There are very few things I’m truly passionate about, but Startups are one of them. I love nearly everything about them. The long hours, the teamwork, the passion, and even the uncertainties. Will they succeed or will they fail? There’s rarely a gray area, due in large part to venture capitalists who are less than willing to allow their investment to wade in mediocrity forever. I am thankful for this; There is a beautiful simplicity in only having two outcomes available.
The startup life also aligns with many of the advantages of a frugal life. Startups allow their founders to steer their destiny. They have the ability to work for themselves on a project that they enjoy and possess a golden opportunity for early retirement. Paul Graham, who I will talk more about later in this essay, describes startups as a way to compress your entire working career into a few years. That sure sounds familiar.
When we talk about retirement, I think most of us are speaking of being unbound by the structure and limited flexibility of a traditional work setting. I would like to think it’s fairly rare that someone desires to retire only to sit on a couch and waste their life away. Being self-employed gives a person the option to work on what they want while still being productive, and it’s becoming increasingly easier to test the market and build a side business while also working.
The origin process of the best startups
While they bring innumerable benefits, startups are also incredibly difficult. I’m learning this firsthand as I’ve been working on what I believe to be a revolutionary service. Truthfully, a more accurate description would be “possibly could be revolutionary, maybe“. As is often the case, creators value their startup more than their target customer ever will. This is the case even with massive successes, and I am certainly no exception to this rule. None the less, my idea was born out of necessity, which is a great indicator of success. My service brings a solution to a problem that I myself faced as a consumer.
Some will have noticed that earlier in this post I linked to Paul Graham’s blog. He’s an incredible writer, and he is brilliant. I do not mean run of the mill, “that guy is smart,” brilliant. He is brilliant, brilliant. Transcending higher education status quo, brilliant. And because of this, or perhaps forced by this, I read his blog and study his advice as if they are the last written words of wisdom on earth.
Paul has this say to say about startup idea’s, and the problem that they solve:
“Why is it so important to work on a problem you have? Among other things, it ensures the problem really exists. It sounds obvious to say you should only work on problems that exist. And yet by far the most common mistake startups make is to solve problems no one has.”
The best website startups, for example, solve problems. One of the more recent revolutionary startups is AirBnB. Their service solved two problems. First, they gave homeowners an extra source of income (even money hippies are using their service, raking in additional income by renting their extra space on AirBnB’s platform). Second, it allowed travelers an opportunity to find affordable shelter and provided additional rooming options when hotels were sold out (such as during large events that take over a city, like a fashion show).
Pauls comment is liberating, yet depressing. Perhaps I do have the idea that solves a problem! Or – maybe I am the next circa-1995 Paul Graham who failed to realize that the marketplace doesn’t need, or want, the product he had created.
“In 1995 I started a company to put art galleries online. But galleries didn’t want to be online. It’s not how the art business works. So why did I spend 6 months working on this stupid idea? Because I didn’t pay attention to users.”
Pauls art gallery company didn’t solve a problem. He created a model of the market that didn’t exist, and even the great Paul Graham was too wrapped up in the idea to notice it. It’s amazing how quickly our brains are led astray even when we have all the knowledge at our disposal to make a proper decision. It is for this very reason that I have had moments of doubt about my idea.
There is a glimmer of hope, however. Paul went on to co-found ViaWeb, one of the first web-based store applications. The company was sold a few years after he founded it for a little under $50 million. Nearly a decade later he founded Y-Combinator, the world’s most respected startup incubator, where he and his team invest money in young companies to help them accelerate and grow. Perhaps you have heard of a few of their startups? They include Reddit, Dropbox, Stripe, and Weebly, among others.
The frugal startup
I’ve recently been feeling a bit guilty about starting a company considering the debt that has yet to be repaid. Thankfully, startups have naturally become less costly over time. Forbes estimates that close to 90% of startups are now bootstrapped. Meaning, they fund their company out of their own pocket. Consider the cost differential between only 20 years ago and today. In the 1990’s, websites would cost upwards of $100,000 for a relatively simple (by today’s standards) architecture. Complex databases and eCommerce applications could cost upwards of a million dollars.
That’s a far cry from today, where in 10 minutes you can be online with WordPress, Shopify, or a litany of other ready set services. For advanced programming needs, you can turn to services such as UpWork and RentACoder, where for a small sum you have a deeply knowledgeable hacker at your fingertips. You don’t have to write a single line of code.
That’s what Spencer Haws did when he started his SAAS company, Long Tail Pro. He outsourced his programming needs to someone who wrote the software entirely for him. Profits for his software expanded to over half a million dollars in a four-year span. His company recently sold the software and the company for an undisclosed large sum.
Relatively speaking, I am in a good position. I know a good amount of coding, though I am still learning. Because of this, I can pay for certain parts of the project that are especially difficult while saving significant amounts of money by coding the rest myself.
Alright, what’s your startup idea Mr. Beatles?
I’m not sure I’m ready to divulge that yet.
The beta test version of the website will be available for user testing very soon. Probably in 3 weeks, or less. The first challenge may prove to be one of the most difficult. I will have to find a user base willing to give me honest and direct feedback. Traditional digital advertising, such as posting a request on Craigslist and Facebook, would likely not yield adequate results. I can imagine many people would view the website out of curiosity, but not take the time to give me their detailed opinion and user experience. Surveys are notoriously ignored.
What I can tell you is that the website streamlines the way consumers shop for a particular high priced item. The service will allow users to compare prices from several different competitors, all in one location. For this given product, no other price comparator (that I currently know of) exists.
Due to the unique concept, it is very easy to question whether this is something that people will quickly adapt to. Those in the market for this product may have become accustomed to seeing results and pricing and details in a particular manner, and even though I believe this is a superior streamlined method that gives the consumer the answers they need in the quickest amount of time, I question whether people will rather stay with what they know. Old habits die hard.
The other question is whether I will patent the idea. Or more accurately, the process at which the data is collected and then displayed. Without a patent, one of the larger companies that dominate the space could copy my methodology and introduce their own pricing feature. From my research, there are ways around certain data collection patents as well, so this is still something to be explored.
Plan moving forward
I plan to make leaps of progress in the next few weeks. I’ve outlined a few of the next steps and assigned generous timetables. And if Paul Graham reads this someday, thank you.
- Finish the MVP (prototype). A couple of weeks of coding should do it.
- Conduct advanced testing and debugging of the software and system. This process shouldn’t take too long, as I’ve been doing this all along.
- Find people to use the website and give me feedback. Is it useful? Would you use it? If yes, are there any changes you would implement to make it even more useful?
If anyone has any suggestions or feedback, I’d love to hear it!