Beyond Startups

Software startups are great, but are they enough?

Founding a startup provides a path for creative technologists to get paid, sometimes quite abundantly, for their drive to be creative with technology.

It used to be that you needed somebody with business vision and hustle to come along and motivate one to channel their energy into a startup. Woz had to be convinced by Jobs they should do Apple. Now after so many success stories, it's the norm for technologists to read a few Paul Graham essays, learn the skills and accessible tools to run a business, and apply for an accelerator.

Today there is rarely a case when a computer programmer works on a hobby project and doesn't consider the possibility of doing it as a startup or bootstrap business.

There are blog posts, books, and conferences motivating people to take a chance to change the world and do a startup. If it doesn't work out, a programmer can nearly always fall back to an extremely well paid job working at Google, Facebook, Twitter, Uber, Dropbox, etc.

So what's wrong with this?

Value beyond market value

My concern is about the value and opportunity being left out. What are we missing out on that this system makes us blind to? I think software startups filter out a good amount of useful tools and technologies that could exist if we didn't try to make them work as startups.

This idea might only make sense to creative technologists. Hackers, if you will. By this I mean people that are, or have been at one time, motivated by the combination of creativity and computer technology. People excited by possibilities of what they could do or build with some new platform or tool.

Some might have grown to value wealth generation measured in potential dollars more than what got them into tech in the first place. The engineers turned CEOs turned VCs. The hardcore capitalists. Go big or go home. There is nothing wrong with these people, but they just might have a hard time seeing beyond startups.

Tech startups focus on value that can scale and at some point be measured in revenue. Twitter is super cool, captured a huge userbase, and for the longest time didn't make money. But it continued to exist because investors believed it had the potential to figure out how to make money. Lots of it.

A million guys walk into a Silicon Valley bar. No one buys anything. Bar declared massive success. -@stammy

Traction is often valued like money because it represents potential money. Sort of like how money represents value?

My argument is that there are ideas and technologies that exist on a spectrum of value that are worthwhile, but are ignored because they don't work as a startup.

Experienced entrepreneurs learn this lesson pretty quickly, but usually in a way that paints those ideas as not having value. I'm not saying bad ideas don't exist. There are certainly ideas that are truly "in search of a problem". Customer discovery and lean methodology has done wonders in helping entrepreneurs find a product that not only solves a problem, but will sell. That's what you need to have a sustainable business.

However, there are plenty of ideas, tools, and technologies that should exist, solve a problem, create value, but don't make the cut for being startup worthy. In other words, they won't make enough money to sustain a business, let alone a VC funded growth startup. So they are discarded.

A trite example of value without business value

Let me stop and explore making music as an example that no longer sustains business value but clearly provides value. Perhaps an over simplification of how the industry works, but to hopefully make a point.

It's hard to make money making music today. Not just as a nobody. Even top artists have struggled with the technological and cultural shifts that have made it hard to get people to pay for music.

The mismatch between market value and the value that artists know their work has unsurprisingly creates a lot of frustration. Slowly they've adapted and come to realize there's different kinds of value. Only one of which is market value.

It actually seems like in aggregate the value in music is increasing. The ever expanding long tail of countless new artists provides more songs that resonate with certain individuals more than songs designed for a mass audience. There's more music overall and more opportunity to find artists that you really love.

Too bad it's harder than ever for artists to make a living contributing to that value. Instead they have to find alternative "products" that still have market value. Shows. Merchandise. Obvious examples, but the good ones get creative.

By the way, some don't figure out how to make a living with it. Yet they continue to make music anyway. Good music even. Why is that? Are starving artists delusional or are they just preoccupied by a compulsion to create in a medium that works for them?

Back to startups and technology

There are plenty of ideas, tools, and technologies that should exist, solve a problem, create value, but don't make the cut for being a fundable startup.

Or maybe worse, they're funded and built, but don't have the necessary growth despite being used, maybe even loved, for ongoing operating capital. So the tool is shutdown and disappears.

Or perhaps even worse: They're funded, they're successful, they're loved, and they're bought by a company that gets it. They did it! Then one day the strategic value of it changes, so the technology that was built is shutdown and disappears. Eventually even forgotten. This happens a lot. Good thing the founders made a lot of money, that was the point right??

What if your goal is to make a technology exist. To empower and open up new possibilities with a tool or platform. You know the value of it, and, man, it would suck if it didn't exist. Turns out, even if it's built and as a startup is successful, it still might end up effectively not existing. Insanity.

There are plenty of valuable tools that don't even make it that far. Tech entrepreneurs might know the value of what they built but discard it because they learn it won't sustain a startup. VCs might say "this is a feature, not a product", or my favorite, "this is a vitamin, not a pill".

Especially for technical entrepreneurs looking to do a startup, understanding the difference between a feature and a product is critical. You can't build a company around a feature. And yet if a large company like Google provided that "feature", regardless of whether it made less than it cost to run, we could be happy as hell it exists. Until they decide to shut it down. Remember Google Reader?

I've found the most effective entrepreneurs know how to let go of ego, vision, and technology, and go where the money and market is. I just don't think anybody really tells technology entrepreneurs that.

Paul Graham talks about hackers as painters, craftsmen of technology. That they want to do startups and be successful so they can continue their craft of building technology. This idea seemed to be so powerful, and yet Silicon Valley (ahem, San Francisco) is overrun with wannabe entrepreneurs and "tech bros" that, well, I guess are in it for the wrong reasons. Perhaps they're better suited to following the money.

YCombinator is actually a great example of where to find good tech ideas that turn out to be bad businesses. Absolutely great companies have come out of YCombinator, but many of those bright hackers build features instead of products. Eventually they pivot or regroup, but what if that feature was pretty useful? What if it opened up possibilities that didn't exist before?

Some technologists want to build a tool just so it exists. Maybe to make some idea or technology more accessible. Maybe to empower a niche audience. To be a building block for others. Maybe just to build something cool. Rather than build it and then spend the next 5-10 years figuring out to make it work as a business, whether VC funded or self funded, maybe … don't bother with the business part.

My ideal is for people to do what makes them happy. To do what makes them feel like their time alive is worth something. That when they're compelled to build cool tools, they can focus on building cool tools. Not that it was wasted trying to fit a square block into a round hole.

Certainly building a business can be a fun challenge. I totally get that. But if you're creative, and you want to create more than you want to hustle, maybe we should find an alternative to startups. A way for software technologists to get paid to build what they believe should exist, regardless of whether it can sustain a startup.

Not just for them, but for the value we've been discarding for years.