Time makes fools of us all.
Apparently I only write personal blog posts once a year. Last year I published it in December, and I said some stuff I disagree with now. A lot.
Don't bother reading the old post till you've read this one, I'll block quote to fix myself from last year.
Product is not everything in a company.
I said this:
The product should be everything in a technology company. Not the marketing. Marketing is not the hard part of building a tech company… it’s building a product that people want.
In the book Traction: A Startup Guide to Getting Customers the authors say:
If you’re starting a company , chances are you can build a product. Almost every failed startup has a product. What failed startups don’t have are enough customers.
and Marc Andreesen says
The number one reason that we pass on entrepreneurs we’d otherwise like to back is their focusing on product to the exclusion of everything else.
Ouch. Yeah, I'm an idiot. I knew this before reading the traction book, but it's even more clear how wrong I was.
The reality is the hardest part of a company shifts depending on its age. It's all a journey, and there are different hard parts of a company depending on where you're at. In the earliest days, the most important thing to do is de-risk the hardest part of the venture. Flexport knows how to clear customs, so who cares if they do it with software or carrier pigeons behind the scenes? The product has to be good enough to use, and then it's marketing / finding people who need it that's the hard part.
I think my oversimplification might be a reaction to "business focused" founders who think it's ok to outsource the product. You can't outsource anything crucial to your business. That means software development and marketing for software companies. Maybe early on it'd be possible to outsource an MVP of a product, but it just seems like the founding team should have the dna to create the vision and product.
The Traction book says you should spend 50% marketing 50% development. I think that's probably accurate.1
I still think the best thing for a soul of a company is to focus on product and customer service at the earliest days, and work out the marketing stuff later, but oftetimes product first founders let the marketing slide for way too long.
Investors should do whatever they want
Moron Randall said:
On the investment side, investors who focus their efforts locally essentially are giving handouts to local companies. And that’s even worse than not getting any investment at all. It’s like saying “you’re good when compared to all the Utah business plans I’ve seen, but if we compare you to an NYC or Boulder startup, you’re not quite there.” Good investors, in my arguably ignorant view, should invest with a thesis, and then pattern match all investments to that thesis. And “Utah companies” is not a thesis.4 If you’re a serious investor, you realize the power law dynamics at work, especially in seed stage investing, where a local investor would have the best access. As a non-top-5 startup hub, Utah investors who are serious, ie the ones founders should aspire to raise money from, can’t afford to be exclusively locally focused. At all. If they are, it’s a red flag to me as an entrepreneur that they probably don’t have the same world view of startups as me.
Since then I've changed my tune. While I don't have any local investors, I've seen some really great companies get spurred from local investors. I still think the smart investors should probably not invest exclusively in one area (Silicon Valley included), and I still think local accelerators are a weird phenomena (more on that shortly), but investors should invest for whatever reasons they want. And any investor who's willing to take a bet on an entrepreneur, especially at the seed stage, should be applauded.
There are more reasons to invest than just to find the next bajillion dollar company.
In retrospect, I should have probably reached out to the local community more. I only reached out to two local investors, and only because I knew them beforehand. I feel like I probably missed out on meeting some great folks, just because I had seen people be burned before by noob investors.
What would I do today? I have some amazing investors. Really. Today I got 4 emails from my investors who really have been spectacularly helpful. But, I think there's a good chance with the mix of YC and local investors that I could have had the expertise of investing that YC provides, along with meeting local folks who could have a meaningful impact. I don't think if I had the option, however, I'd still opt for local investors exclusively. I'd do anything to let my company not die, though.
If I was an investor though, obviously I'd totally follow that philosophy.
I see some value in BoomStartup / local accelerators.
At the time I said
Programs like BoomStartup and other local-specific accelerators around the country are actually bad for companies generally. BoomStartup offers the same exact terms as Y Combinator ($20,000 in cash investment for 6% common stock) but I have a hard time believing a company would get anywhere close to the value out of the program, even completely ignoring the $80k YCVC note. So why apply? If you’re the best quality company, shouldn’t you be doing the best quality accelerator? And, as an investor, shouldn’t you be looking for the big hits to add to your portfolio?
I was TOTALLY wrong. I now don't think they're bad for companies generally. I had a friend go through BoomStartup and it might make the difference between the company sticking around / existing at all, and failing. And they have a really good shot at impacting the world.2
Had they not done BoomStartup, they might have been able to raise money. (I think it's probable they could have.) But this first exposure helped them. A lot, I think.
But, I also think some of my point is valid. I'm not sure the program particularly "accelerated" them, but it did provide some access to capital, and a forcing function of a demo day which exposed them to other investors / forced investors to seriously evaluate the opportunity in a timely fashion.
I still think if you're trying to create a really impactful company, and YC understands you3 then you should go there. The value is even better than last year, because [Sam / YC standardized the YC deal][yc_deal] at 6% for $120k.
I stand by my stance that BoomStartup's goal should be to attract world changing companies, and the way to do that is by being competitive with YC in attracting amazing companies.4
The other thing I keep re-learning is the old saying: "Time makes fools of us all."
Shout out to our amazing investor Diego Basch for recommending the book. The book also has a great framework for developers who might not have tried marketing before on how to suck less at it as quickly as possible. ↩︎
One of my coworkers found out about them randomly and thought they were amazing / uses them regularly. That's a pretty good sign, to me anyway. ↩︎
I was accepted by YC after writing this post btw. I hadn't even had an interview until the first week of January, so I had no idea that was happening. ↩︎
They could do this probably by offering a better deal than YC (2%?), and then doubling down on winners out of the program. That'd let them attract more quality companies, and then they could be the ones to facilitate financing rounds on the winners. It'd create a real signaling problem for the startups that don't do well though, so there'd be some real risk. I don't know anyone at BoomStartup, but I think they are not bad actors. They're trying, and my last post / i previously felt like they might be more sharkish than they probably are. ↩︎
















