How to (tech) Startup

https://www.julian.com/guide/startup/ From same author as How to Write Better. Somewhat similar to Outside advice for ambitious teenagers.

Market Pull

”Market pull is when consumers reflexively want a product upon learning of it, and they’re willing to do whatever is required to get it”. Market pull is the force behind “product-market fit”. The idea is so good that the market pulls it without you having to work hard to sell it.

Market pull happens when three things are true

1. Comprehension: People can immediately understand the value of your product.
2. Value: There’s enough value that it justifies switching to your product.
3. Enthusiasm: People want the product right away.

Some common market pull categories:

1. Democratize investment opportunities
   1. Masterworks
   2. Republic
   3. Equi
2. Create new income opportunities
   1. Airbnb
   2. Uber and Lyft
   3. DoorDash
3. Remove extensive labor for a low cost
   1. Zapier
   2. Webflow
   3. Softr
4. Lower cost and increase convenience w/o reducing quality significantly
   1. Dropbox
   2. Spotify
   3. On-demand cable tv
5. Adapt a proven business model to a new region
6. Create a marketplace for a market that is manual and inefficient
7. Build SaaS that encourages users to invite other users
   1. Slack, Asana, Zoom, WhatsApp “You don’t need market pull today if you’re confident it’ll arrive in the near future.” If success isn’t necessarily the goal, like if there’s a social mission then market pull isn’t necessarily a concern.

How to assess market pull:

1. Find at least 100 potential customers that are representative of the total audience.
2. Ask each to rank your startup idea out of 10 on how likely they are to put down a cash deposit for it.
3. Count the percentage of respondents who respond 9 or 10. In my experience, these are the only two numbers that matter. Don’t be misled by 7s and 8s—these numbers often aren’t high enough for people to ultimately purchase.
4. Take the percentage of respondents who say 9 and 10 and multiply that by the size of your sample audience. Now you’re getting an idea of what percentage of the market you appeal to and therefore how big your idea is.
5. See if you can get those 9s and 10s to actually pay a deposit. If so, you’re onto something.
6. Rinse and repeat for every idea you have.

Startup Ideas

See How to Get Startup Ideas for more.

There are five market forces:

1. technology
2. consumer behavior
3. environment
4. regulation
5. distribution channels

Changes in these market forces generate opportunities because they create market pull with high demand and no supply. Most startup ideas aren’t particularly new, so timing is important.

”[Airbnb was] famously passed on by many smart investors because people thought: No one’s going to rent out a space in their home to a stranger… But one of the reasons it succeeded, aside from a good business model, a good idea, great execution, is the timing. [The 2009 recession was a time] when people really needed extra money, and that maybe helped people overcome their objection to rent out their own home to a stranger.”

You need to study market changes to find ideas of your own. “To intuit which changes in consumer behavior are necessary, you must inhabit the mind of your customer and build products you yourself would want. Then you survey others to ensure you’re not alone.”

Two main types of opportunities to be on the lookout for:

1. Products that consumers always wanted but couldn’t get until now.
2. Products that consumers could always get but only now badly want. “If your startup idea has been possible for a long time yet no one’s made it work, you likely need a market change for the idea to become scalable.”

Acquiring Customers

What makes a startup better than its competition is not necessarily what determines its success. What is your GTM (go-to-market) insight. In other words, how are you working on growing rapidly.

Growth is a fundamental feature of the product set. It’s not something you figure out later once the product’s been build.

Product-led acquisition (PLA) is the best way to grow your startup. PLA is when your users will naturally invite other users. Slack, Netflix, Venmo, Cash App, Snapchat, Zoom, Airbnb, etc.

4 ways to integrate PLA

• Encourage users to invite other users
• Turn your product into a billboard (people using it encourage others to use it ie iphones, nike, clothing)
• Encourage users to make shareable content
• Trigger word of mouth.

Retention → for software startups

Building state: State are things that keep users in through rewards. I.e. snapchat skins or eBay reputation. Anything that triggers sunk-cost fallacy.

State-building strategies

1. Non-transferable reputation points
2. Non-transferrable audience → YouTube, Instagram, any social network
3. Non-transferrable data
4. Consolidate contacts into a social graph: Linkedin

Hiring

Hire people who are genuinely rabidly curios to devour everything and experiment. They should be able to use your opportunities to be able to master the skills they want to master (this will keep them locked in and more motivated).

Hire the people that test new tools and techniques, study the competition, read the latest blog posts because they want to.

Mix your employee’s curiosity with their role.

To find curios people ask:

1. In your current job, what have you done to further your skills?
2. What are the interesting tools you’ve been playing with recently?
3. What are the skills you want to learn but haven’t yet.
4. What do you do to stay on top of updates.

Overall personality traits.

1. They’re curios
2. They learn quickly
3. They’re resourceful
4. They’re ethical and trustworthy
5. Their actions are intentional and strategic.
6. They play well with others. Extra plus if they inspire others.

Make sure that you create time for people to tell you where you’re going wrong and give your opinions. Cool ideas and solutions to problems are often in people’s heads and they just don’t want to tell you them because they don’t want to seem combative.