The perils of the business guy
Utah is a weird place. It has a really strong sales culture, which is great if you’re building something which requires personal relationship management and building relationships of trust. Utah’s Mormon heritage is largely responsible for this. In fact, the term Building Relationships of Trust is a religious cliche that evolved out of Mormon teachings.
So living in Utah, despite being an entrepreneur who has the “YC single founder” label, I end up hearing from a lot of would-be entrepreneurs who see the attractive characteristics of starting a company, and think “hey I think I want to start a tech company.”
To be clear: This mindset is very strange for me. I didn’t start my career wanting to start a company. I started wanting to have tools that didn’t exist for me, and realized the best way for the tools to exist was to create them myself. The opposing mindset of seeing the benefits of company creation first, and figuring out what to create second isn’t bad nor negative, nor should it be discouraged because the fact is anyone can create something meaningful in the world. However, I think a lot of people who start out as “business first” people, who have skills / place emphasis on relationships instead of product aren’t aware of the pitfalls.
First, think about your own personal skill set. Are you a domain expert? Do you know something that nobody else knows or can see because of your domain expertise? Could you alone with no outside help build a convincing first version of a product? Have you ever experienced failing to scale because your tech stack isn’t strong enough? Have you raised money before? Do you know rich people? Have you ever had to shut down a business before? Do you know what it’s like to not know where your money will be coming in a month, and feel ok about it? Have you worked with programmers before? Designers? Have you built a team before? Do you know how to effectively communicate in email? Chat? Via text? Are you scared of getting customers? Have you ever had to follow up with people endlessly until they finally crack? Do you know the basics of marketing? Do you know how to get your first hundred users? Thousand users? Million users? Billion users? Can you deal with existential dread and feelings of hopelessness for extended periods of time? No, seriously, can you? Have you ever had a project, idea or career theme that you worked on for more than 5 years?
Don’t worry, I’ve never met a first-time entreprenuer who was prepared. If you’re going to start a company, and really this could be any type of company not just startups, you should look at this list of skills and feel like there are at least a handful that you can either convincingly answer with a “yes, and I’m one of a few people in the world for whom this is true” or a “yes, I’ve done that before.” A lot of them will be “No”, and worse, “No, and I hate doing that.” As long as there’s not one where you say “No, and I’ll never do that”, you’re a likely candidate for an entreprenuer.
Startups, and specifically technology focused startups, are where I spend my time. So the rest of this essay is focused specifically for you, business person who wants to build a business with a software component / emphasis.
Software has this really attractive quality to most business people: Exponential margins. As you build software, for every user you acquire, your margin goes up. This is in opposition to something like a pure hardware company, or a fruit grower, or something, where each unit has a fixed cost associated with it.
So you’ve seen this really cool financial process, and you’ve thought to yourself: Hey I could do that. You might even have a really good idea you think could be big, and better yet since you’re so awesome at relationship building you think you could even convince your rich friends / investor friends / banker friends to give you like $1mm to get a first version out.
STOP. Seriously stop. For just a second.
Let me describe the most likely scenario for you right now. You’re going to say like “ok i’m going to build uber for dogs: on-demand pets” or some permutation of hot startup / topic area / buzzword / market you’ve identified to be huge, you’re going to outsource the tech to someone who you barely know, or worse, an overseas development house, and you’re going to raise a boat load of money, hire employees, and feel like you have a successfulish company right out of the gate.
Bad news: You’re setting yourself up for failure.
Let’s tease this out. So the v1 that you had built by some outsourced person or firm. Turns out it’s really bad because they did it in a rush and made specific technical tradeoffs to get it done quickly. Turns out those technical tradeoffs (referred to as tech debt) don’t align well with the product vision, and now you’re either behind schedule on getting your good version out, you’re fighting with your hastily chosen cofounder because you don’t believe they can do a good job, all while you have investors looming over your head trying not to babysit you but being really concerned about what’s going to happen to their money.
The way out is luck often times for most entreprenuers who survive this spiral. A lot of companies don’t. And the funny part is: This was how technology companies were largely built (TiVo, Handspring, anything that probably launched at DEMO when it was payola) until the founder-focused crop of mega tech corps proved to VCs / LPs that if you keep product focused founders in for a long time, you get Apple, Google and FB, instead of Microsoft, Oracle, and IBM.2
So what if I told you that instead of relying on luck to beat the tech debt spiral, you could de-risk your entire plan by committing maybe a year of part-time (2 hours a day) work to it? So the thing that you want to spend 10 years+ on, and want to become a billion dollar company, you could spend a total of 120 hours, spread out over a year, and de-risk the hardest parts of your company?
I think you’re going to know what I’m going to suggest: Learn to code. But this isn’t some sort of pie in the sky “if you learn to code, you can do things” speech. Let me tell you exactly why you, business person, if you spend 120 hours before starting your company, you’ll save yourself thousands of hours and potentially millions of dollars of problems.
So let’s rewind back. You have the idea. You think it’s awesome, and can be huge. The risk for you is not on relationship building, or fundraising, like my risks were. The risk for you is basically: Can you actually build a team around your vision, and execute like nobody’s business to prove out the business model.
Most of your risk is centrally tied into building something people want… ie something a customer likes / loves and wants to use / recommend to their friends. Developers have this risk too, but they can de-risk much more quickly than you, because often times since they have a technical background, they can go through iterations literally in their head of ideas that might or might not work, and prove / disprove them before typing a single keystroke.
You don’t have this luxury. You have guesses, not informed hypothesises. Your head iterations aren’t based in reality, they’re based in fantasy. Because you don’t actually know how to build things, your brain iterations are little more than clarifiers: You’ll get some perspective by thinking about it, but you have no idea if your idea is technically feasible, let alone good.
OK, so I’ve convinced you that artifacts are better than daydreams. Things you can touch / feel / share are better than ideas. So you’re going to learn to code. What do you actually need to learn?
I don’t currently have a perfectly prescribed path. I think coding bootcamp programs like Dev Mountain are really interesting because they can probably shortcut a lot of the stuff that learn-to-code programs online miss. But regardless, you’re resourceful and you know people, finding a place to learn to code isn’t really that hard. Let’s talk about the motives you should have while coding.
If you have the skillset of a qualified junior developer here’s the magic that gets unlocked: YOU CAN NOW SORT THROUGH COFOUNDERS. Remember that person you barely know who you were going to work on a project with for the rest of your life? That person has to a) be an awesome friend, and b) they have to be technically competent. Even though you can’t accurately judge the upper bound of their skillset, you can now judge the lower. And you can tell if the speed at which they do things is faster than you. Also, you unlock some of the magical pre-processing ability to code in your head, even if it’s limited.
But here’s the coolest part of all: You can credibly comment on technical tradeoffs. Yes, you’re not the most amazing developer, but because you can both understand a feature at a core level, and have people explain the hard parts from easy (and you can know if they’re lying) you can now help make accurate tech debt tradeoffs.
Now, your tech debt is like a good investment, rather than a bad loan. You don’t have to default on your codebase. You, as the CEO or cofounder, can help build the simplest version of the product. You hopefully will never touch the code again after the first version is done and you’ve proven your initial hypothesis… but you’ve also set yourself up to be successful. That early exit ramp for the business person founder who outsources their code overseas and ends up with a horrible, unstable base? You get to skip that.
Additionally, someone like HQ or Izeni can actually build a really really good first version of your product with you, and you can trade money for time and not sacrifice quality.
A fast note: Y Combinator, as founded, was designed to help turn hackers into business people. Turning business people into hackers seems like a different thing, but eventually it’s the same. If you, as a business person, become a junior dev, and find a hacker, something like YC acts as a true “accelerator”, because now they can help you focus on what you need to focus on. I think there needs to be some other thing that exists to take talented business people, teach them a modicum of coding knowledge, and then introduce them to talented hackers who they might be able to start things with.
Also, this essay is really only focused on helping business focused founders who don’t have a hacker cofounder / can’t adequately judge a cofounder. If you worked at somewhere, like Google or something, as a business person / BD / Sales, and had coworkers who you actually worked with before (0 degrees of separation), I think the above outlined approach is likely to be overkill. The chances that a personal relationship de-rails a startup are higher than a technical match, I think, so if you have someone who you really like, and they want to start something with you and believe in you, you might as well get a v1 going and see what happens.