By Dan Shipper
- Be well read
- Learn how to build a real software business
By real business I meant a business that has paying customers from day one and that makes enough money every month that I could work on it full time when I graduated.
Although I wouldn’t go as far as to call myself well-read (I don’t think that’s something to be achieved, just pursued) I can confidently cross goal number two off of my list:
In about 11 months we’ve built Firefly up to well into the 6 figures in recurring revenue.
We’ve done this primarily through two channels: on-site website signups and large partnerships.
In July we announced a partnership with Olark to roll our cobrowsing out to their 5,000 paying customers. We’ve also struck similar deals with much larger customer support companies as well as companies in other verticals like financial services.
What makes this somewhat special is that there’s just two of us working on the business, we’re entirely bootstrapped (except for 20k from the excellent Dorm Room Fund), and this year I’m going to be a senior in college.
IF YOU’RE AN ENGINEERING UNDERGRAD, I CAN TEXT INTRO YOU TO DORM ROOM FUND CECE CHENG (text me @6502838008 🙂 650-283-8008
Larry@duck9.com is for spam.)
Because the past few years have been such a crazy ride, I wanted to take some time to write down some of the things I’ve learned along the way.
What separates my writing is that I was a beginner so recently that I can still accurately remember what it feels like.
(I LOVE THAT MR SHIPPER DOCUMENTS THE FIRST FEW STEPS OUT OF THE BATTERS BOX)
I remember seeing people building products, and getting them featured on blogs, and getting userbases, and giving speeches, and writing popular blog posts and feeling like I was seeing it all through a pane of impossibly thick glass: I could look but I couldn’t touch. I remember finishing a product and feeling like I didn’t even know where to start looking for people to show it to. It’s a lonely, vapid, discouraging feeling.
YES! WOW (I FORGET. WAIT, I NEVER HAD THAT CUZ I HAD MARK MCCORMACK)
I’m hardly a huge success yet, but I do have a thing or two to say about getting from there to running a real business with real customers that pay you real money every month. And about doing it while juggling classwork, a social life and maintaining a blog on the side.
(I PEAKED MY SOPH YEAR IN COLLEGE WHEN I PLAYED A SPORT, STUDIED ENGR, WORKED AT DAILY ILLINI, STARTED A BIZ , PLEDGED to OFFICER OF MY FRAT (Kappa Sigs!), super MODELLED, DATED A THETA)
In other words, things that are more than the sum of their parts.
A business is a complex system that demonstrates emergence. And just like you’re not going to find consciousness in any one particular neuron in the brain, you’re not going to find “the secret” to a business’s success in any one particular place. There’s no silver bullet.
Rather, a successful business is the result of thousands of different elements that interact together at the same time.
The problem with most posts like this is that they tend to focus on The 5 Things That Made Our Company Successful because it’s easy to write about and easy to digest. Or they’ll give you 5 Things You Should Do To Exit For A Billion Dollars.
At best this is either an oversimplification or a misunderstanding of success.
When you hear someone say: “Business X was successful because they did Y” take it with a grain of salt. When you really start to unpack how things play out inside of an actual business, you’ll find that it’s a lot more complicated than that.
We just tell simple stories because they’re easier to digest.
(CROSS THE CHASM FROM THE RIGHT https://bit.ly/buster14512w)
I thought to myself, “All we have to do once we build the app is get it in TechCrunch and start getting some investor interest. That will legitimize us enough that things will start to take off.”
Having been in TechCrunch (and almost every other tech-related publication) and having garnered lots of investment interest along the way, I can confidently tell you that while it certainly doesn’t hurt, it’s neither a necessary nor sufficient component of a successful business.
In his book, Surely You’re Joking Mr. FeynmanNobel-prize winning physicist Richard Feynman tells a (probably apocryphal) story about what he calls cargo cults:
“In the South Seas there is a cargo cult of people. During the war they saw airplanes land with lots of good materials, and they want the same thing to happen now. So they’ve arranged to make things like runways, to put fires along the sides of the runways, to make a wooden hut for a man to sit in, with two wooden pieces on his head like headphones and bars of bamboo sticking out like antennas – he’s the controller – and they wait for the airplanes to land.
They’re doing everything right. The form is perfect. It looks exactly the way it looked before. But it doesn’t work.
(RE READ THE ABOVE PARAGRAPH)
No airplanes land.
So I call these things cargo cult science, because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential, because the planes don’t land.”
When I see inexperienced entrepreneurs focusing solely on getting press or trying to raise money it reminds me a lot of this passage. The unconscious thinking is this:
“Successful entrepreneurs tend to get lots of coverage and raise lots of money, therefore to be a successful entrepreneur I need to get those things.”
As Nassim Taleb would say: This points the arrow of causation in a direction it shouldn’t go.
It’s true that if your business is taking off you’re going to get lots of investor interest and lots of press opportunities. But lots of investor interest and press does not create a successful business.
Focusing on those external things instead of nailing down the value you’re providing is like strapping on the wooden headphones and waiting for the planes to land. It looks and feels like starting a company, but it’s missing something essential that dooms it.
(I BOIL DOWN WHAT WORKS IN A VIDEO THAT SOLVES THIS
I got it from STANFORD ENGINEERING #ENGR145
50-70% of my lecture time, I GOT A KID TO DO THE LECTURE. I MEAN DO U WANNA HEAR ME TALK FOR 90 MIN??)
It’s very simple: honesty.
What I used to do is try to run from my mistakes. It was’t overt; I wasn’t deluded. Rather, I did it in small ways that were easy to hide from myself. I would tell myself little stories and look at things that happened in certain ways that would make it seem like we were doing better than we actually were.
It’s the kind of thing that makes you say to yourself, “We’ve had over 1,000 signups since launch” instead of “We have 1 paying customer.” Or what makes you say to yourself, “We’re growing 50% week-over-week” when you know that you’ve only done that for two weeks in a row and you only have 10 customers.
These kind of little, up-to-a-point, white lies work in most aspects of life. But in rocket science and entrepreneurhsip they’re killer. They’re how you blow up on the launch pad.
Telling yourself, “we’re growing 50% week-over-week” when you have 10 customers and just concentrating on getting press and raising money is the equivalent of standing out on a freshly-minted landing strip with wooden headphones on and waiting for the planes to land.
(MORE LATER!)
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