A great talk by Paul Graham got me thinking about my own experiences over the years and in this post, I will discuss some of the key ideas that I found to be important and true.
A first-time entrepreneur is plagued by the necessity to find something that works. And buying a few business books will lead them to think that finding the right business model is the most important accomplishment they could make before starting up. But a business idea that works on pen and paper is not necessarily one that works in the real world. And it’s not necessarily the one you need to be starting.
Over the years I’ve come up with many different business ideas. Some were good and some were very bad. I always made sure to play within the rules. I put the Business Model Canvas to good use. I was mindful of all the main aspects that are considered when assessing the soundness of a business idea. But I never pursued these projects beyond a few weeks — and when I did, I often regretted it. It took me years to figure out why, and in about 4–5 minutes near the end of his talk, Paul Graham told me what I only learned very painfully. It really boils down to being selfish and honest about what you care about.
There are plenty of examples of people who have managed to create successful businesses by being wholly pragmatic in their approach and not take into consideration vague terms like “passion.” MJ Demarco (author of Millionaire Fastlane) is the first example that comes to mind.
They assess the market opportunity, the risks, and the probability of success based on the competencies of the team — and based on these considerations make a decision about whether or not they should start a business. But that strategy doesn’t work for everyone, and it doesn’t work for people who aren’t completely externally motivated — that is, by money or fame.
Demarco admits that he was fueled by the idea of owning a Lamborghini ever since he was a young boy, and because of that — managed to create successful businesses that he didn’t necessarily think were interesting, but that made good business sense. And he became rich because of it. But before you try to follow in his footsteps, consider that you might not be like him.
If you are someone who is truly motivated by those external factors, great! That opens up far more opportunities that you can pursue successfully — and like Demarco, you will an advantage over the silly hopeless fools following their passion (especially over those who have no respect for practical considerations whatsoever). That’s especially true if you decide to compete in a domain that most people don’t find interesting or exciting (higher entry barrier).
But if you are someone who requires intrinsic motivation to get something done, you need to go beyond having the right business model. You will need to combine sound business logic with a personal infatuation with whatever it is you are trying to improve or add value to. Otherwise, you will run into two problems.
The first is that your determination will wane with time. The second is that you will not have invested the required intensity of work to be able to notice the subtle problems that other people are overlooking. I loved the phrase Graham used, “self-indulgence” when describing the type of projects he pursued over the years — that eventuated in successful businesses (such as Y Combinator).
To understand something deeply, you need to invest a lot of time into it, and that requires an inexplicable attachment (and even obsession) towards it. And to solve a problem deeply, you need to approach it with a kind of open mindedness and lack of pressure to allow your right brain to make non-obvious connections. The market is over-saturated with obvious solutions to obvious problems. Having superficial knowledge about a subject will prevent you from discovering either.
Don’t Rush it
One thing that bothers me is how a lot of authors of business books callously try to encourage everyone to be an entrepreneur. Of course, there is always the snide disclaimer somewhere near the end of the book, but the overwhelming message is “jump in now!.” And that’s understandable. It’s hard to sell a book with a tentative (albeit more thoughtful, nuanced, and accurate) message like “jump in at your own peril, but if you do, you need to learn a lot more now about yourself and the world and take a calculated risk that you feel you can recover from financially and psychologically.”
Graham doesn’t think you should jump in. He thinks you should wait until the time is right — for good reason. After starting a business (that works), you will not have the opportunity to live a life that is devoid of intense work and responsibility. You will be sprinting endlessly, and that will probably be your life for a long time.You will never get the chance to “backpack through Thailand” in your twenties — something that people have been doing for generations apparently.
Starting a business is insane. It’s rarely justifiable, and it’s especially not justifiable when you have very little knowledge about how the world works, yourself, and other people. Stated differently, don’t start a business from your dorm room. The Facebook story and others like it have been romanticised in popular culture as a mythologized youthful rebellion against the patriarchal pangs of authority and it’s gone too far.
Young founders rarely know what they’re doing and many of the success stories you hear about are somewhat accidental successes. There’s a lot of trial and error involved, there’s no set strategy that works, and the odds of success are astronomically low. That doesn’t mean people should never take chances. On the contrary, but businesses like Facebook and Yahoo were started out as side projects that eventually took on a life of their own. Zuckerberg didn’t drop out of college before he started Facebook (or a version of it that was very promising). Chronology matters.
Graham insists that the decision to start a business with someone mimics the process by which you select your friends. He tells you to find people who you like and can tolerate. Learning how to work with people you like is a very important skill to cultivate while in university. And rightfully stated by Graham, it’s rare to find out how much you like someone (before deciding you want to work with them). The answer usually presents itself when you are both faced with different incentives and goals. And it is especially apparent when failure strikes.
Regardless, even if it were true that good friends make good partners — it’s not obvious that you need a partner. It’s especially not obvious that you need four. These decisions are often made impulsively when they shouldn’t. Figuring out how the burden of work is going to be divided is not easy, and it can ruin relationships between good friends. I think that when working with others, you should proceed with trepidation and honesty. Not doing so will cause you to become unrealistic about your expectations of them, and being dishonest will harm everyone involved in the long run.
Learn What You Love
If you spend your time trying to force business ideas, your thinking will remain rigid and lack creativity. The alternative is to spend your university years voraciously consuming information about things that you enjoy learning about. The subjects you choose — no matter what they are, will allow you to develop unique insights that other “non-indulgent” people will miss out on. In other words, to prime yourself to be successful at starting a business when in university, you should be selfish and honest about what you want.
A point on selfishness. If you’re not selfish about what you like, you will spend your time thinking only about how you can cater to the needs of others, but very little time thinking about how you can exploit your own strengths. Compromising the need to cater to others for self-indulgence in subjects you find truly interesting for no practical purpose is an important trade-off that you should be brave enough to make — especially if you plan on starting a business.
A final point about working on projects you truly find interesting is that it improves the quality of your life. If you’re someone who is convinced you want to start a business, you will spend most of your time working on it. If you spend most of your time trying to solve problems you don’t really care about (albeit successfully), you will enjoy life a lot less.
Defining “interesting” is something Graham didn’t do very clearly because it’s difficult to do so, but I think I know what he meant. The best question to ask yourself — if you want to find out whether you really find something interesting — is to try to imagine working on that problem as far out into the future as possible.
It’s hard to imagine anything beyond two years, so let’s set two years as the upper limit. If you can imagine working on an idea for six months to two years, and feel excited about it, then it might be a good indication to pursue it. But if you think that six months is too much time to invest into that idea, and that you would need to see a return on your investment much sooner, then it would be a fatal error to keep going.
Of course, there is always the chance that you develop your interest in the idea as you spend more time on it. And that certainly happens often enough. Which is why, I don’t think this exercise is possible when you first come up when a business idea. Instead, I think you should spend some time with it, the same way you would in any relationship. Test the waters, so to speak. Eventually, after working on it for a few weeks, you will get a good feel for it. You will reach a point where you can understand what you basically need to learn about, and that’s when you need to make that determination about whether you want to go ahead.
And it’s important to be objective with yourself about it too. It’s easy to fool yourself into thinking that you’re really interested in the idea, especially when you factor in your innate human tendency to fall for the Sunk Costs Effect. But if you devote time to thinking about your personal psychology more deeply, taking note of how your interests have changed throughout time, you will get a better idea of what kinds of things were fads, and what things were serious consistent interests. Combining that knowledge with an honest evaluation of your interest levels across the few weeks spent working on the idea, and with visualizing the future as well as you can manage, will result in a much better understanding of how much you really care about the problem you’re trying to solve.
In Zero to One, Thiel makes a similar point when he reminds you that you only get a small number of chances in life to start a business. You probably overestimate how many times you will be back in the race. But if you’re normal, that number will not be that high. And I believe that’s a useful idea to keep in mind. Knowing that you will only get to have two or three chances (realistically) to start a business will force you to be more thoughtful (and emotional) about which ideas you end up pursuing.