I can’t tell you how many people in his position would’ve started building something before actually figuring out what his market wanted. Sure, it’s easier to solve a problem without talking to your potential users, but odds are you’re going to be building something for a bigger market than just yourself and your peer group. Raj got out from behind the keyboard to really understand the industry he was targeting before he disrupted it.
RentHop, a Y Combinator startup that was poised to be the hipmunk of apartment rentals, just needed some more love. Its two technically brilliant founders had devised some very clever ways to sift through and find the gems among the mountains of notoriously awful apartment rental listings in New York City. But the company began when one of the founders, Lee Lin, got so frustrated by his own renting experience that he got his broker’s license in order to really understand what it was like on both sides.
If you’re not willing to really understand the industry you’re aspiring to reinvent, don’t bother starting a startup. Having industry experience is not only invaluable for building a great product or service, it also shows investors the dedication a successful founder needs to have.
Business First, Then Business Cards
Once you’ve identified a real problem and done your research, start trying to solve it in the simplest way possible. Your first version should certainly embarrass you. “Minimum viable product” has become a startup cliché for good reason. Just build the simplest possible solution to a problem, and launch it.
This probably won’t take as long as you might think. Each round of Y Combinator was designed to be three months long because Paul wanted it to be a summer program, so students could decide to take time off from school if their company was going well. This happened to also be a reasonable amount of time to go from idea to a live product. If it takes longer than a few months to start testing your idea, it’s because either you’re trying too hard to perfect it (you never will, so don’t bother) or there’s some other bigger problem.
The first version of reddit was absurdly simple. We didn’t have voting, and we certainly didn’t have commenting or the ability to create subreddits. It was simply a place where one could submit links and, based on clicks, see them rise and fall on the front page. A new user would simply see a front page of interesting links to click on.
Hipmunk was a flight-only search when we launched (no hotels, car rentals, etc.), and even that was strikingly bare-bones. Thanks to Adam’s hustle with the online travel agencies, we not only provided flight data but also started to collect a commission on referrals right away. We were making money from day one, which always puts a smile on investors’ faces.
And bear this in mind: the first version of Airbnb, the startup that has more rooms available for rent than the Hilton corporation, started from a single apartment in the SOMA neighborhood of San Francisco. The founders began the site by renting out air mattresses in their own home to conference attendees looking to save money.
Once you’re up and running, spread the word and start watching how users interact with what you’ve built. Listen to how they’re talking about it. This is key. There’s something incredibly satisfying about seeing the logs of the first users who try out what you’ve built. It’s one reason why I can’t encourage enough students to start building projects just for the experience of having real people all over the world use something you’ve built. Compared to dull schoolwork, learning by creating something relevant and usable is incredibly rewarding.
Once you’ve got something to show, use the growing number of available tools that allow people to share that great idea. We launched reddit in 2005, before “social media” was a phrase. Just five years later, launching hipmunk was drastically easier, because by then there were more tools than ever for people to spread the word about things they care about.
Word of mouth has always been the most powerful form of advertising—and it spreads faster and farther than ever before. Make something people want, and people will find out about it. If you’re not getting traction, it simply means you haven’t solved that core problem of making something people want. But that’s okay! Figure out what people are using. Talk to your users—those first hundred or so people who are willing to take a chance on a product they’ve never heard of are golden. Treat them well and get to the root of whatever problem it is that you’re not currently solving for them.
The most striking example of this was the stagnant first year of Airbnb.com. What it took was for the founders to actually stay in the homes of their dogged users to find out what kept them using the site and how they could improve their experience.
Perhaps the most distilled version of this would be to simply give a damn about everything you’re building. Take pride in the products you make, the service you provide, and the company you build. Give more damns than anyone else, because there aren’t a lot of things a startup has going for it, except that its founders and employees certainly care more than the competition. And that makes all the difference.
Why Are You Still Reading This Book?
One of the great equalizing effects of the World Wide Web is the fact that the cost of starting a company online falls every day. Your address is a URL. If someone has a browser anywhere in the world without a firewall (i.e., not in China), your idea is as easily accessible to that person as anything else online. You may have the best blueberry muffin recipe in town, but if your bakery isn’t on the right street, it could be game over. Location, location, location, right?
Remember—online, all links (locations) are created equal. And it costs about ten dollars to register a domain for a year.
The biggest investment you’ll need to make is your time. If you’re already a web developer, pretend this is a “choose your own adventure” and head to chapter 5, because you’re already ahead of the game.
Find People Who Give a Damn
All right, now that the developers are gone…
Here’s the thing. On the Internet, the makers wield all the power. Remember, if they needn’t ask for anyone’s permission, creatives can just create. If you’re looking to build a website and you’re not a builder, you’re more than likely going to have to try to become one. Now, you might be thinking, “Wait—I can just hire one, right?” Of course you can try, but demand far outweighs supply when it comes to developers in the developed world, and this isn’t likely to change very soon. I’m encouraging all the geeks I know to reproduce for the sake of humanity, but it’ll still be years before their sons and daughters will be of programming age.
What about outsourcing? I’ve never done it, because if something goes wrong (and it will), whether it’s 3:00 a.m. or 3:00 p.m. Eastern time, I need to know that my CTO is either awake or willing to wake up and give a damn about solving the problem. Unless you’ve got a close relationship with whoever is overseas and is working with you, it’s going to be nearly impossible to expect the same kind of dedication from that person.
That said, I’ve seen startups successfully build a minimum viable product that can get some users, show some traction, and ultimately be rebuilt from scratch by whoever takes over as CTO. I’ve also seen startups entirely outsource development and, by building a strong team behind a reliable point person, actually maintain it over the years of scale and growth.
Frankly, the most valuable thing you can do as you build something online is learn how to write code. Even if you end up never starting something of your own, the skills you learn in development are highly sought after these days. Plus it doesn’t show any signs of slowing down, given that in the future, everything that turns on will also have software.
Good news! All the greatest developers (like Steve said in chapter 2) are predominantly self-taught, thanks to a wealth of resources available online—for free!
That’s right. You can learn one of the most marketable skills right now from your home for the cost of a computer, an Internet connection, and your time.
The options vary greatly, but
here are four suggestions to get you started—three I invested in because of how much I believe in the value of this education and one with zombies:
http://Codecademy.com
http://GeneralAssemb.ly
http://MakeGamesWithUs.com
http://RailsForZombies.org (I didn’t invest in this one, but it’s awesome.)
Once you understand how a website is created and have gone through the process of designing a user experience, you’ll never look at websites the same way. This goes for everything from the choice of fonts to the layout of buttons to the copy on the screen. Keep an eye out for great design that inspires you and keep that list beside the list of agonizing experiences I encouraged you to write. You’ll start seeing every bad experience online as an opportunity for innovation.
Thanks largely to the success of Y Combinator, tech accelerators became a common model for, you guessed it, accelerating startup innovation. Not all accelerators are created equal, and even getting into Y Combinator is no guarantee of success. Fortunately, as the cost of starting something online continues to fall, the opportunities for getting it funded continue to grow.
Earn Every Single User
This isn’t just important for your product, it’s important for everything you produce—every e-mail, all the copy on your website, even your business card. You’ll need to get everyone (other than your mom) to care about what you’re working on. To this day, I remind myself of this every time I create something, including this book. If I’m not entertaining, informing, or inspiring you—what’s the point? I need to earn your attention.
Now you know why there are doodles in this book.
How to Surprise and Delight
I teased you about this earlier. There’s no point in trying to found a startup until you’ve got something people want. Once you’ve got traction, it’s time to focus on turning those users/customers/donors into evangelists by doing a full-scale analysis of all the ways you can build a company and community that not only understands why you’re doing what you do but will also be your best advertising for it.
This started as a class I taught at one of the New York locations of General Assembly, an education startup teaching skills for tech entrepreneurship, but after a half-dozen sold-out classes I realized I needed a way for it to scale. That’s where this section comes in!
Whether you’re building your brand around communities, as reddit does; around design, as hipmunk does; or around connection, as Breadpig does, one thing is clear: how much you care really does matter. Many of us interact with the Internet through beautifully designed hardware that is ultimately still robotic, no matter how shiny. A chance to surprise and delight someone by doing something a little exceptional goes a long way because it provides a smack of awesome humanity upside the head. There is nothing insignificant. That error message you just wrote is probably just like thousands of others I’ve encountered and will encounter—make it different; make it sound like your brand. For example, when I make a mistake on hipmunk and put in an arrival date that’s actually before my departure date, the error message is anything but generic:
We don’t support trips to the past yet.
Think of how much that conveys in just thirty-two characters. Instead of Error: Invalid dates, you get a cheeky reply that probably makes you smile a bit.
That’s something Steve dropped in because he felt like it and didn’t need to file a report to get it done. And it makes a difference. I routinely see people chortling about this online. And that’s just one example of many—not unique to hipmunk but unique to a new generation of companies building products and services that actually give a damn about the end customer.
How bad has it gotten?
My friend and fellow author Tony Hsieh, who’s also published by Business Plus, wrote a major international bestseller, Delivering Happiness, that essentially boiled down to two points: excellent customer service is vital to Zappos, and it should be vital in your business, too. Think about that. What does it say about the state of business when CEOs everywhere hear that and think, “Wow! That’s a revolutionary idea—we should be treating our customers well!”
There’s a huge opportunity here for startups. It’s one more reason why the best time is now to get started—so many incumbents are still figuring this out. Most of them will never get the Internet because they weren’t raised online. Use that knowledge to your advantage, founder.
In the meantime, I’ll also inevitably be consulting for some of these companies, telling them to adapt or die. We’ll see who gets the message, but there really is hope for everyone.
One of the most reviled organizations in the United States—the Internal Revenue Service6—inadvertently demonstrated that. In 2010, a San Francisco couple scanned a letter they received from the IRS and put it online. There’s a portion of the letter that I love to share. Here’s the best part:
We have reviewed your correspondence regarding the penalties that were charged to your account and based on your explanation that “the adult brain turns to jello those first few months raising a baby,” we have decided to remove all penalty charges. A total of $2,522.00 in penalty charges have been removed.
Yep, that happened. Not only did a kind soul at the IRS have the creativity and autonomy to do that, but he or she couldn’t have expected the impact it made in our connected world. Ten years ago this story would’ve made the rounds at the couple’s workplaces and probably at the next family Thanksgiving. Maybe it would have reached a few dozen or maybe a hundred people.
How did I find it? It was voted to the top of a popular subreddit, where it soared across Twitter, Facebook, et cetera. (It even was quoted in those awkward e-mails your parents still forward around.) Millions of people online saw this letter and were affected by it. Some person in the bureaucratic, form-letter jungle of the IRS had enough imagination, initiative, and humanity to make a $2,522 decision that did more for the reputation of the IRS than a multi-million-dollar ad campaign ever could have.
Just think of the potential Super Bowl commercial: “The IRS loves you—honest! See you April 15!”
There aren’t enough talking geckos and Old Spice guys in the world to genuinely convince anyone that the IRS gives a damn about the individual. But letters like this one actually might win a few people over. And if the IRS can do it, why can’t you?
Ignore Thy Competition
This was something Steve and I learned just a few weeks after launching reddit. (If only I’d had this book to read before we launched!7) On July 11, 2005, I sent an e-mail to Steve under the subject line READ THIS that contained only three words and a URL:
www.digg.com
meet the enemy.
The next day, I signed up for Digg to learn just what we were dealing with. Steve and I hadn’t done a very thorough competitive analysis before we got started speccing reddit, but it turned out to be a blessing because we didn’t have anything else clouding our judgment during those weeks we built the site. What doomed so many startups in our space was that they essentially copied Digg—and every one of them, like Digg, eventually fell. Back then, though, we didn’t know how it would turn out. I just knew I’d be answering “How are you different from Digg?” questions for the foreseeable future. Fortunately, we’d built a fundamentally different platform, even if it took us longer to gain traction.
Digg launched in December of 2004, when their founder, Kevin Rose, promoted it on the TV show he co-hosted, The Screen Savers8 (he didn’t mention it was his website, but so it goes). All of a sudden we had competition. And it was started by a quasi-celebrity who’d already used his platform to jump-start the community and who’d already raised a round of funding.
Meanwhile, two nobodies fresh out of college had just taken twelve grand to pay for spaghetti and were working on solving a similar problem. I loved those odds.
Naturally, we mentioned Digg to our lead investor, Paul Graham, who gave us some sage advice that’s remained indispensable to this day: Digg wasn
’t going to defeat us. We’d either defeat ourselves first or they would defeat themselves for us.
If you’re solving an interesting problem, or just having success, there will always be competition. Online, the marketplace of ideas is so fluid that new entrants can have tremendous success in a short period of time (and existing players can fall off just as fast). One ought to be more concerned about an upstart drinking one’s milk shake than about an incumbent, but in either case, it doesn’t behoove you to be looking back at competitors because you’ll find yourself lulled into replicating and reacting instead of innovating and moving forward.
As we kept improving reddit, Digg kept making missteps. The value of both our websites is that the community created and curated all the great content. Steve and I recognized this, and thus every technological and business decision Steve and I made had this central truth in mind—Digg, not so much.
That said, it took awhile for everyone else to realize it. As early as 2008, Erick Schonfeld, writer for a popular tech blog at the time, TechCrunch, had already written us off, saying, “The winner here clearly is Digg,” and calling the gap between us “pretty insurmountable.”9 There was a moment, still years before reddit’s traffic passed and then eclipsed Digg’s, that I’ll never forget (well, that and it’s on YouTube). In 2009, while Kevin Rose was onstage for a live event, someone threw a homemade reddit shirt at his feet. He picked it up and showed it to the crowd. Then he pantomimed blowing his nose on the shirt and discarded it.10 This was too good.
Just a year after blowing his nose on reddit, reddit blew Digg out of the way. All we had to do was ignore it—Digg’s own missteps caught up with it and the site’s popularity plummeted. To this day, reddit continues to soar, but no one is complacent. Our competition is now much bigger and broader as we battle for everyone’s attention online. The advantage of leading is that you’re not following anyone, but as I said, the competition to worry about is what is probably launching right now.11
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