Startups often make the mistake of creating products with too many features that don't work well. It is better to have a product with just one working feature. Trying to accommodate multiple use cases in a product before proving the existence of a single use case is a common problem. Building a complete product without user validation, known as "boiling the ocean," is a mistake. Successful companies like Google start with simple and basic products. OpenSea and Gusto are examples of companies that started simple and focused on core functionality before expanding. Having lots of features that don't work properly is worse than having one feature that works. Investor validation does not guarantee success, and founders should not rely solely on validation. First principles and ground truth answers from customers are crucial in startups. Clear thinking and discipline are important for success. Hardware crowdfunding can be challenging and risky for startups. Best practices for hardware startups include avoiding rushing into manufacturing and starting as a software company first.
Rookie Mistakes
- Founders of startups often make the mistake of creating a product with too many features that don't work well.
- Having a product with just one working feature is better than having a product with multiple features that don't function properly.
- The analogy of a company offering multiple benefits and services that don't work well is used to illustrate this point.
Note from YC founder
The most profound aspect of the text is the common problem of trying to accommodate multiple use cases in a product before proving the existence of a single use case that serves the customer.
- Trying to accommodate multiple use cases in a product before proving the existence of a single use case is a common problem.
- It is important to first prove the existence of a single use case that serves the customer before expanding to multiple use cases.
Boiling the ocean
The concept of "boiling the ocean" in the context of building a startup refers to the mistake of trying to build a complete product without getting any users first. This approach assumes that the founder knows what the customer wants without validation from actual users. It is important to put the product in front of users early on to test hypotheses and validate ideas, rather than relying on assumptions. The term "Google itis" suggests a tendency to believe in replicating Google's success without user validation and iteration.
Key points:
- "Boiling the ocean" refers to building a complete product without user validation
- Founders should put their product in front of users early on to test hypotheses
- "Google itis" is the tendency to believe in replicating Google's success without user validation and iteration.
Googlitis
- Successful companies like Google often start out with simple and basic products
- It is important to understand the simplicity of these companies' early versions
- Google is used as an example to illustrate this point
- Building a basic and effective product should be the initial focus before expanding and adding more features
OpenSea
OpenSea, a company that enables NFT trading, became successful by starting with a simple website and gradually improving it. The key lesson is to prioritize basic functionality before adding complexity.
- OpenSea began as a basic website and continuously updated it to enhance the platform.
- The company's success was achieved by focusing on the core use case and building network effects.
- Starting simple and ensuring basic functionality is essential before introducing complex features.
Gusto
Gusto, formerly known as Zen Payroll, is a comprehensive HR tool that simplifies and streamlines payroll processes for businesses. It started as an online payroll service and expanded to include benefits, org charts, and 401k management. The company's success lies in its ability to eliminate manual paperwork and phone calls to ADP.
Having lots of features is infinitely worse than having one that works all right
- Having lots of features that don't work properly is worse than having one feature that works
- Customers dislike companies that offer many features but fail to deliver consistently
Note from YC founder
- The video highlights the misconception of assuming a successful business model in one country will work in another.
- This often leads to rapid hiring and excessive spending before realizing the product doesn't appeal to the target market.
- Investors are attracted to these ideas, perpetuating the cycle.
Blank for X - Fail after getting money
Companies that fail after receiving funding: the common belief that investor validation guarantees success is debunked.
- Getting funding does not guarantee success for companies
- Many companies fail despite receiving funding
- Investor validation is not a foolproof indicator of future success
Validation
Validation in the startup world can come from various sources such as employees or winning a competition, but it does not guarantee success. Founders are ultimately responsible for making their startup work, and validation alone does not ensure that. It is similar to passing a driver's license test, which does not guarantee good driving skills. Having a startup license, such as a website or funding, does not prevent a startup from failing. Founders should not rely solely on validation but focus on making their startup successful.
- Validation in the startup world can come from various sources such as employees or winning a competition, but it does not guarantee success.
- Founders are ultimately responsible for making their startup work, and validation alone does not ensure that.
- Having a startup license, such as a website or funding, does not prevent a startup from failing.
- Founders should not rely solely on validation but focus on making their startup successful.
First principles
The most profound aspect of the text is the importance of using first principles in startups.
Key points:
- Observing and understanding the problem firsthand is crucial in startups.
- Relying on traditional methods of learning is not effective.
- Seeking advice is a misconception; actively engaging with customers and iterating on solutions is essential.
Ground Truth Answers
- Ground truth answers from customers are crucial for founders to gather information directly and solve real problems.
- Authority figures do not have all the answers, so it is important to obtain ground truth from customers.
- Investors should not overlook the need for ground truth and instead focus on funding and building teams.
- Generating revenue and solving real problems for customers should be prioritized over growth.
Clear thinking
Clear thinking is often hindered by the pressure of deadlines or difficult situations. The video discusses the idea of bottling up the quality of execution and thinking, wishing for consistent high performance without crises. The comparison is made to college, where students wait until the last minute to produce their best work. The only solution mentioned is working in companies that struggle to raise money, as it keeps them on their toes. The topic emphasizes the importance of clear thinking and the desire for consistent high-quality performance.
Discipline
Discipline is often mistaken for genius and is crucial for success. Focused work and avoiding distractions are important. One can improve discipline through practice. Hard workers are more dangerous than smart people. Lazy competitors can be advantageous for startup founders.
Hardware crowdfunding
Hardware crowdfunding allows companies to raise money by selling products in advance through platforms like Kickstarter. However, many companies lack knowledge about manufacturing costs, pricing, and product viability. This often leads to unmet expectations, delays, and dissatisfaction among backers. Despite the initial appeal, crowdfunding can also result in negative publicity and a damaged reputation.
Key points:
- Hardware crowdfunding was once seen as a panacea for startups, but it has become a challenging and risky endeavor.
- Crowdfunding is now viewed as a tool that should be used after shipping and manufacturing a few versions of the product.
- Challenges in crowdfunding include delays, refunds, and negative public perception.
- Crowdfunding for hardware companies has evolved from a necessary step to a potential option in the startup world.
Hardware startup - Best practices
Best practices for hardware startups:
- Avoid rushing into manufacturing at the early stages to prevent negative perceptions and accusations of scamming.
- Consider starting as a software company first, as it is easier and allows for accountability when taking money from people on the internet.
- Be cautious about rubbing people the wrong way, as it can have serious consequences on one's life.
- Remember that there is no free lunch, and mistakes with people's money can severely impact a startup's reputation.