Thursday, October 19, 2006

18 Mistakes That Kill Startups...

I always get a chuckle out of Paul Graham's essays, the latest one 18 Mistakes That Kill Startups being no exception. As with most business essays, it is full of obvious truisms, cliches, and of course, the mythical great hacker hero. One of the problems of autobiographical business writers who write from their own experience is selection bias, the inability of people to be objective about their own success and see it within the big picture.

One's own success, of course, is always due to one's great ideas, work, foresight, and lack of mistakes, and never due to serendipitous events, suddenly favorable market conditions, or just plain old personal connections. Why was Viaweb a "success"? Surely, it's because it was written in Lisp! and not because the internet boom was in a full swing sellers market, larger companies were practically buying anything with a half dozen users and a web site. As a programmer, I'd love to believe that the biggest influence on the success or failure of a business idea is programming ability, it strokes the narcissist ego of anyone who considers themselves a good programmer. I mean, for every socially isolated geek growing up in school, what could be better than finding out that the universe is optimized for nerds to succeed.

This is not to say that one's success can't be because of merit, just that one can't determine which factors lead to success by only measuring one's own successes in isolation. Would you take a new medicine because the last couple of times it worked for someone else to cure their disease? Business advice essays are the financial equivalent of diet pill and herbal remedy testimonials.

Many people who invest in the stock market love to believe that their successful stock picks are because of a special insight, or technique that they use for their picks. The reality is, most people are unable to beat a random dart board or index fund, but in isolation and over small time windows, their successful choices look to be correlated with their behavior -- until -- they lose spectacularly on some trade. And so it goes, in sports, in politics, in competitions, many winning competitors attribute their success to lucky charms, daily superstituous rituals, herbal supplements, religious prayers. Does athletic training and genetics play a part? Certainly the answer is yes, but at high levels of competition, an athlete can also win by another competitor falling on bad luck -- a gust of wind, a slippery track, a misplaced foot, an equipment malfunction, a bad starting position draw. That's why writing a book on "18 mistakes that stop you from winning a Gold Medal at the Olympics" is practically worthless.

There may be a list of "do's and don'ts" that are neccessary (but not sufficient) for successful startups, but I believe that most of them are probably conditional on situation, and probably not discoverable in practice, there are just too many variables. Instead, I would view the market as a memetic ecosystem, and startups as organisms competiting within the environment. Which organism is the fittest? The only way to know is to release it into the environment and see. The system is too complex for a simple set of rules of thumb to determine optimal fitness. Sometimes organisms which appear poorly designed or weak, end up surviving because off an odd confluence of external factors.

I'm often stumped by stories of accidental success, of people who created something on a whim, and overnight had it spread like wildfire, while at the same time, people who had created almost exactly the same ideas in the past failed miserably. We'd like to attribute their success to design or intent or "something they did right" and the failures to "something they did wrong" Did they use the wrong programming language? Did they raise too little money? Too much. Hire the wrong people? All the while, ignoring the fact that sometimes the result is due to the nebulous, continually shifting aspects of human desire.

In the end, probably the most important worthwhile advice that most business writers give regardless of what you believe determines success is this: you're more likely to succeed if you try to do something, than if you do nothing. You won't know if your organism will survive in the memetic environment if you don't release it.

Graham's 18 point list is full of truisms and hedged statements.

Rule #3. Don't choose niche ideas because other people are already doing the other great ideas
Rule #4. Don't choose ideas other people are already doing

Rule #8. Don't launch your site too late.
Rule #9. Don't launch your site too early.

Rule #11. Don't raise too little money.
Rule #12. Don't spend too much money.
Rule #13. Don't raise too much money.

Which I reduce to the following:
1. A successful startup does exactly what is required for success, and not too little or too much.

And of course, the implicit rules, like Don't Solve Other People's Problems (unless of course, you're ViaWeb) Spending time doing business development is bad (especially by hiring a business guy) unless of course it's done by a hacker who takes time out of hacking to make calls to other executives, who of course, love getting calls from hackers. Oh, and don't hire Bad Programmers, except that no one can tell what makes a Good Programmer, except for Good Programmers(*). Apparently, it's impossible for any Good Programmer to want to work with a Business Guy(tm) also. That's why so many startups failed during the dot-com boom, because of bad programmers, not writing in LISP on Unix machines, and the inability of Business Guy to inspire Good Programmer Guy to join him.

Oh, and if you want to know which programming language to use on your next startup project, go find out what Phd students are using on research projects at elite colleges. (of course, an elite college by definition won't be using Java for such projects.)


(*) This reminds me of the way immortals in the HighLander series "sense" other immortals. Hmm, maybe a YouTube spoof is in order? Hacker gods walk among us undetectable to all but themselves! (cue weird "six sense" soundfx as Paul Graham enters a room where Eric S Raymond is sitting)