Story of Tapgreet overcoming the trough of sorrow
You will go through this:
1. Write down your original model that you were optimistic about using Steve Blank's chart
2. Identify analogs and leaps of faith
3. Don't prototype. Pretotype leaps of faith.
4. Reorganize your model to eliminate leaps of faith, only keeping valid ones
5. Write down the new model that has no leaps of faith
6. Write down the funnel and identify key metrics
7. Measure the key metrics for a benchmark
8. Identify the first bottleneck, and hang out with the customer to figure out where the hiccup is
9. Optimize, don't quit. Remember your original vision.
10. Do not scale. Explore big changes to assumptions to make radical improvements.
11. Only scale when the blueprint has traction.
Careers are not continuous.
They follow S curves.
Remember Don Draper from Mad Men: he reinvented himself from a Korea war deserter.
Career and in general advancement comes from abandoning exploitation of a local optima to exploration of a radically new concept. Sometimes it takes changing your identity, even your name. E.g. Mark Twain.
Immigrant are good at this.
(Follow anecdotal examples with causal recipe)
1. Decide your passion
2. find role model analogs
3. Identify leaps of faith
4. Test LOF by using an alter ego (e.g. on LinkedIn, changing your title)
5. Track success and adopt fully. Rewrite past.
6. Realize that presentation erases past memory
Deal with your technical debt before complete operational paralysis and expensive intervention. Based on Agile Software Engineering and Program Management Best Practices and intended for maturing companies.
- Consolidate with old post and its references, Khosla + inspire author
Technical Debt is a metaphor referring to the eventual consequences of poor software architecture and development within a codebase... usually due to business pressures or lack of knowledge. The danger occurs when the debt is not repaid. Every minute spent on not-quite-right code counts as interest on that debt. Entire engineering organizations can be brought to a stand-still under the debt load of an unconsolidated implementation (leading to zero velocity in a dynamically changing marketplace).
Wikipedia, Technical Debt
If you're a startup engineer looking to start or join your next venture, I intended this writing for you. If you're the marketing founder of a startup company and you are on your way to product-market fit, you would greatly benefit from understanding the following concepts.
- The MBA founder's missing metric
- The economic forces behind Technical Liability
Why do startups with business-teams, prototypes and validated markets offer me huge equity
- A slight digression into my vision for myself, personal experiments and pivots
- I've failed big many times. That's the only way to recognize a pattern for success.
- My personal product-market-fit, or engineer-ecosystem-fit
- I am an engineer. Just a differentiated one.
Pay your Software Engineering taxes, or make me partner.
- The Big Ball of Mud vs. Second System Effect
- Most successful startups end up with this tradeoff
- Scaling vs. Scalability
- To get rid of debt, you must sell equity
Software is rapidly eating the world and business models as we know it, at an exponential pace. Industries that used to outsource their IT needs, as slow and stagnant as healthcare, are waking up. They realize that they either need to reinvent themselves with software in the center of the value chain, or risk having their revenue streams disrupted by a few immigrant kids graduating from Stanford and coming out of the left field. Disruptive competition may either replace the value chain or play ball with direct competitors during Mergers and Acquisitions.
The rich companies' hunger for incumbency has the unencumbered innovator scrambling to serve up solutions frequently valued north of $100MM. In the rush to make it from quagmired to admired, innovators obsessively mind the pace of their nascent company's breathing rhythm: its cash-flow.
But in their calculations, they often lose sight of an important vital metric, the responsibility for which is outsourced to non-owner engineers. It leaves the sight of the founding team and only returns with a loud thud noise, the moment they're ready to step on the growth accelerator. It's called Technical Liability, or more lovingly in the world of engineering, technical debt.
A perfect illustration of smart money in action was when Walmart, a Fortune 500 retail and logistics company, acquired a tiny 6-year old San Bruno, California startup called Kosmix in 2011 and rebranded it as WalmartLabs. The rumored price was north of $300MM. They essentially recognized the need to mitigate the risk of going head-to-head with Amazon's online channel when it comes to extreme efficiency in sales conversion for physical goods. What better way to instantly slash the risk than to acquire an already architected prototype fitting a validated model, and plant the desired culture far far away from home so that it cannot be slowly strangled by the mainstream operational management?
Co-incidentally, I originally wrote the tips in this article, based on my own experiences in 2011 (around the same time) while at Adify, an Ad Startup that Cox Communications acquired, also for $300MM. What's even more of a co-incidence is that Adify and WalmartLabs sit in adjacent buildings in San Bruno. Same location, same acquisition price, same year, same reason. If that doesn't prove that rich companies behave alike based on social proof and without the need for co-incidence, you should probably visit Gerald Weinberg's Law of Twins : "Most of the time, no matter how much effort one expends, no event of any great significance will result."
The world is pressing full-on ahead and I've had many other opportunities to examine various stages of the growth of a corporation, from startups I've co-founded, to Google, from the inside. I've learned a few things along the way. The following trends continue:
Walmart seems to be extremely successful with WalmartLabs as its reform process surrogate. Every six months they manage to call me about how quickly they're growing and whether I've changed my mind about wanting to join. (A different subject. Shameless self-promotion: With complete hindsight, my sweet spot is building the technology arm of ventures with business teams that have cheaply validated markets that I care about. I'm over the phase of raising someone else's proverbial grown-up baby. But here's my number -- So call me maybe?)
The rest of Fortune 500 companies have discovered that if they continue to ignore Silicon Valley, the San Francisco Bay Area will slowly eat New York's lunch. Wall Street Journal reiterates this in their December 2013 article: Fortune 500 Companies Seek Startup Mojo
A new generation of opportunistic startups have come into play. They're usually founded by MBA graduates, business executives or strategy consultants, aware of the aforementioned appetite and mojo. They rise to the occasion by turning an incumbent company's neglect of potential efficiencies into market insights around tech-based convenience, hence discovering the customer by stealing it. They outsource engineering to friends, freelancers and e-lancers out of bootstrapped funds. They sell the crap out of the band-aid assisted broken prototype until they can prove that the value they're proposing to the customer is much higher than what they bought the customer's attention for. And then ...
Then they come to me with a huge pain, offering equity.
And I have many options. Excuse the pun.
I described the economic forces behind the rush to product-market-fit. I also alluded to the fact that I'm an engineer by training. In 2007, Paul Graham of YCombinator wooed me with his essays, as I was sitting in my comfy (NOT) cubicle chair, to start thinking of myself as a startup of one person rather than a corporate engineer. He wasn't the first. I had watched Pirates of Silicon Valley from my dorm room in Waterloo university and had been seduced by the insanity and charisma of Steve Jobs. I turned many ideas into "things" in vein. Somewhere along the process, I forgot who I exactly was. The lines blurred. I wasn't yet an entrepreneur, though my self-image no longer matched with that of other engineers either. I was a hybrid. For a while, I thought perhaps I was a "product guy", whatever that means. I ran with that for a while. But that just served to confuse people even more.
I decided that living by default wasn't going to give me answers. I left The Big Company and embarked on a 90 day mini-retirement , solo backpacking in Europe. When I returned in late 2008, having just spent beaucoup Dollars on expensive Euro currency, I found myself in the middle of a recession. Everyone had everything to lose. I had already given up everything that I had (my possessions, my job and my relationship at the time) so depending on the reader's perspective, I was at ultimate spiritual liberty. I knocked on every startup door in Seattle and asked to be technically interviewed. They all went well. No return calls. Nobody would part with their funding to hire an entrepreneurial-minded engineer in the middle of a recession. The last knock was back on the door of The Big Company. A charismatic manager offered me a challenging and temporary 9-month assignment with a deadline. I accepted.
For 9 months I planned my escape. I was a hybrid character, given corporate shelter. I was grateful but uneasy at the same time. Everyone else was worried about making a mistake that would jeopardize their livelihood during popular downsizing season. My nightmare was missing out on the opportunity of learning who I was really supposed to be in life. "Your time is limited. Don't waste it living someone else's life", one of the pirates had said. Then from the culmination of my efforts towards self-discovery, a strange thing happened:
Jim Morris, the co-discoverer of the string-search algorithm and the Dean of Carnegie Mellon University's Silicon Valley campus called me on my cell phone. Five minutes into the conversation, I suddenly had flashes of learning his Knuth-Morris-Pratt Search algorithm in a Waterloo algorithms course and recognized whom I was speaking to. He was calling to understand why the heck I hadn't followed up on my request for a brochure to the "Software Management and Entrepreneurship" program. I said I was too late. I hadn't even written the GMAT exam yet. He said "I guess you have 5 days to prepare!" and ... I swear that I didn't sleep that week and lived on a bag of avocados. I forgot to take my passport to the exam room and that made me another 45 minutes late. And somehow it all worked out with a respectable score!
Co-incidentally, that same week some recruiter chick (I say that playfully, she's currently still to this day one of my very good friends) called me on the phone from Adify, about an anonymous Craigslist ad I had posted, looking for a startup job. They were in the Bay Area, soaking up all engineers in Seattle that were familiar with their certain tech stack. I was baffled enough at this lucky co-incidence.
And the third co-incidence was that the single pretty American girl I was flirting with online from distance decided to move to Northern California. Three extremely unlikely events coincided simply as a cosmological side-effect of my self-image transformation. I didn't throw any of these aside. Within a week, I was in San Francisco, working at Adify full-time, going to CMU part-time and dating the woman of my dreams. Two years later, I asked her to marry me. Which reminds me, I should finish writing this article before the lovely wife comes home.
Now that you've read my self-indulgent story, I'm going to share with you a secret that took me an entire year of making mistakes to figure out. I'm sharing this in the spirit that entrepreneurship is not a zero sum game. If you are a hybrid entrepreneur-engineer, your gain is not my loss. In fact, the better this works, the more opportunities we both will have. I'm still selfish, you see. And more importantly, taking advantage of this secret requires huge income-risk appetite. So it's not for the typical engineer still sitting in a corporate office. It's for the entrepreneurial engineer. One who has already pulled out his hair in boredom, rattled the cage, foregone the need for any soft-landings and left the corporate treadmill to discover his true path:
Let's see. That's an entrepreneurial (2%) x engineer (0.5% of US population) x who left the corporate world intentionally and for good! (0.6% according to Forbes ) ... so my target audience is 180 individuals in the entire United States. You can see why I'm not afraid of competition.
There are 180 individuals in the US who could do this. That, or I'm bad at math. Both are plausible.
When I left The Last Employer, I had a business plan in mind. I had been moonlighting on it for a year with a partner. I invested both time and money. I knew what I knew, and I didn't know that I didn't know what I didn't know. Consequently my plan went side-ways after about two years of investment. And I did some soul-searching and re-reading. Every book that I re-read made absolute new sense when it made contact with a mind that had just experienced the intangible.
I highly recommend Steve Blank's course on Udacity: How to Build a Startup . I also strongly recommend reading Pretotype It, by Alberto Savoia .
Alberto Savoia was my Director of Engineering at Google. We left around the same time. Once I had already made enough mistakes, I met with him in Mountain View in a mentor-mentee capacity. He now advises Fortune 500 companies on how to innovate (his own journey is worthy of another complete article). He told me about a new framework he has for startups that goes simply like this:
First Prove Desirability, then Prove Visibility, and last, Prove Feasibility -- That's how you make sure you're building the right it before you build it right.
Alberto Savoia, Pretotype Labs
Nothing more elegantly succinct about the entrepreneurial process has ever been said. And I have never ignored a lesson so readily despite knowing better. The reason is simple. You can't learn entrepreneurship by theory. You stop failing one day, because failing becomes real. It hurts. It stops being this theoretic thing that might happen if we don't execute well. It becomes the thing that will certainly happen again, like a broken jaw on a bicycle with only front-brakes going down-hills, if any of our assumptions are untested.
But the untested pirate loves untested waves.
My startup had a single problem. I had skipped "proving desirability". Big mistake. Big BIG gigantic mistake. No amount of blood and tears would make customers care about the composition of melodies, a single one of which sounds awful, once the orchestra is already playing. I had not decomposed the melodies and listened to each one first. Some of the hypotheses were wrong in the system design, but there was no way of isolating which one.
And I had to start envisioning my escape from the first step again, with renewed motivation after dipping into an entire year of personal runway.
I went through a painful phase of ideation, during which nothing seemed worth doing. And worse than that, I couldn't come up even with bad ideas. Creativity was gone. A month into it, I learned that book authors call this "Writer's Block" and it's a manifestation of perfectionism.
So I started writing more seriously. I use writing as an analog for coding. Because I'm a perfectionist with engineered products, and I don't think of myself as much of a writer, I use writing to unclog my creativity pipeline and boost my self-confidence. It works.
After the pipeline of ideas started flowing (I started collaborating with consultant-type friends and colleagues as well) I slowly learned, through appropriate process this time, that most ideas are invalid. The more disconnected from the customer you are, for example the less likely you are to use the product yourself, the more invalid your ideas are. Customer discovery works best when you're solving your own problem. The problem I had was that most of my problems were too niche (this very article is evidence) for most other people to relate to. If you think first-world problems are non-problems, imagine how valid are the problems of a self-imposed corporate retiree in the first world.
I went back to all the assumptions that I'd been repeating in my internal dialog so frequently, I could no longer hear them. And the one about my hybrid self-image resurfaced after 4 months of self-criticism and analysis. And it was the following:
I am an engineer!
I've been confused for too long. But now I know who I am. I'm an engineer. I'm not Steve Jobs. I'm not Steve Blank, or Eric Ries. I'm not a strategy consultant. I know the fundamentals of sales, marketing and advertising. But I'm not a salesperson, marketer or advertiser. I'm an engineer. With a differentiator:
I'm the engineer who understands the entrepreneurship process. I understand the difference between hype and a valid market, because I can talk to customers as well as build a product rapidly. And I'm a liberated engineer, in that I don't need to be convinced to leave the best company in the world or expect my income to be entirely based on performance. I've already made those transitions. Like I said: if my math is right, there are only about 180 engineers in the entire United States with those differentiations.
That's why I can be valuable. But who's the customer? This is where I'll connect the two subjects: My learnings as an entrepreneur engineer, meet the opportunity of technical debt.
Debt is the opposite of choice. I learned that when I graduated with $50K in student loans, and I paid it off as if it was the plague. My wife and I swore to never owe another dime to anyone in our lives, and we're happier and freer for it. Some day I hope the American consumer will listen to Dave Ramsey.
Software startups are a fickle bunch though. You have a small window of opportunity to potentially be acquired for 8 or 9 figures. Executives with business backgrounds usually discover (steal like an artist) the right customers and validates them through outsourced engineering. The trouble with management delegating a service they don't personally understand is that they quantify the performance of the non-owner on visible accomplishments. The look and feel of software are visible to an external user. Its quality is only visible to engineers.
For every dollar that you spend in outsourced engineering, you're borrowing a dollar from the future in invisible lack of quality. It's like having a home built with no nuts or bolts. It's a house of cards. The more you build on a bad foundation, the higher your interest rate on what you've borrowed against the future. This is called Technical Debt. Sooner or later, servicing the interest on the debt becomes so expensive, in terms of the velocity of deliverables, that the founding team comes to a time-tested trade off.
The Big Ball of Mud is by definition "a software system that lacks a perceivable architecture". It's a house with no nails or screws. To fix it, almost all development has to be halted and depending on the scale of technical debt, one or many quarters need to be allocated to fundamentally fix the problems. It's like "Make it Right: Holmes on Homes", but for software.
The Second System Effect is "the tendency of small, elegant, and successful systems to have elephantine, feature-laden monstrosities as their successors due to inflated expectations". This alternative choice to fixing the Ball of Mud has an even higher risk of failure, because the first system was driven by the customer, while the second system is an interpretation of the requirements apparent from the behavior of the first system. It's like trying to look at a dinosaur and re-creating it through engineering, to be resistant to climate change.
In a way, these two trade-offs are similar to the trade-off you face when dealing with debt: Pay it off, or declare bankruptcy and start over, wiser.
The billions-of-dollars-valued visibly successful startups like Facebook and Instagram, built by geeky engineers eating pizza for breakfast and drinking Red Bull for lunch are Power-Curve exceptions. They capture the imagination of media and public. They're exactly the wrong representations of the mainstream startup culture.
Most successful startups exit at much smaller scale. And most of those are started by people in touch with the market. Or if you like, marketing people. Marketing folks delegate engineering, because they realize that feasibility, as per Alberto, is the least risky of the risks. Most end up scrapping the idea once it doesn't validate in the market. Some hit a vain.
The moment they succeed with validation, the biggest question becomes "does it scale?"
Of course, a non-engineering team doesn't actually ask this question. They go ahead and start signing up more and more customers, until one day suddenly the whole thing collapses. The entire customer base starts calling the barely-existing Customer Support number, usually the founders' cell-phone numbers. If the founders are lucky, a PR disaster ensues. And then, here we are. This is the maximum growth potential of this business. The funding has depleted. The non-owner freelancers don't know (or possibly don't care about) the rest of the way forward.
...Founders are told that premature scaling is the #1 reason for Startup failure. Non-technical founders don't understand the difference between scale and scalability...
... Either sell it to an investor to raise money to hire techies who don't care, or sell it to an owner-techie for sweat equity ...
The fastest way to look like an expert in a system is to publicly accept the blame for why it doesn't work.
That's it. Really. Do with it what you will.
Quite frankly nobody knows. That's why we created Pitchery for everyone to use. I would love to announce a one-liner that will make you want to join Pitchery. Ironically, the pitch for Pitchery is a short story. It will illustrate how you cannot afford to not use it, and yet you will most likely ignore it in your first startup. But that's okay. Our target audience is second-time founders, and you should check in with us at that time. For now, read on.
At the peak of my career, I left an amazing company (the amazing
company), to embark as an entrepreneur and continue my first serious venture
full-time. In total my founding team and I spent two years and a good chunk
of our life savings on it. We built a beautiful platform, software that ran
on various devices, even beautiful customer-facing hardware deployed inside
many serious businesses. People were spending on our product. We had
customers and spent everyday talking with them and iterating on the product
instantly. It was evolved to flawless engineering perfection. Everything was
done by the design book and with craftsman pride.
At month 18, the business was simply "stuck", like a sail ship without the
winds. The cash and faith dwindled, and one day after nearly two years, we
all decided to end the sleepless nights of fruitless worry, because it wasn't
clear how to proceed and overcome the lack of wind, namely market apathy.
The insecurity, vulnerability and the sense of loneliness after a public
failure go deep. I was ready to cave in, but an obsessive need to master this
chaotic black art kept me awake. I spent the next few months thinking about
new ideas. I took the time reading a pile of new books on top of the pile of
old books, and speaking to many friendly advisors and experts. The failure
post-mortem was clear: At my previous company, we had jumped to prototyping
and validating the business before going through the process of testing
whether the assumptions about user desires were composed together correctly.
In other words, we had assumed "yes, people want this" and our question
was "what should it look like when it's born", as opposed to "do people want
this?". And every observation, like customers spending a bit of money here
and there, was interpreted as a further reason to drink more of our own
cool-aid. Once the prototype was built for validation, the assumptions were
too solidly glued together to come apart. When you have a sail ship that
doesn't sail, you're too preoccupied with how it's broken to ever question
whether the wind is blowing. To make matters more faith-shattering, I knew
all along in theory that I was following a broken process. But experience,
they say, is "what you get just after you need it". The tuition for this
experience was two years of more than one person's life and a large chunk of
their life savings. And the saving grace is another hopeful saying: "the
master has failed more times than the beginner has ever tried."
A story about wanting to be born
From this failure came a new-found desire. In the course of looking for
the next formal idea, I learned to sympathize with the painful experience of
"writer's block": the loss of ability to produce new creative work. The
desire to overcome the pain of writer's block was so strong in me that I
spent a month researching how people come up with ideas. A noteworthy theme
came from recalling a Carnegie Mellon workshop I attended years ago that
essentially demonstrated through the "30 circles creativity exercise" that to
get new ideas, you must act on your old ones to clean up your mental
pipeline. I recalled the workshop while reading a Paul Graham (YCombinator)
essay that essentially says people in large companies have bad ideas because
they're not allowed to work on their old ideas. All this was great, but I
still had a problem: I had no "ideas".
As I uttered this to myself, I recalled that a while back I did have a
spreadsheet of "good" ideas. I looked at it. They were all hallucinations at
the time, but for each of them today there was a near-IPO company. It turns
out I've always had good ideas. I just couldn't reason about them in a way
that inspired anyone's desire to see the picture, until my own faith would
I will briefly mention, for completion, that one of the mistakes I made
during this transitional period was to delegate the ideation process to
domain experts. On more than one occasion I partnered with new friends from
consulting backgrounds to inspire me with their ideas. Suffice to say that I
spent two months doing this and found it counter-productive. There is a moral
hazard in not having the passionate vision and the ability to create in one
mind: the domain visionary underestimates the pain of building experiments
for their grand and ever-changing ideas; and the technology expert gets
burned out trying equally plausible ideas from several sources. I decided I
must take responsibility for leading the journey towards a final painting, as
opposed to closing my eyes and seeing it based on someone else's
In the absurd quest for discovering where an "idea" comes from, I visited
or read published works of amazing friends, mentors and thought-leaders (in no particular
order) like Alberto Savoia, Mar Hershenson, Pejman Nozad, Steve Blank, Eric
Ries, Marc Andreessen, Paul Graham, Randy Komisar, Clayton Christensen, Paul
Hawken, Geoffrey Moore, Stuart Evans and Gerald Weinberg. There was a single
common thread that I've probably heard a thousand times, but it never made
more sense than now: "Find a pain point that many others have. Make sure it's
real. You can ask, but the best way to make sure something is real is to feel
There is no sweeter paraphrasing of this phenomenon than Gerald Weinberg's
quote in a short story "a Buffalo Story" in his book, Secrets of Consulting:
"You can get buffalo to go anywhere, as long as they want to go there."
I must confess when I re-encountered the word "idea" as "pain point", for
about a week I considered the possibility that despite my tumultuous life
story (another subject), today I may have no pains. I may have, after all,
graduated as part of the "first world problems" class. And I laughed in agony
for a while at the ironic pain point of not having any pain points.
And then ... there it was.
This is perhaps what PG calls "Schlep Blindness": ideas right under our
noses that don't jump to our consciousness because they involve unpleasant
work. The pain I was very clearly experiencing was the pain of not being able
to articulate my pains and desires. Articulation is tough work. One that most
hackers like myself attempt to avoid using the neatness inherent in
engineering; especially premature engineering. I had just discovered my first
customer: myself. Pain: articulation of pain.
This explains so much. I have ideas. It's just that I can no longer
articulate them, because I'm subconsciously aware of the trillions of
variables making them fluid and mutable to adjacent, more abstract or more
specific ideas. It's to the point that my thoughts seem too liquid to
express. It's to the point that I haven't been able to convince a potential
fellow co-founder or investor to see what they normally would consider worthy
of conversation. I suck at articulating.
The moment I thought of "pain articulation" as a meta-pain point, I knew
the next step: act on it. Not because it was promising, but because the
moment you act on an idea, you get new ideas.
I spent a week building an application for articulating pains and ideas. I
published it under a domain I had bought years ago, called "Pitchery.com". I
had originally bought the domain because three years prior to this I thought
"with mobiles, someday we'd pitch business opportunities to each other on the
go". It turns out Uber understood that problem more concretely, and did it
And you might ask why on earth I picked that problem a few years
ago? Because even then, I had a pain point. I was new to California and felt
lonely. I had just read the book "The Lonely American" and was trying to use
mobile phones to dynamically connect people. The problem was what was the
excuse for connecting? How did they articulate their lonely feelings? I
happened to also suck at sounding like a salesman, so I had thought Pitchery
would be a one-on-one business pitching tool. But here I was, recognizing
suddenly that this is not the first time I've tried to solve the problem of
articulation. It has come full circle, this time so painfully that I'm
choking on words. But it's not some mobile technology hack. The pain is in
the schlep of believable, scientific articulation.
The moment I created the app for gathering and sharing ideas, albeit a
spreadsheet could do this, a light was switched on inside my head: the three
main problems every entrepreneur (me) experiences is articulating the vision to
(1) potential customers, (2) potential co-founders, and (3) potential
investors. Perhaps I'm building an incubator!
One of the ironies of this story is that at this time I had an upcoming
interview with YCombinator; but not for Pitchery. YCombinator interviews are
notoriously hard to get into, for reasons I had been too afraid to discover
for 6 years out of fear of rejection. One of the consultant friends I've
mentioned earlier had one of those ideas that create the moral hazard of "two
visionaries". She understood the domain. I understood the technology. We had
done customer sessions, analysis and all sorts of de-risking. But I just
couldn't love one idea in that domain over another, and she similarly
couldn't see how technology would lift one idea vs. another. A vision must be
in one mind, not split in two. She was amazing at networking and we successfully lined
up the YC interview months in advance. But the divided vision took the
winds out of our sails yet again, and the anxiety of sitting ducks put an end to that very
promising business before birth.
She left town for other opportunities and I was left with Pitchery, the
beginnings of which I've explained above. I wrote a note to YC explaining
what had happened, and they graciously let me present with a new idea
nevertheless. I showed up with a very smart friend, who wasn't particularly
involved in Pitchery. The panel judging us privately was 5 people, mostly YC
partners. The presentation went simply: "Because your idea is too new to have
been tested with customers, and because the team is too new, we're going to
let you go and come back when you're a more mature company six months from
now, much like we did with Drew Houston of Dropbox."
Firstly, there's no surprise there. My biggest disappointment was that I
hadn't applied sooner. If I had, I would have learned to think of YC as an
accelerator, not an incubator. All their articles sound as if they're where
you might discover your idea if you don't have one, but their personal
feedback was not at all in those lines. "You'll need to be a selling business
in 3 months here on demo day, with full traction." In other words, YC is not
an incubator, it's an accelerator.
It took about 2 days for it to fully transpire as a full vision, but this
was actually extremely good news! Here I was, trying to pitch to YC an
incubator, and they didn't even want to hear the idea, because it was too
early stage for them. They were basically saying "go right ahead; we're the
best known incubator brand and we are hereby showing you that we're no longer
actually serving that value."
When I left, I remember thinking that there would be about 50-60 startups
in that batch admitted for the 6 months. What happens to the thousands of
applicants who couldn't articulate their vision and were thinking a place
like YC would potentially help them?
Another interesting phenomenon in life is a friend of mine, Fardad Zand.
We went to the same junior high school half way around the globe. He went to
Netherlands to college and I went to Canada. We kept our friendship, but
never met again for 20 years. A few years ago he arrived for the last stage
of his PhD at MIT in Boston while I was at Google in San Francisco. It turns
out that, like twins, despite 20 years apart we had both arrived at
Technology Innovation Management. It's one of life's mysteries.
That day when I left YC I called him and asked "recently you mentioned
something about the economies of the startup ecosystem in your recent thesis,
what was it?" and my jaw dropped when I heard the response: "A good virtual
ecosystem needs to articulate and exchange information in three modules:
ideation, team building, and fund-raising."
Oh yeah. Wait ... What?!
"Ideation, team building and fund-raising" he said. "This needs to become
a cloud-based economy. The old players are too big for today's tiny startups
and most accelerators like YCombinator have too much overhead to be able to
Right. Wait. Are you thinking of a cloud-based incubator too?
If there is any moral to this story so far, it's that unless you are the
customer, the thing standing between you and a $1 Billion of projected market
cap is a tiny false assumption. Real pain points have multiple independent
people arriving at them at the same, because they are felt, even if extremely
difficult to articulate. In this case, both Fardad and I had independently
come to the conclusion that (1) it's difficult to arrive at the correct
process for discovering customer desires on your own dime and time, (2) it's
hard to build a team when your lack of articulation signal is lost in the
competitive noise, and (3) when you don't have either, it's difficult to
inspire investor confidence and raise funding. And in the competitive
landscape, we both knew that the solutions that are supposed to exist, don't.
At least I did. I was still driving home to San Francisco from my 10 minute
interview in Mountain View, boiling down to "come back when you can
articulate it enough that customers are ready to buy, the team already exists
and investors are 3 months away from investing."
There are thousands of entrepreneurs right at this second looking for help
with their ideas, finding partners and keeping the lights on. Advisors don't
scale. Accelerators want a real percentage of a real company, because
otherwise they can't afford themselves. This leaves room for Pitchery:
A cloud-based global incubator enabling customer discovery, team building
and fund-raising. Pitchery is Internet as Silicon Valley.
Pitchery was co-founded by Amin Ariana and Fardad Zand, two childhood
friends who moved to different countries for higher education, yet both ended
up becoming tech entrepreneurs, fascinated by the science of innovation and
secrets of Silicon Valley.
. . .