Many of the things we call startups are even today referred to by folks we call business people as "not businesses." Instagram for example: was a startup, arguably not much of a business, and doesn't seem to have much of an analogue in history.
Instagram was started with the hope that if they gain enough users, they will be able to figure out how to monetize those users. It's not much of a business today, because they still have not figured out a way to do that.
Those who have invested in Instagram either believe they will be able to figure that out, or they believe they can sell it to someone who believes they can do so.
This is no different than if I were to open a convenience store. I open it -- I'm losing money on rent, the renovations, inventory, etc, etc, etc -- I hope that after a certain amount of time I will be able to attract enough customers to make up for that.. but until I do, I do not have much of a business.
In a way, Instagram is at the opening stage. They're building a user base (what would be the store in my example). And when they figure out how to monetize the users, they will 'open for business' and accept their first customers (probably advertisers.. but they might come up with something else).
There is no contradiction, and there are plenty of analogues in history.
He eloquently explains that startups are different from "normal" businesses and VCs invest in them because of the possible rate of growth. This kind of business has only been very common in the last few decades in the tech industry. And has probably been amplified in the last two decades by the internet.
Lets narrow it to tech startups. When I started my company in 1999 if you weren't in a startup hub it was very hard to come by certain knowledge. Usually you learned the hard way which shortened your runway of both cash and time.
Now there's a lot more information on the web. It requires some study for the first timer to decide which is the correct information and what is just noise. But the resources are there and I would bet this information is changing much slower than from the nineties to present day.
HN and around a dozen blogs are the biggest resources that I've got.
This kind of thinking is one of the reasons I spent my teens and 20s emphasizing things like mathematics and human languages instead of something more applied.
This article assumes all knowledge is equally valuable, equally hard to gain, and decays at the same rate, but none of that is true.
Frameworks change constantly, computer languages less frequently, and architectural notions much less frequently. Yet the value and difficulty of learning is exactly reversed.
The nature of the media that defines the marketing strategy changes relatively slowly compared to tech. Successful business strategies change still slower than the marketing, and the actual behavior of people much more slowly.
Most of the facts that are changing the fastest are very cheap to "re-discover". So cheap that there is a term for it: the Google Effect.
I can't see any particularly good lessons for startups from the article as a result.
The way I would put it is: most of the things we call "wisdom" are more like "fashion." It's fashionable to be "in the cloud." It's fashionable to "fail fast." And so on. These are cyclical attributes; one can always find, at the least, an anecdotal situation which demonstrates or disproves their worth. And over a period of time - one year, five years, 30 years - the fashion runs its course, gets replaced by something else, and then gets revived again.
And - the other part of this is - tech businesses, and consequently tech employees, are entirely reliant on staying within the fashion to make their money. Any single product you push out today has a good chance of devaluing within a few years, if the industry as a whole moves on. And so, over and over, part of the fashion cycle is the monopoly play - every company races to monopolize and lock in its users so that it can break through the fashion cycle, sit on the product with old tech, and maximize extraction. But then, some time later, it gets disrupted by a startup, which then proceeds to lock in its users...
Triple-O strategies (open standard, open source, open development) seem to break the fashion cycle in software over the very long-term and force business to move to new categories(a good thing for the global economy, especially with software demand being ever-increasing). This is especially true when an open solution can break out of the "back office" and improve its UX. But one of the big, largely unanswered questions is whether businesses can be given economic incentives to remain open, and whether this phenomenon can escape software and move into hardware.
The article assumes that we don't know when any particular piece of knowledge will experiment decay and we can't know until after the fact, just as it would happen with a particular atom in the physics half-life.
The lesson is of course to never assume any current practice is the end-of-all-arguments that never should be contested. Have an open mind for everything.
> Founders should try to see around corners to anticipate what knowledge today will be obsolete tomorrow, and find their place accordingly.
I'm not sure how I feel about the final point in the article. It's really hard to predict a change in knowledge. All you have to do is read the "Key Trends of 2012" articles that were written at the end of 2011 to see how hit and miss we are about predictions. Those that correctly "predicted" a shift look like geniuses. Those that didn't...
Although a really interesting post, I beg to differ at one point at least.
The materialistic aspects of startup knowledge definitely have a half-life, sure enough.. but when you are talking about things like "fail-fast", I don't think they're "fashionable."
Startup wisdom - which stems from knowledge - cannot go stale in most cases. Intricate details like what kind of a metric you use to see what affects the conversions can change but the very fact that you should track your conversions doesn't change for centuries or more.
If this is what you did mean by startup knowledge, thanks for writing this! :)
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[ 5.0 ms ] story [ 62.6 ms ] threadInstagram was started with the hope that if they gain enough users, they will be able to figure out how to monetize those users. It's not much of a business today, because they still have not figured out a way to do that.
Those who have invested in Instagram either believe they will be able to figure that out, or they believe they can sell it to someone who believes they can do so.
This is no different than if I were to open a convenience store. I open it -- I'm losing money on rent, the renovations, inventory, etc, etc, etc -- I hope that after a certain amount of time I will be able to attract enough customers to make up for that.. but until I do, I do not have much of a business.
In a way, Instagram is at the opening stage. They're building a user base (what would be the store in my example). And when they figure out how to monetize the users, they will 'open for business' and accept their first customers (probably advertisers.. but they might come up with something else).
There is no contradiction, and there are plenty of analogues in history.
http://paulgraham.com/growth.html
He eloquently explains that startups are different from "normal" businesses and VCs invest in them because of the possible rate of growth. This kind of business has only been very common in the last few decades in the tech industry. And has probably been amplified in the last two decades by the internet.
Now there's a lot more information on the web. It requires some study for the first timer to decide which is the correct information and what is just noise. But the resources are there and I would bet this information is changing much slower than from the nineties to present day.
HN and around a dozen blogs are the biggest resources that I've got.
http://www.npr.org/2012/12/09/166665795/forget-extinct-the-b...
Frameworks change constantly, computer languages less frequently, and architectural notions much less frequently. Yet the value and difficulty of learning is exactly reversed.
The nature of the media that defines the marketing strategy changes relatively slowly compared to tech. Successful business strategies change still slower than the marketing, and the actual behavior of people much more slowly.
Most of the facts that are changing the fastest are very cheap to "re-discover". So cheap that there is a term for it: the Google Effect.
I can't see any particularly good lessons for startups from the article as a result.
And - the other part of this is - tech businesses, and consequently tech employees, are entirely reliant on staying within the fashion to make their money. Any single product you push out today has a good chance of devaluing within a few years, if the industry as a whole moves on. And so, over and over, part of the fashion cycle is the monopoly play - every company races to monopolize and lock in its users so that it can break through the fashion cycle, sit on the product with old tech, and maximize extraction. But then, some time later, it gets disrupted by a startup, which then proceeds to lock in its users...
Triple-O strategies (open standard, open source, open development) seem to break the fashion cycle in software over the very long-term and force business to move to new categories(a good thing for the global economy, especially with software demand being ever-increasing). This is especially true when an open solution can break out of the "back office" and improve its UX. But one of the big, largely unanswered questions is whether businesses can be given economic incentives to remain open, and whether this phenomenon can escape software and move into hardware.
The article assumes that we don't know when any particular piece of knowledge will experiment decay and we can't know until after the fact, just as it would happen with a particular atom in the physics half-life.
The lesson is of course to never assume any current practice is the end-of-all-arguments that never should be contested. Have an open mind for everything.
I'm not sure how I feel about the final point in the article. It's really hard to predict a change in knowledge. All you have to do is read the "Key Trends of 2012" articles that were written at the end of 2011 to see how hit and miss we are about predictions. Those that correctly "predicted" a shift look like geniuses. Those that didn't...
The materialistic aspects of startup knowledge definitely have a half-life, sure enough.. but when you are talking about things like "fail-fast", I don't think they're "fashionable."
Startup wisdom - which stems from knowledge - cannot go stale in most cases. Intricate details like what kind of a metric you use to see what affects the conversions can change but the very fact that you should track your conversions doesn't change for centuries or more.
If this is what you did mean by startup knowledge, thanks for writing this! :)