Saturday, November 28, 2009

Startups

I just read through a fascinating article about startups. It's all worth reading (it's a quick, succinct read), but I think the best part, overall, is the end:


Unconsciously, everyone expects a startup to be like a job, and that explains most of the surprises. It explains why people are surprised how carefully you have to choose cofounders and how hard you have to work to maintain your relationship. You don't have to do that with coworkers. It explains why the ups and downs are surprisingly extreme. In a job there is much more damping. But it also explains why the good times are surprisingly good: most people can't imagine such freedom. As you go down the list, almost all the surprises are surprising in how much a startup differs from a job.

You probably can't overcome anything so pervasive as the model of work you grew up with. So the best solution is to be consciously aware of that. As you go into a startup, you'll be thinking "everyone says it's really extreme." Your next thought will probably be "but I can't believe it will be that bad." If you want to avoid being surprised, the next thought after that should be: "and the reason I can't believe it will be that bad is that my model of work is a job
."

For most of us, our model of life is a job. What if it weren't?

8 comments:

Unknown said...

Thanks, Bill!

I knew most of it, having started my own woodworking business awhile back. But I hadn't thought about any of it with my new venture!

I liked the bit about over-engineering a product. I'll have to think about that one. :-)

Carolyn Ann

Cerulean Bill said...

It all made a lot of sense to me. Of course, I speak from only theoretical experience.

I'd love to be able to do cabinetry, but chopping the end off the Christmas tree, once a year, is the extent of my skill.

STAG said...

Freedom is, or can be, the freedom to not get paid....

Cerulean Bill said...

True enough. And I know that you know this better than me. But sometimes, I wonder: is the opportunity to fail something that's worth knowing?

STAG said...

The lessons of failure are limited. Anybody can foul up, and most businesses are one foul up away from dissolution. A single (or even multiple) foul up does not a failure make.

Of course, it might possibly be in the definition of "failure". You get a dozen people, you will get a dozen different reasons why they are in business. If these reasons are fulfilled, they call it a "success".

I often choose "lifestyle" over "cash payout". This means that I shut down the business one month out of every year to travel in Europe, cherry pick the sexy, possibly low paying but fun contracts, and in general, enjoy my job so much that I love to go into work in the morning. I have taken hundreds of contracts over the years which seemed so much like work that I swore "never again", and would be willing to write a book entitled "When you should say no!".

I have been accused of not having a business at all, but rather, a hobby. Well, my business pays me as much as I earned in the service, I work half the hours, take none of the responsibility and I get to hang out with a lot of very interesting people. My real "hobby" is riding trains. There are things I would change...if I were to work twice as many hours I could afford to hire some of my out of work friends, but you know...altruism can go only so far.

Well, enough of this. Surprisingly enough, I have to get back to work.

Ta.

Cerulean Bill said...

I've often wondered why small, successful companies so often evolve into large, bureaucratic ones. A distant relative, talking about his father's quite successful business, said that the bigger they got, the more rules and procedures they had. It seems as if there is a point where they want to make more money, but the only way to do it -- and its not a guaranteed way -- is to sell the soul of the company.

STAG said...

Well, businesses change because the goals change. When you start out your goal is "Damned if I am going to work for THAT guy again!" Later on, your goal is to get enough orders into the funnel to be able to hire more staff, particularly staff that will do the boring work. Later still, the goal is to have enough orders in the funnel to not have to lay off any of your staff during down times.
After the first rocky couple of years, the goal changes to "Since I can't compete on price, can I compete on quality or service? And then hiring practices change up from hiring the guy to sweep up to hiring the guy with the expertise to run that fancy machine, or maintain the hot website. Often the owner loses sight of the goal at this point, the goal is not to have the machine or website, or bank balance, but to use it as a tool to grow. But if you persevere, and grow enough, you end up with a business model in which the tail wags the dog. The employees are more knowledgable than you, the boss, and "Dilbert" situations start to develop. The owner or boss is no longer actually making the product, but making financial and HR decisions.
Most bosses get defensive at that point, and hand out rules and regulations in lieu of leadership. Often the original boss gets fed up with it, and sells out, and if you are the new owner, you have bypassed all the "hands on" years, and gone straight into a corporate world. The bottom line now runs things instead of the boss.

I love start ups. I run them until they die on the vine or become successful enough to sell. Most die, by the way. I recommend that if you decide to buy a business to chat with me first...decide what your goals are. If the goals are met at any stage of the business, you can call it a success.

I could write a book, I tell ya! But I think others have beat me to it!

Cerulean Bill said...

There's always room for good books on the subject. I'll even give you a title: Lessons From The Forge: Making Metal, Making Money Don't thank me now.

I've only been in one organization that grew -- EDS. When I started with them, it was, perhaps, two thousand people. When I left, it was in the low twenties. I got the feeling that no matter how many contracts we signed, we needed to sign more in order to earn money. Much later, I found out that part of the reason was, we always, always, always did a lousy job in estimating costs, and we usually let the customer push us to do things for free. Like an alcoholic, we'd swear Never Again, which would be good for a while, but then -- well, this is an Important Customer, so okay, Just This Once.....