We Happy Few
A college kid in a dorm room starts assembling and selling person computers.. Two college dropouts–or recent graduates–start building hardware in a garage. A woman starts a software consulting business in her second bedroom, then creates a software product. Four men in a pie shop sketch a design for a personal computer. All startups by definition start small and attract founders who welcome the independence. Perhaps they have failed in a larger firm or they have become disillusioned working in one, perhaps they have never worked a large company and have no idea what’s really involved.
These startups often face competition from established incumbents who have more people, better financial resources, and relationships with customers. Their success in a niche can attract the attention of larger players either intentionally through their messaging or when prospects they have approached turn to existing vendors to provide similar functionality.
Marathon Not a Sprint
First time entrepreneurs often romanticize the speed and power of working in a small team, but experienced entrepreneurs understand that established firms often fight back very effectively: no market of with any value is uncontested and it’s going to be a marathon not a sprint.
“History seems to indicate that breakthroughs are usually the result of a small group of capable people fending off a larger group of equally capable people with a stake in the status quo.”
George Heilmeier in “A Moveable Feast” [PDF] 2005 Kyoto Prize Lecture
The team has to set a sustainable pace from the beginning. This often means not only work/life balance–keeping all of the critical commitments you have made to friends and family in addition to your co-founders–but work/work balance: finding a way to generate revenue, to bootstrap, while you are exploring the market and building the first and sometimes subsequent version of your product. Not every new product is an immediate success.
Startups are incredibly hard work. They require that you maintain good relationships with your family and friends and continue to participate in the communities you are a member of so that you can get support and useful perspective when you need it. Very few real products are built in a (long) weekend or a week or even a month or two. Plan for at least nine to 18 months of hard work where there are a number of “sprints” that are a few days to a week of concentrated work. But the team has to be able to sustain creative problem solving for a period of probably two years before it’s clear you have traction, at which point the game gets much harder as your competitors start to go to school on your success.
Cameron Moll explores the challenges of a team of two or three competing with a team of twenty in “Things Take Time”
The team of twenty has quantity on its side — more hands and specialists to execute the work. With that, of course, comes all the red tape, political baggage, and countless meetings that accompany such teams and the organizations that employ them. Quantity suffers at the hand of seemingly endless structure.
The team of two or three has independence on its side — they call the shots, whenever and however they choose. With that, of course, comes all the requisite components for supporting and maintaining the thing they’re creating. Customer support, billing, advertising, blogging, tweeting, client and customer acquisition, and the like. Time suffers at the hand of a seemingly endless to-do list.
The independent team soon realizes that speed isn’t a luxury; its currency is late nights and long weekends. For those who prefer to keep a semi-regular schedule and who have other things to care for outside of work, we eventually learn to accept that things just take longer than we hope they’d take. Problem solving takes time. Details take time. […]
I’m learning, rather forcibly I suppose, to be okay with things taking time. I’m also learning that often you end up with a better product when you take your time to get all the big and small details just right. It’s time well-spent.
It’s OK to take this time if you are in direct communication with customers who are willing to pay for the product. It’s a mistake to spend all of your time in the workshop if you have not had a number of conversations with prospects and closed some opportunities.
Avoid The Strong Points Of Established Firms
A larger company can work a startup into the ground unless you are careful in your choice of product and niche market: a frontal assault is typically beaten back. Startups have to choose how they will compete very carefully. In the “Bootstrapper Manifesto” Seth Godin lists five key leverage points that many established companies enjoy: distribution, access to capital, brand equity, customer relationships, and great employees. Here is a brief explanation of each and some approaches that a startup can use to counter these advantages.
- Distribution: they are able to get the product in front of the customer.
Counter: Sell directly, or find partners unwilling to work with larger firms
- Access to Capital: they can borrow a lot of money.
Counter: Frugality, be smart about which problems you tackle, leverage existing team expertise.
- Brand Equity: if the prospect already knows about the company and the product it substantially reduces their perception of risk in making a purchase.
Counter: go to firms who are unattractive to larger firms or not well served by them.
- Customer Relationships: especially in B2B with approved vendor lists and existing contracts.
Counter: chase smaller deals, chase deals where you bring enough advantage someone will fight to put you on the list.
- Great Employees: talented people with low tolerance for risk are delighted to work in established firms. Entrepreneurs greatly overestimate most people’s appetite for risk, especially as passengers in their race car.
Counter: provide opportunities for folks with appropriate experience who may be less desirable to larger firms. Examples of this might be older engineers, women who want to work part time because they have small children, people with less experience but more enthusiasm for learning.
More generally you need to configure your business model so that you are either pursuing opportunities that are less attractive to larger firms or your product violates one or more key requirements for their business. This may mean:
- Chasing smaller deals to get traction and establish your brand.
- Not implementing some functionality that your competitors have that your current prospects don’t find valuable, enabling you to get to market faster and at a lower price.
- Providing additional services that a larger firm either doe not have the expertise for.
- Providing additional services that won’t necessarily work at scale but allows you to further differentiate your offering for your target nice.
- Configuring or customizing a version of your product more rapidly or more completely than your competition.
Focus and Perseverance Means Saying No
Fast Company called work/life balance “bunk” a decade ago because “hungry” labor was going to work us into the ground. If you are able to substitute working smarter or working more intimately with customers for working more cheaply you can likely avoid this fate. Successful bootstrappers remain open to possibilities–especially the possibility that they are mistaken in one or more of their business hypotheses–but maintain focus: they explore many options but say yes to only a few.
One of the reasons I am excited about Discovery Kanban as a model for not only larger firms but startups is that entrepreneurs, especially bootstrapping entrepreneurs, have to husband their resources but find a way to explore the market. This means being explicit about the amount of effort that will be invested in developing and exploring options, and being very crisp on commitments. Discovery Kanban offers a framework for managing risks, options, probes, and committed projects from a consistent perspective: we can only focus on a few things at a time, what are they?
- Getting the Band Together to Overthrow the Current Order I see J.R.R. Tolkien’s The Fellowship of the Ring as the story of a small multi-disciplinary team (“The Fellowship”) coming together to challenge and ultimately change the status quo. A status quo supported by a much larger and more powerful set of armies and magic.
- Seth Godin’s Bootstrapper Manifesto
- Ten Mistakes Early Stage Bootstrappers Often Make
- Discovery Kanban Allows You To Balance Delivery and Discovery
- Discovery Kanban Helps You Manage Risks and Options In Your Product Roadmap