How To Start A Startup (3/3) — Product

By Richard Reis

Hello dear,

Welcome to the final letter in my “How To Start A Startup” mini-series!

Today we’ll talk about building a product.

As you probably guessed, this mostly applies to software (although some of these principles apply to any type of product).

Regardless, what matters most isn’t your idea, but you. If you’re any good, you’ll fix a bad idea. If you’re not, it doesn’t matter how good your idea is.

You’ve probably heard this advice thousands of times before, but it’s true: Invest in yourself first (we briefly talked about this last week).

You say you’re ready? Ok then. All you need now is a product.

Why a product? Because a product turns into a business (if enough people use it/ pay for it).

How do you build a product that will turn into a business? Here are a few principles.

#1: Just Build Stuff

How do you build a successful product? By building lots of products.

Perhaps, my favorite example of this is Mark Zuckerberg:

“I had this hobby of just building these little projects. I had like twelve projects that year [2003]. Of course I wasn’t fully committed to any one of them. Most of them were about seeing how people were connected through mutual references.” — Mark Zuckerberg

This is why I say most people (who want to work on software) should learn how to code.

That way, when you have new ideas you can implement them (which is far better than the MBA student who has an idea and pays someone else to build it).

“If you can build stuff, what should you build?”

  1. You could build something just for fun.
  2. You could solve a problem. For example, Drew Houston kept forgetting his thumb drive, so he opened his laptop and started building Dropbox.

“If I could go back and redo my twenties, that would be one thing I’d do more of: just try hacking things together. Like many people that age, I spent a lot of time worrying about what I should do. I also spent some time trying to build stuff. I should have spent less time worrying and more time building. If you’re not sure what to do, make something.” — Paul Graham

#2: Make Something People Want

This is the YC motto.

Early on, you don’t need to know anything about building businesses. You need to know everything about your users.

Find out what they want, and give it to them.

Sidenote: This might sound similar to the Lean Startup methodology. But it’s different. Sure the book is popular, but it’s fundamentally flawed (since it’s primary philosophy relies too much on customer feedback). I don’t recall any of the really big startup founders relying too much on customer feedback. They did something different.

Think From First Principles

When you’re solving a problem, don’t reason by analogy.

Know exactly what the problem is and build the best solution.

Here’s an example:

Problem: It’s 1908. People want to get from point A to point B faster.

Solution 1 (reasoning by analogy): Everyone has horses. The best horses go from point A to point B faster. We should raise really fast horses and sell them!

Solution 2 (reasoning from first principles): I’m Henry Ford. Horses are cool and all, but I don’t think people want a faster horse. I think they want a better solution to the problem. If that’s the case, they’ll like this internal combustion engine technology!

Don’t ask people what solution they want (hence why I’m skeptical of the Lean Startup methodology). They don’t know what’s possible as well as you do.

Instead, solve their problem in an unexpectedly superior way.

This is best done by thinking from first principles.

Build For Yourself

The best way to build something people want is by building something you want.

At YC they call this the organic method.

How do you do this? Ask yourself “what problem do I wish someone else would solve for me?”

Ok… Now go build it.

This is much better than building something you think people want.

“Apple happened because Steve Wozniak wanted a computer.

The iPhone is the phone Steve Jobs wants.

When he was writing that first Basic interpreter for the Altair, Bill Gates was writing something he would use, as were Larry and Sergey when they wrote the first versions of Google.” — Paul Graham

Build For Others

This goes back to thinking from first principles.

How are people solving the problem? Can you give them a better way?

Building for others is much harder. You’re less sure of what the problem is and you’re less sure whether or not your solution is good.

Many people do this. They build a solution and then look for the problem.

Don’t do that.

A way around this is taking a luxury and turning it into a commodity. You already know there’s demand for it so you just make it more available.

  • Cars were luxuries, until Ford made them common.
  • Computers were luxuries, until Apple made them common.
  • Personal drivers were luxuries, until Uber made them common.

Sidenote: By the way, things that used to be super luxurious are taken for granted today. Your heater, your toilet, and your bathtub are examples. Can you think of something only the rich can afford today but that will be common in the future? That will probably be a big business.

Start Small

Do not do “The Big Launch.”

I repeat, do not do “The Big Launch!”

What is the big launch? Launching a product as if it were a movie (with a beautiful cinematic trailer and a “coming soon” underneath it, lots of media coverage, and available to anyone in the world).

I can’t think of any successful startup that had a big launch:

  • Apple only sold 200 Apple I’s.
  • Facebook was only for Harvard students.
  • Uber only had one black car in SF.
  • Amazon only sold books.
  • Tesla’s first car was only for 2,450 wealthy people.

If you build a solution, ask yourself “who is this for?”

Don’t answer “everyone.” If you do, you’re toast.

Aim for a subset of a subset of a subset. You want to avoid competition by dominating a tiiiiiiiny segment of the market.

After that, you grow.

After that, you go for world domination.

“ Don’t be discouraged if what you produce initially is something other people dismiss as a toy. In fact, that’s a good sign. That’s probably why everyone else has been overlooking the idea. The first microcomputers were dismissed as toys. And the first planes, and the first cars. At this point, when someone comes to us with something that users like but that we could envision forum trolls dismissing as a toy, it makes us especially likely to invest.” — Paul Graham

#3: Launch Fast

Even if you have a good idea, the first thing you build will not be quite right.

It’s unrealistic to expect you’ll get everything perfectly by yourself (no one can). Admit this up front.

You’ll need help. That help will come from your users.

This is why it’s important to build a version 1 as soon as possible and get it out there.

It won’t be perfect, but it will give you a place to start.

Sidenote: Version 1 doesn’t mean you should release something full of bugs (and ugly). It means release something minimal. You can add more features later.

“ In a startup, your initial plans are almost certain to be wrong in some way, and your first priority should be to figure out where. The only way to do that is to try implementing them.” — Paul Graham

#4: Recruit Users Manually

Remember I told you you’ll do things that don’t scale in a startup?

The first thing will be recruiting users.

Thinking about hiring a PR firm? Releasing a YouTube trailer? Or paying for Facebook ads?

Bad idea.

For one, doing that means you’re ignoring the frugality principle!!! So you’re probably wasting money in other areas too.

Secondly, you’ll lose the wonderful chance of talking to and getting to know your users.

Remember you need to know your users better than they know themselves. You need to know what they want before they even know it.

You’ll never know your users if there’s a PR firm between you two.

“If you’re going to attract users, you’ll probably have to get up from your computer and go find some. It’s unpleasant work, but if you can make yourself do it you have a much greater chance of succeeding.” — Paul Graham

#5: Iterate

Congrats! You have a product out there, and 10 people are using it.

What do you do now? Watch them. Like a hawk.

What do they like? What do they dislike? What features are they using most?

— — — Story time! — — —

In 2010, some Stanford students launched a social media app named Burbn.

Things weren’t going great, they had a few users but nothing crazy. The app was too similar to a far bigger competitor, Foursquare.

However, one day they realized their users loved the photo sharing part of the app.

“Hmm” they thought. “Maybe we should remove all the useless parts of the app and only focus on this part people really seem to like.”

And that’s exactly what the smart Stanford students did.

You probably already guessed this, but they also gave the app a new name: Instagram.

— — — End of story time— — —

“Most startups end up nothing like the initial idea. It would be closer to the truth to say the main value of your initial idea is that, in the process of discovering it’s broken, you’ll come up with your real idea.” — Paul Graham

Caution, this is a slippery slope!

If you give good advice to startup founders, they’ll take it to the extreme.

Case in point, what used to be “iterate” turned into “pivot”.

This is wrong.

Iteration means you keep improving your app and modifying it little by little until you hit the jackpot.

Pivot means “I f***ed up so I’m trying something totally different.”

VCs tell horror stories of founders who brag about how many times they pivoted!

When you iterate, see yourself as a scientist. You know the truth is somewhere in there, you just need to keep tweaking things until you find it.

“Switching to a new idea every week will be equally fatal. Is there some kind of external test you can use? One is to ask whether the ideas represent some kind of progression. If in each new idea you’re able to re-use most of what you built for the previous ones, then you’re probably in a process that converges. Whereas if you keep restarting from scratch, that’s a bad sign.” — Paul Graham

#6: Wow Your Users

What are you trying to achieve with your product?

Love.

I’m not kidding, your goal is to have a product users love.

A good essay on this is Kevin Kelly’s 1,000 true fans.” It is better to have a small group of people who love your product, than a large number of people who kiiiiinda like it.

How do you make users love you? Any way you can! (for inspiration, read Tony Hsieh’s book or watch this amazing Kevin Hale video).

Here are a few ideas:

  • Amazing customer service: One mistake startup founders do is imitate big companies so much they also imitate the bad parts (like customer service). As a startup, one advantage is that you can deliver amazing customer service! Respond to user’s comments instantly, solve their problem on the spot, send them thank you notes, or send them ice cream!
  • Easter Eggs: Put in delightful little details your users don’t expect. An example is how Tesla cars’ volume goes to 11 (in homage to Spinal Tap). Another example is all the cool little things Wufoo did (again I can’t recommend this Kevin Hale video enough). Another example is how one email created thousands of new customers for CD Baby.
  • Beautiful Design: Design is not only how something looks, but how it works. A slow or confusing product will alienate all users. Make your product easy to use and beautiful. For more on this topic, I highly recommend Samuel Hulick’s Teardowns (all of them).

“Your first users should feel that signing up with you was one of the best choices they ever made. And you in turn should be racking your brains to think of new ways to delight them.” — Paul Graham

Why do all this? Because if users love you, you’ll achieve the holy grail of marketing: word of mouth.

That is your goal. Once you achieve that, your product will start evolving into a business.

Congratulations.

And that’s it for today!

Today, we learned:

  • To build a successful product, build a lot of products.
  • Make something people want.
  • Launch fast.
  • Recruit users manually.
  • Iterate.
  • Wow your users (aim for ❤️).

See you next week (follow the series here to be notified).

Be well.

R

Thanks for reading! 😊If you enjoyed it, test how many times can you hit 👏 in 5 seconds. It’s great cardio for your fingers AND will help other people see the story.You can follow me on Twitter at @richardreeze to find out whenever others just like it come out.📚 Do you like books? If so you might enjoy my latest obsession: 
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Since I write about finance, legal jargon is obligatory (because the guys in suits made me). Before following any of my advice, read this disclaimer.

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Richard Reis

Richard Reis

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"I write this not for the many, but for you; each of us is enough of an audience for the other." - Epicurus https://www.richardreis.me/