Four Rules for Starting a Startup

There are more than four rules, of course. I don’t know how many there are in total. But I do know these four are important. They are what I would tell myself if I could go back five years.

And so,

Dear younger Paul,

Rule 1: Build for yourself.

He had noticed something odd about the cell phones on the market: They all stank, just like portable music players used to. “We would sit around talking about how much we hated our phones.” he recalled. (..) So Jobs and his team became excited about the prospect of building a phone that they would want to use. “That’s the best motivator of all,” Jobs later said.

— From Walter Issacson’s Steve Jobs

This wasn’t an easy lesson to learn. Before founding Learndot (“Matygo” at the time), I was a Computer Science student at UBC. The school had standardized on the Blackboard Learning Management System and, like most students, I hated it. It was buggy, slow, and looked like it was designed by same team as Windows ME. In my third year I was hired as a TA and made a life-changing discovery: Instructors were just as frustrated with Blackboard as students.

This was life-changing because it’s what gave me the idea to build an alternative. It wasn’t a grand vision. I wasn’t thinking about raising money or marketing or “business development” or any of that (I knew nothing about those at the time). But I did want to make my life a bit easier and since I was decent at web programming, thought I’d take a stab at building something. So I recruited my childhood friend Joe and we got to work. Nine months later, we launched version one. It wouldn’t load in IE, was brutally slow in Firefox, and crashed mobile browsers.

But we kept iterating and soon we fixed the major compatibility issues, improved performance, and added mobile apps. In two semesters we went from piloting with 200 students to serving over 10,000 students across Canada. No sales, no marketing, just two friends solving a problem they knew intimately. In retrospect, it’s crazy to think that two students built a product in nine months that beat out a billion-dollar company’s flagship solution. But software is like that. We understood our users because we were our users.

A Matygo screen from our first semesterA Matygo screen from our first semester

Unfortunately, we got this right by accident. We hadn’t actually learnt the rule yet. That would change as soon as we stopped dogfooding and started waffling instead. The first problem was inevitable — Joe and I graduated. Short of starting a PhD, we had few options to maintain our personal use case. The next crisis came only a few months after graduation. We joined an accelerator and faced the reality that our product was supposed to be a business if we were going to raise money. It’s a long story, but suffice it to say that our attempts to monetize our University LMS were entirely unproductive. So we started pivoting.

“Matygo Bucks” from a pivot into paid live online coding classes.“Matygo Bucks” from a pivot into paid live online coding classes.

What followed were turbulent years of indecision and false starts. We finally found our way out of the forest by focusing on something we needed ourselves, customer education for SaaS companies. We were, after all, a SaaS company.

When you’re building a product, empathy is your compass and passion is your engine. Empathy is how accurately you feel what users feel. Passion is how badly you need to see your solution in the world. Both grow in direct proportion with how closely you connect to your product, so it’s pretty clear that there’s a simple method to nurture both: build for yourself.

  1. If you’re building a consumer product, make something you need to use yourself daily. Ask “If someone else had built this instead of me, would I still use it just as much?” If the answer is no, reset.

  2. If you’re building a business product, you need to have domain experience. Making software for fire halls? Be a part-time fireman. Building a medical records platform? I hope you worked in a hospital. And so on.

Rule 2: Ride the Wave.

Ride the Wave

“A rising tide lifts all boats”

— Proverb

Tech progresses in waves. As each wave rumbles in a new generation of winners are launched.

1960s-70s: Mainframes. IBM.

1980s — mid 90s: Personal Computers. Apple and Microsoft.

Late 1990s — early 00s: The Internet. Google, Yahoo, Amazon, and eBay.

2000s: The Social Web. Facebook and Twitter.

Late 2010-Present: Mobile. Uber and Lyft.

Note that none of these companies would have succeeded had they been born earlier than they were. Uber would have failed in 2001, Facebook in 1992, and Apple in 1970. Each wave opens up previously hidden opportunities for solutions to old problems. And even if you aren’t destined to be a mega-winner, getting in front of the next tsunami gives you a huge advantage. Your platform’s growth is your growth. A rising tide may lift all boats, but your boat has to be in the right ocean.

So how do you ride the wave while building for yourself? Be selective and perceptive. Then, when the right one comes, you will know.

After years of building personal gizmos, when Woz heard about the MOS 6502 processor he knew he could build the personal computer he always wanted. Jeff Bezos, a bookworm, realized in 1994 that the internet would allow for stores with 100x more inventory than brick-and-mortars, so he built himself a better bookstore. Zuckerberg, a young web programmer, started developing thefacebook to help him and his college friends connect online just as the Web was becoming truly mainstream and the dot-com hype had worn off.

So what could be your wave? Here are a few big trends I’m watching today in February 2015.

  • 3D printing
  • VR
  • Blockchain
  • Internet of Things & Wearables
  • Autonomous Vehicles

Rule 3: Solve Ancient Problems.

Ancient Problems

The human condition doesn’t change much. Great products solve problems that have existed for eons. They serve basic human needs. Your grandparents’ grandparents should have an analogy for what your product does.

A few examples:

  1. Humans document information to move our species forward. Written word improved on oral communication. Books and libraries made the written word distributable and accessible. The world wide web improved on libraries. Google replaced librarians and improved the world wide web.

  2. People need to move from point A to point B for food, shelter, socializing, and most other things. Horse-drawn carriages improved on walking. Cars improved on the horse-drawn carriage. Taxis improved on personal cars. Uber & Lyft improved on taxis.

  3. Nearly every society has had public forums. A democratic society can’t exist without them. They come in many forms: Roman bathhouses, the coffee house corkboard, the barbershop crew, talk radio. Twitter took this human need and solved it at a global scale.

To put it it simply: if a problem is big enough to be worth solving, there’s already a solution for it. This is true for both business and consumer products.

If this sounds obvious, try this: Next time you find yourself at a startup event, plastic glass of wine in your hand, listening to elevator pitches, see if you (or better yet, the founder) can make a grandparents’ grandparents analogy for what the product does. It’s really hard for most pitches but surprisingly easy for great ones.

Rule 4:Make no little plans.

No Little Plans

“Make no little plans; they have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will not die, but long after we are gone be a living thing, asserting itself with ever-growing insistence.”

— Daniel Burnham, Chicago Architect, 1907

Three questions:

  1. What makes Elon Musk so badass? He’s not tech’s only billionaire or serial entrepreneur, or the richest, or the youngest. He’s not the first person to CEO two notable companies simultaneously (Jobs did that). Tesla is tiny by car company standards. SpaceX is still private and valued lower than Instagram or WhatsApp. Yet Elon is tech’s golden boy. Why do so many people want to work for, invest in, and be like Elon?

  2. A Google recruiter was explaining to me their talent allocation process and said, “Unfortunately, we can’t put everyone in Google X!”. “Bummer”, I thought, and then “Why do so many people — existing Googlers and new recruits — want to work in Google X?” Most of their projects probably won’t ever see the light of day. Those that will are years, if not decades, away from commercialization. And they might flop when they finally hit the market (Google Glass, anyone?). So why’s Google X so hot?

  3. Sonia, my wife, is an aerospace engineer at NASA. Cool, right?…But why? She spends her days trying to get her code to run, working on presentations, and dealing with email just like countless other engineers. Unlike the Googlers on the other side of the fence, she gets her coffee out of a coin-operated vending machine. Why does she get such great reactions when she tells people her job?

We know the answers, of course. NASA put a man on the moon, the Hubble Space Telescope into orbit, and a selfie-taking rover on Mars. Google X is working to coat the entire planet with internet, embed computers in contact lenses, and is leading the development of self-driving cars. The head of Google X, Astro Teller’s title is literally “Captain of Moonshots”.

Meanwhile, Elon Musk’s vision for SpaceX is “to make the human race an interplanetary species”. Which is crazy, yet not as crazy as the fact that they might actually do it. On the side, Elon is reshaping the global automobile and energy industries with Tesla and SolarCity.

There’s sex appeal in the audacious. We all, deep down, want to be part of something important during our lives.

As an entrepreneur, you are always selling your vision. You sell it to the investors, to potential employees, to your customers, and to yourself. Your job is to get hearts pounding and imaginations whirling. No one wants to be part of little plans. There’s no magic in them. So don’t make them.

One more time, with feeling

  1. Build for yourself, so that you have empathy and passion.

  2. Ride the wave of new technology platforms.

  3. Solve ancient problems, since the human condition doesn’t change. And,

  4. Make no little plans. Everyone wants to be part of a big story.

The truth is I really am writing this for myself. These lessons kept reaffirming themselves through punishment, so I thought it might be prudent to document them. My experience for the past few years was startup-land, but I suspect they’ll apply just as well to product management in established companies and probably a lot of other situations in life as well. Here’s hoping they might bring you some good too. When ambitious products get built that solve basic problems with our most advanced technology, everybody wins.