One Order of Operations for Starting a Startup by Michael Seibel

One order of operations for starting a startup: more often than not, when I talk to a talented technical person who's thinking about becoming a founder, their number one blockers that they don't have an idea. At some point during their formative years, they learned that every great startup started with a great idea, and if the idea isn't amazing—usually as judged by peers, parents, or other people with little startup experience—the startup will fail.

All right, why'd you write that?

I wrote that I think—I think you did.

Now, I think I've read that before.

I wrote this because this is the number one excuse I hear from people who, um, want to start a startup, right? And it's so interesting to me. I think that like there are all of these old entrepreneurial rules and business best practices that, that I think that people just want to apply hand and glove to a new industry.

Mhm, I think tech startups might be a little different.

So interestingly enough, like I don't even think people are really taught how to find ideas. So, like, I feel as though people are sitting there saying, "I don't have an idea," and they don't even really understand a process by which to get one.

Yeah, they think it's supposed to like happen organically—like it's like almost like out of the cartoons where like a light bulb goes off the top of your head.

And like that's not really how it works. And so what I wanted to do with this essay was give people a framework that they could try to use to come up with an idea. So instead of this being a passive process, it can be an active process.

I think one of the things that like might be hard for people to see is like, now being in this world for so long, I have a lot of friends who wanted to do a startup and didn't know what they wanted to do and then came up with an idea and were very successful. So like I've seen this happen with a lot of people, and so that's kind of where I've come up with this thought.

Mhm. So you break it out into one, two, three, four—uh, several steps.

So this is, I'm going to outline, and then we can explain. So the order of operations: here's where I'd start. Is there any particular problem that you're passionate about? The next step, once you decide on a problem, find some friends and brainstorm potential solutions to the problem. The next step, at this point, the most important thing, uh, to make that spark turn into a fire is to work together and build and launch an MVP.

Yes. And that's basically it.

Yeah, yeah, it's not that complex.

No, it's hard, but it's not that complex.

No, it's not. So let's start at the beginning: a particular passion problem you're passionate about.

So I think oftentimes, I'll give you the conversation that I had with, um, a founder. I was at a conference over the weekend called Afrotech, and there were a bunch of young people who wanted to start companies there. This woman walked up to me and she said, "I have an idea—I’m doing a startup that helps other startups."

And um, I call this like a meta startup. And this is startups that I kind of don't like because it's like, in some ways, I think it's like a cop-out. It's like, "Hey, I'm giving—I want to help give other startups advice and guidance, but I haven't really done a startup myself." And like, it's— I don't know, it's just—it's—it's not great.

And so I dug in. I was like, "Okay, so what's a problem that you have?" And, um, it was interesting. So the woman was a mother and she said one of the problems I had is that, um, there are a lot of places when I go somewhere new, there are a lot of places where I don't know if I can use my stroller with my baby because it's like hard to get around or if I'm walking on a street. Does it have, you know, the proper sidewalks and so forth? So I'd love, like, some type of product that would like tell me, um, what path I should take that's like stroller friendly.

And I said to her, "Okay, that's— but we're getting somewhere. Right? Now we're not— we're not in like this meta idea. Now we're actually solving a problem directly. Great."

But I—I asked her, "Hey, can you judge this by two, um, things? First one: how frequent is this problem?"

MH: And she said, "Well actually when I'm in an area that I know then I know where to walk, I know how to do it. It's not that frequent."

And how intense is this problem?

It's like, "Well, you know, if I have to go over a curb or something, you know, it's like—it’s a—it’s pain, but it's not like, you know." So then I was like, "Okay, what if you could start a problem that was addressing one of the top three problems in your life? What would it be?"

And you know what she said?

She said, “Affordable childcare.”

I like, you know what? A lot of people have that problem. That's a big problem. And like, I felt my like douchebag investor light go off. It's like, "Yes, you should do that. Like that is a problem. Like even if you have solved that problem, you're going to be wildly successful. Like there are gajillions people have that problem—it's ridiculously intense."

And it was like interesting because in such a weird way, I feel like she had somehow condensed all of the startup advice that she'd been given and everything she read to go to this like wrong place when I just asked her what's the problem in your life. And she almost immediately got to like a place that could create real value.

Now like how should she solve that problem?

Okay, yes, that's another question, but damn, like it's a personal problem she has, and she sure as hell knows that if she makes a product, is it helping her?

Yeah, and at least if it's helping her, she knows it's like halfway decent.

So like that, I got to a really exciting place by just digging into like, "What sucks for you?" I think everyone can do that exercise. And I think that like that exercise can be informed by your work life or your personal life.

So many startups I see were created because they were doing something at work and they were like, "This sucks! Why do I have to keep on doing this?"

Yeah, I'm going to make this thing and then sell it to my job so that no one has to do this ever again. Right? Um, so it can apply either way.

Right, and this is a very easy way to get people to pay you, whereas doing things like strapping a webcam to your head—not as obvious.

Not as obvious of a problem.

Pretty, pretty non-obvious.

So all right, so you go there.

Yeah, so once you find a problem, find some friends and brainstorm potential solutions to the problem.

So here's the trick: um, you don't need to skip to a solution too early, MH. And your thought process should be whatever solution I come up with is probably going to be wrong.

So my solution really is a first hypothesis. And basically, it's like imagine I'm trying to, um, I don't know, like redo some famous science experiment—like I'm trying to figure out the speed of gravity or something, right? Um, I first have to start with a hypothesis, then test, and then repeat, repeat, repeat, and play to my answer.

Okay, so um, I don't need to know the answer up front—like that's not the goal. If you have a big enough problem, like trust that like if you come up with anything resembling an answer in a reasonable period of time—years, yeah, you have a big business.

So instead of thinking, "Okay, let me come with my idea how to solve it," I think the more important thing is to start talking to other people about it because I think that the number one thing you have to do to create a company, or one of the top three, is to have some co-founders.

And it's really helpful to figure out who are the types of people who you can talk to about something and you riff well. You—you iterate each other's ideas.

There's sometime people you brainstorm with, and like they say like, I say, "Craig, wouldn't it be cool if the sky is red?" And Craig says, "No," and that's the end of the brainstorm, right? It's like, well we might not have a best-found relationship.

Right, as opposed to like, "Well wouldn't it be cool if the sky was red?" and Craig says, "You know we can't make the sky red, but what happens if we tint all the windows in the house red so you can make it look like the sky's red?"

It's like, "Oh! Yeah, right! You know, like we’re moving!"

So you want to start having those conversations with people that you like, um, people—if you're not technical, people who are technical—um, people who you respect their intelligence. And ideally, together you start coming up with an idea.

And what's cool about that is that if you come up with that idea together, um, everyone you've been talking to feels some ownership of the idea.

Yeah, and that helps kind of light that flame.

Yeah, yeah, it's dangerous to be married to a solution.

Yeah, yes, that’s a real problem.

All right, so at this point the most important thing is to turn that spark into a fire and work together to build an MVP.

Boom!

So the biggest mistake that people make at this point is to think that the things they need to do is like, now I feel like some like weird Phantom MBA starts whispering in their ear, and it's like, "You need to incorporate, you need to raise money," you need to—it's like kick that person out! That person, like, that's not—it's not what you need to do.

Can you just build a simple V1 of the product?

Can you build the simplest V1, even if it's just an Excel spreadsheet? Something powered by an Excel spreadsheet? Give it a try.

Like the way to get that team even more excited is to try something, yeah?

And like oftentimes, I see people kind of get lost in that legal or that fundraising world and never even got to give their thing a try.

You don’t need—you don't need like bank accounts to give something a try.

You don’t need an incorporation to give something a try. For the most part, there's some ideas you do, but like for the most part, you don't.

Um, and a way that you can really get that team solidified is just to get some kind of MVP and get like one customer, two customers.

Um, this is one—the final test on like, "Hey, can we work together well?"

Right? And two, man, it amps up the excitement a lot. And so that when you have to go through some of the of incorporation and stuff, yeah?

Or fundraising, right? The excitement level is high.

Yeah.

Um, also third, it gives you leverage. Like if you actually have something with a couple customers, then like investors are far more interested to like to talk to you than if you just have an idea, especially people who are on the fence about working with you.

Yes. I mean, these are all of these things that you're saying. These are all excuses you create because it's easier than working on the actual problem.

Well yes, for some people. But I also think it's for some people, it's what they think is the right path.

It's like—it's like, I actually think that some people—some people are being—I don't want to say lazy, but some people are being, I don't know. Um, not—some people are kind of being disingenuous in this process, but I think other people actually think, "Oh no, the right thing to do is actually to come up with an idea, fundraise, outsource an MVP, and then hire a team."

Like I think that like some people think that's the right thing to do, and it's like harder—that's a harder path.

Okay, like you don't have to do that.

Well, my failure mode is different then.

Um, all right, so so then, uh, you WRA this essay up with a couple things—the two failed orders of operations.

Well these are two of many, I suppose.

Yes, um, so one: come up with an idea, and then pitch to investors.

Yes.

Two: I have an idea but can't write code, and none of my co-founders can either.

Yeah, so, um, we're in a time where there are a lot of startups, and there's, um, unfortunately, you're—people that you're pitching, if they're good, they're getting pitched by a lot of people, so you need to bring some real fire to that meeting.

Yeah. And a good deck is no longer good enough.

Um, I would argue that back in the day, like in the 90s, it was so expensive to get software made and hosted online and get users that like a good deck—actually back then it was like a 100-page business plan—like that’s all you could get. That's all you could do without money.

Um, we're not there now. And so um, you're not bringing the fire if you're just bringing an idea.

Now some people can raise on just an idea, right? And if you're one of those lucky people, that's great, but like, I don't know, like I rather be good than lucky.

Um, in terms of, you know, no technical co-founders, like this is a constant issue. And I'm surprised by this.

Like I talked to a friend the other day who is thinking about starting something and doesn't have a technical co-founder yet, and even she was a little concerned about getting one even though she has kind of been in the tech startup world, and you know, I had to encourage her. I had to tell her, "No, you can! Like you can do this!"

Like it's not—it's—not only is it's not going to be that hard, it's that like it's probably going to be easier than outsourcing it.

Um, the one failure mode that I see a lot is that I see people who can raise a little bit of money go down the outsourcing route and believe that they are progressing. They believe that the thing is moving forward, and what they don't realize is that for the most part, they’re going to need to iterate anything that's created by those outsourcers over and over and over and over again, and it gets pretty expensive pretty fast.

And so the failure mode that I see so constantly is outsourcing, iterating with that outsourcer—you run out of money.

Yeah, you haven't figured things out yet, and so you have to go to an investor and say, "Well I don't have anything, I need more money," and like that's death.

And like what's so sad about that death is that like you've been kind of walking that path the whole time, but often you don't realize it to the very end and after you spent money, and like sometimes it's people's own money.

Like they do their savings—they hand their savings to these people.

And like I don't think the outsourcing folks are bad or morally wrong. Um, I just think that like people should take the hustle that they have and apply it to the number one problem: which is like, it just turns out that getting a technical co-founder tends to be cheaper than paying an outsourcer.

Yeah, yeah. I mean I guess, you know, to push back, if you had someone outsource something and then that got you a couple customers, then you found a co-founder—that's a great outcome.

Well it's interesting because I think that a lot of people go into the outsourcing route with that, um, intention, but the thing that they don't realize is that like, they didn't feel comfortable going and finding a technical co-founder.

Now when they don't have any traction and they don't have a product, right? Most likely the outcome is the outsourcer will give them a shitty product—a shitty V1.

Totally.

Yeah. They won't have any users then, and now they'll go after a technical co-founder with a shitty product and no users and less money.

Like—and they want to give the co-founder 10%—yeah, like they're not actually in a better position.

So it's like, like, yes, I think that they're—like one—and I—and I mentioned in the essay, there are counter examples like there are people who do go from a contractor to big company, but it's just—I would argue it's a harder path, and it's a path that's much more likely to lose you a lot of money—your own money.

Your own money.