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Aaron Stanton
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« on: September 28, 2009, 05:16:48 pm » |
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Every time Paul and I leave on some sort of business trip, it seems someone mentions us unexpectedly. We just got off the plane in New York, and I'm told that BookLamp was mentioned in this month's Popular Science. I haven't seen a copy myself, yet, but I've been getting e-mails about it all day. It makes me wish we could move forward with the Reader's Project a bit more aggressively - we've had access to a fairly large commercial database of books for a while (10,000+) that we haven't been able to roll out publicly for a variety of reasons. I know how lame it is to say something like, "Man, I wish I could show you all the cool things we have going on behind the scenes..."... but, well, I wish I could show you all the cool things we have going on behind the scenes. At some point we'll roll this out as a functional, non-beta service - though the form it takes may be different than what it is now. And it's likely to not be our first milestone, depending on things like... well, like this trip to New York.
We always want things to move faster, but as I've said before, this is no longer a story that moves at the speed of the Internet. This is now a story that's told at the speed of life, and life is sometimes slow.
My post last week about the inglorious nature of starting a company elicited some e-mails from a number of other entrepreneurs. One of the common, reoccuring themes that's often mentioned is the, "role of the start-up". People often look at big companies like Google or Amazon or whatever industry player happens to be in your area, and wonder, "How can I compete, or even beat, someone with such gigantic resources?"
Depending on the amount of time I have, I tend to point people towards an excellent book called The Innovator's Dilemma by Clayton Christensen, which is an excellent and encouraging description of why small companies will ALWAYS have a role to play in the market. If it's a dinner conversation, though, I tend to reference three tools that I refer to as the Start-up's Weapons. Basically, there are three weapons that a small start-up has that allows it to compete in a marketplace filled with other, more resource rich competitors. They are, as I see it: Time, Efficiency, and Innovation.
This is by no means an end all list, but it touches on some of the most important elements that separate the start-up from the big company. Let's start with Time. For a large, established company, the renewable resource is money. We're afraid they'll enter our markets because they have money, and a source of getting new money, and they're likely to use it to try to beat you. Money is not a renewable resource for a start-up, though, especially if they're pre-revenue. For a pre-revenue company, money comes at the cost of their ownership in their own company, because money comes through investments or loans. For a founder, nothing is more painful than having to give up a significant chunk of your dream to someone else.
Time is our renewable resource. Small companies are experts at creating time. Whether it's by staying up late and working weekends, or having a close enough group of employees that everyone is willing to stay late in exchange for a few slices of pizza, I don't know. Whatever it is, a start-up can get more done in a month than a larger company can get done in a month. I'm tempted to go out on a limb and say that's true almost regardless of comparable team size... but I won't, because it's likely to get me in trouble.
What I do know, though, is that anyone that's worked in a large company and a start-up both knows that the differences go beyond money. There's a foxhole mentality at a start-up - you're all in this together, trying to keep afloat a ship sailing for a destination that you all believe in. And since you can't create money at the beginning, you create time, instead, and do the work yourself.
The second weapon is efficiency. This weapon is widely misunderstood as a necessity of limited resources, not a precursor to success as a small company. People survive in spite of the limited resources, not because of them. I actually believe that success ultimately comes because of the skills and habits formed in those lean times. This connects back to my last post about the inglorious nature of start-ups - because a company is small, it can create a culture that promotes and loves efficiency. We start-ups should take pride in our ability to assign value to things that normal companies consider only second hand. For example, when Novel Projects was first started, we did it in the typical garage fashion. We gathered up computers, moved into a small space with cement floors and inadequate heating and air conditioning, and proceeded to be proud of our tiny hole in the wall.
As we grew, we added people that learned to be equally proud of how much we could accomplish on very little. We learned efficiency. And we are proud of that efficiency, even though we're in a bigger space with more people, now. Every employee, every one of us, is proud of it in the same way that survivors of the great depression are proud of their own self-sufficiency.
David, who used to work as a Director at Amazon during it's early days, once told me a story. When Amazon was still young, around 200 employees - most of them people working in the warehouses - someone ordered cheap leather chairs for the board room. And Jeff Bezos, Amazon's founder, didn't like this - he had the chairs returned.
Apparently, he didn't object to their price - which was not high, apparently, as chairs go - but instead to the appearance of leather. I'm reading a lot into this story, but if it were me, I'd say that he didn't like the perceived decadence, the shift in values away from efficiency and towards desiring leather in the board room. The company had started around a culture that was literally proud of coming from limited roots, literally boastful of how they made it on their own. New employees had to build their own desks upon arrival. Self-sufficiency was the core. And then one day someone isn't proud of the scrappy nature of the company, and thinks that what a "real" company needs is nice chairs, and big desks, and polished conference rooms.
Why? Because that's what big businesses have. People who join large, established companies do so often in part because they like the big desk, and don't like looking unimpressive. People join start-ups often times because of the exact opposite, because they like being the people in the small offices doing grandiose things. So when I say that one of the weapons of a start-up is efficiency, what I really mean is that a good start-up will be proud of efficiency in a way that a large company will likely never be.
And finally, Innovation. Big companies talk about innovation a great deal, but innovation is really hard to sustain in large environments. I'll refer you to Innovator's Dilemma again on that point, but let me sum it up this way - innovation requires a champion. A champion that believes in the innovation, for better or worse, above everything else that is going on in the company. Start-ups usually exist because somewhere along the line an innovator refused to let go of an innovation that everyone else had seen, dismissed, and moved on from. And in a large company where your promotions are dependent on upon pleasing the people above you, it's really had to stick to your guns for an unpopular idea that no one wants to hear about any more. In other words, it's hard to be a champion of anything.
But small companies can't operate that way. Partly as a result of the efficiency, of dealing with limited resources, innovation is the bread and butter of the start-up life. Known solutions sometimes have to be ignored because they're resource intensive, and untried solutions have to be built and made to work instead. If you can't innovate and hold onto innovations, you're doomed as a company.
If you talk to investors, you often hear there are two - among many - dangers that a company faces at the beginning. One is under-capitalization. The other is over-capitalization. One is having so few means that all the innovation, efficiency, and time in the world doesn't get the job done. The other is when you have so many resources that you ignore those three things all together, instead stoking your ego by acting like a large company and treating someone else's money as a renewable resource.
When it comes right down to it, there are many tools that big companies have... but never forget that small companies have weapons, too. And each of those three I listed... I think they can be described in other ways, too. I think traditionally they're described as hard work, passion for what you're doing, and an unwillingness to give up.
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