup to fail - Founders can do only a few startups in their lifetimes

Given low odds like 1%, with (There are of course several non-financial reasons and payoffs. For instance, an Idea takes demonic possession of you, and the only way to exorcise from your tortured brain is to do a startup..)

Re: Startup = Growth

#132

Post by Tycho »

I'd be interested to know the volatility of these growth rates. PG talked as if the might be fairly constant over the course of one or two years, but my gut feeling is that they'd be anything but.

Re: Startup = Growth

#133

Post by shimon »

ozataman wrote: post #118
marvin wrote: post #113

Earlier quoted context omitted.

This is not true. Minecraft is the best example; it had an insane growth rate both in percent and absolute numbers, exactly what PG is talking about. The other games you mention are also good examples of starups in high-growth terms. And when talking about markets, most people who enjoy Diablo, Baldur's Gate and Minecraft _don't_ enjoy free-to-play games, since these games have no element of art or story to them. And…

Somehow titling Minecraft, Diablo, BG as "Startup"s or "Startup-like" things feels wrong to me. Minecraft was one guy (probably) enjoying himself while putting together something creative. It then exploded. Did he really target 10% growth per week? Diablo, BG, etc. were all calculated bets by people with lots of experience in the industry. They weren't building a business model, a new organization, etc. They were doi…

Minecraft maybe didn't set out to be a startup, but it achieved all the growth goals of one, and it's certainly fair to call it one now, isn't it?

Games like Diablo and BG are actually run in a fashion closer to movies than startups. A game publisher finances games that it expects will succeed. The publisher's competitive advantage comes largely from brand equity and high capital cost of creating a new game. Thanks to brand equity, they are primarily expanding or upselling into a market where they already have a lot of reach. Of course, there is some risk of failure in each project, but it's closer to that of making a blockbuster sequel than that of solving a novel problem with technology.

Re: Startup = Growth

#134

Post by nhangen »

I'll admit that I was a little bummed after reading this article. Every single PG essay I've read left me feeling stoked, lit on fire like I could take on the world. I felt I could identify with the man, and like I belonged here.

This essay, on the other hand, left me feeling like I don't belong here. I feel as if the YC philosophy has evolved into something different than it was, or perhaps, that this is more honesty than we've ever seen before.

Either way, I couldn't be happier to use revenue as my measuring tool, and not free users. Racing to give my product away at a rate of 5-7% weekly growth would require me to completely change my product development philosophy. I build what I build because I see something missing, not because I hope to flip it in a year.

Re: Startup = Growth

#135

Post by caf »

ozataman wrote: post #104
ChrisNorstrom wrote: post #94

- Venture Capital pouring millions into untried businesses. - The crazy valuations. - The recent complains of VCs that "Entrepreneurs aren't working on enough big ideas". It all actually makes sense now. It's all in the name of Big Risk = Big Reward style ventures. Especially after defining a "startup" as a company meant to grow rapidly and to massive proportions. Not necessarily a tech business. Not an online store…

Yeah, there is something about this startup model I don't quite like. To be upfront, I am not arguing what the word startup means - the society is free to assign to it any meaning it wants and what Paul describes here is a clear, specific meaning that's as good as any. What makes me uneasy is the model itself and what it implies for the entrepreneur. To me, it makes the most sense for the VCs and other investors who…

It's not so much "who cares if you're inefficient" - if you really have found that goldmine then you have to tear into it quickly, because if you slow down to get that extra efficiency then a faster, less efficient competitor will dig it out from under you.

Re: Startup = Growth

#136

Post by emmett »

ekm2 wrote: post #129

pg listed writing novels and tech startups as "high-beta" occupations.What are other high beta and high alpha occupations?

Anything where the best practitioners are famous.

Sports player.

Politician.

Artist.

You can complete the list.

Re: Startup = Growth

#138

Post by apinstein »

ChrisNorstrom wrote: post #94

- Venture Capital pouring millions into untried businesses. - The crazy valuations. - The recent complains of VCs that "Entrepreneurs aren't working on enough big ideas". It all actually makes sense now. It's all in the name of Big Risk = Big Reward style ventures. Especially after defining a "startup" as a company meant to grow rapidly and to massive proportions. Not necessarily a tech business. Not an online store…

We need a "slow startup" movement.

pg's definition of a startup is just one kind of startup. I like to call it the VC startup. It's an organization whose goal is to succeed big or fail, and fast. This "charter" is driven by the needs of investors, and I get that. It makes perfect sense, and from where pg's sitting, it's the attitude he needs to have to successfully manage his portfolio. But it's not the only way to grow a startup, and I think it unfairly marginalizes non-VC startups as non-startups.

pg probably wouldn't consider my company a startup, but I think he'd be wrong.

We're 4 years old, have 4 employees, profitable, and grow at a pokey 100% YoY. The pace of work is enjoyable. We build things for the long-term. We have time to help our customers. We get to see our friends and family. A lot. The principals own 100% of the equity.

But in our minds we aren't building just a tech business, we are building a startup. A slow startup. We picked a huge market (photography). We started by marketing to a small niche where we could be profitable while building the infrastructure required to scale to a larger horizontal market.

If we'd been VC funded, we might be in the same position for growth; finally finding traction after years and several expensive, painful pivots. In this alternate startup universe we'd own practically none of the company at that point, and we'd have wasted a lot more money.

I "grew up" in the 90s dot-com era reading Geoffrey Moore. We feel like we're executing that strategy and doing it well. We're poised for overnight success in a larger market, and on our own terms. I don't feel like any less of a startup than the multiple VC-backed startups I have worked for previously. I do feel a lot less stress.

So, if you want to enjoy life, build great things, and potentially make a ton of money, don't think it's not possible. Find or found a slow startup and change the world!

Re: Startup = Growth

#139

Post by eranation »

I don't think good ideas are ideas that are overlooked. I think we saw many times that being second is better. Google vs Altavista, Facebook vs Myspace, Github vs SourceForge, Google maps vs Mapquest, Foursquare vs Yelp, Stackoverflow vs ExpertsExchange, and the list goes on.

I think the ideas are overrated, what matters is the small twist in the idea that makes you better than the competition, and most importantly, execution. Once you are out with your product, getting the right talent, getting the right design, getting features out there faster than your competition (like your own company in the past based on one of your posts) is what matters.

I think there are not that many ideas that are overlooked, just people that don't think they can do something with them. the chance that an idea was not thought by someone else, that reads the same blogs, have a similar lifestyle, and is a smart person like you, is very low (or the problem you are trying to solve is not a real problem), but the chances of that person to have the courage, time, effort and perhaps money to start a business, and find good co-founders, (and willing to risk his marriage and apply to YC) is what's a bit more rare in my opinion.

On the other hand, I have zero experience relative to you, and it's a little weird for me to disagree with one of the biggest startup mentors of our time, but still, this is just my opinion.

Re: Startup = Growth

#140

Post by smoyer »

Isn't a start-up that's bootstrapped and designed with a clear path to monetization desirable anymore? You can obviously design something to grow quickly, but doesn't that also increase the risk of it being a flash-in-the-pan?
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