Why You Should Bootstrap Your First Company

A while back I read Daniel Tenner's excellent article entitled Taking the Leap. Having run my own modestly successful startup for going on 7 years now, I can say with some authority that he makes excellent points. But one thing about the post bothered me: his advice is most applicable to your first startup. That distinction is critical.

Hacker News idolizes people like Steve Jobs, Elon Musk, and other visionaries who take incredible risks in the face of absurd odds. Their stories are dramatic, and it's delicious to read stories of people who buck the system and succeed. But it is a disservice to the less experienced to omit the beginning to every success story: the small successes they had early in life.

The men who mine asteroids and build electric sports cars don't start with those ventures. To illustrate my point, I'd like to tell a quick story.

Back in 2008, my cofounders and I were going door to door trying to raise a minuscule amount of funding. One of our business advisers gave us an introduction to a successful founder turned angel investor who had just sold his company. Everyone was talking about how successful he was, but over the course of developing a mentorship relationship, we heard about how he  got his humble entrepreneurial start. He did it by selling asbestos file folders to legal consultancies at a time when everyone was going digital. The business model was in it's death throes, but he was able to generate enough profit to reinvest it on his next company.

Read that again if you missed it: our visionary angel investor got started selling fireproof file protectors to lawyers who wouldn't need them in a few years.

This sort of story is far from isolated. Success begets success. Elon Musk didn't start with Tesla, he started by selling a $500 computer game called Blastar at the age of 12.

Don't try and shoot the moon on your first startup. Bootstrapping reduces the upside of your ventures, but it also reduces the risk that you'll fail. Daniel Tenner has it right: keep your head down, reduce your burn rate, and if you succeed doing that a few times, Mars, cold fusion, and hover bikes will still be waiting.

Your Startup Need an Intractable Design Problem

Since 2008, I have been tasked with designing and UX testing the entire website for my first startup. From the outside, Skritter is pretty simple, it's a website that teaches students of Chinese and Japanese to better learn and remember their characters. Basically a flashcard program for Chinese and Japanese.

Seems pretty simple, right?

Well, not at all, actually. The problem is that Skritter uses a spaced repetition algorithm that makes it non-obvious to add and manage vocabulary. Unlike a standard flashcard program, you don't just add words to your library, the application does that for you gradually, as you learn and remember more content. So on Skritter, you can't "study" a list, you have to "start adding from" a list. The difference creates all sorts of problems for users. Where are you in the list? What haven't you learned yet? When you stop adding from a list, should we remove all the material you've already added? Spaced repetition makes Skritter powerful and useful, but at the cost of simplicity.

For years I railed against this unintuive aspect of our product. Apple, Dropbox, and a hundred other companies were making it big by making it simple. Although Skritter eventually became a big success, it took a while for people to "get it" and it was an exercise in frustration for me as the product designer.

So I was thrilled to start work on a new startup in 2013. CodeCombat offered me the opportunity to build upon the design lessons learned at Skritter, but in a different arena: game design. We were making a game that taught users to write JavaScript.

Sounds pretty simple, right?

Not at all. Although there are hundreds of educational games teaching everything from typing to math, surprisingly few teach users to code. And those that do serve more as antipatterns than examples of successful design. For CodeCombat, we couldn't just rely on typical game mechanics, because we were supposed to be teaching users how to code the very behaviors most games take for granted like move up, for instance. As a result, simple things like unit selection, setting waypoints, choosing actions, and resource allocation turn into non-obvious design conundrums.

When I was working on Skritter, I used to think, "Someday I'll be able to work on a product that's simple and obvious, boy that'll be sweet." But CodeCombat taught me is that if you aren't running into seemingly intractable design problems, that's a strong indicator the product isn't solving real problems.

There are products out there that won by simplifying a complex problem; perhaps it's file uploads, or listening to music, or sharing photos with friends. But it's a mistake to assume that because the end result is simple that it was simple to design. As Apple has proven time and time again, making things simple is extremely difficult.

So, if your startup isn't solving an intractable design problem, find one.

Minecraft Isn't Educational

I have spent the majority of my professional career building edtech products. First I taught tens of thousands of students Chinese and Japanese, then I taught millions of kids to code. I know a lot about building educational products; games in particular. As a lover of Minecraft and an edtech game designer, I'm here to tell you that Minecraft isn't an educational game.

For those not familiar, Minecraft has several game modes none of which are games in the sense of having levels, bosses, missions, and achievements. Minecraft more closely resembles a digital sandbox with varying levels of abstraction. Survival mode is a bounded sandbox with randomly generating baddies. Creative mode is digital Legos. None of Minecraft's game modes explicitly teach the player anything. That's right: there is no educational content in Minecraft whatsoever. There are no lessons, tutorials, grades, or tests, there is no backstory, no plot, no puzzles, no brainteasers, riddles, math, or history. Nothing in the game tries to teach anyone anything. 

I hear you crying out "but Minecraft holds kid's interest long enough that they learn to mod the game, or build simple circuits, or build historic structures. Surely that's educational!"

But take a look at that line of reasoning again: the advocates don't claim that Minecraft teaches anything. They claim that kids like it enough that they may end up teaching themselves something unrelated while playing. The girl who likes computers learns enough Java to mod the game. The boy that likes building things constructs interesting structures. But to say that learning in the pursuit of addictive entertainment is educational is sloppy and unfair reasoning. By that same logic, Grand Theft Auto 5 is educational because some kids get so into it that they memorize the geography of LA to minimize transit between missions [1]. 

The reason that parents, schools, and kids call Minecraft educational is that it combines the addictive behavior of video games with the least offensive content imaginable. What learning occurs in the course of that addiction is labeled educational, but is no more useful to kids than anything else they voluntarily spend equal amounts of time on.

Why does the distinction matter? Because it's misleading educators and game designers. Spoiler alert for people making edtech games: there's very little to learn from Minecraft because as I mentioned above, it doesn't teach anything. Spoiler alert for teachers: Minecraft won't teach your students anything useful [2]. 

I love Minecraft and have played for much longer than I'd like to admit. So has my wife. So has my brother. As a game, it's great; but as education, it's no better than World of Warcraft. If you want your kid to learn, you'd be better off letting them follow their interests and educating themselves.

[1] Yeah, yeah, "Los Santos." Everyone knows it's LA.

[2] Even though it will keep them entertained for a class period with little to no chance that parents will complain.

Effort and Reward: Correlation, Not Causation

A few weeks back I was watching The Queen of Versailles, which is an independent documentary about billionaire timeshare mogul David Siegel and his quest to build the largest house in America. At the beginning of the movie, the director interviews Siegel about how Westgate Resorts got it's start. He talked about how he founded the company when he was young and naive, worked like hell, and managed to grow the company to billions in sales. What struck me about his description was how similar it is to the way I describe working on my first startup, with one critical difference: Skritter is a tiny bit less less profitable.

This got me thinking about the nature of effort vs reward. It's a common misconception among entrepreneurs that the harder you work, the more successful you become. This workaholic mentality causes people to sideline important aspects of their lives to maximize a perceived chance to make it big. I believe that effort and reward are correlated. If your goal is to become a millionaire, you are far more likely to reach your goal working very hard on a bunch of ventures than if you stay at a job that allows you to relax and coast. The age old motto "God helps those that help themselves," seems true.

But the the amount of reward you enjoy for your effort is randomly distributed. If it weren't, David Siegel of Westgate fame would have had to work a thousand times harder/longer than someone whose startup makes $1M/yr. Since that clearly isn't possible in a normal human lifespan, I'm forced to conclude that there is a big component of luck involved in the rewards anyone reaps from their efforts.

Having a deep understanding of that fact is important because it helps workaholics like me from over-investing in work. The truth is that I probably stand about the same chance of retiring early from a new venture whether I pace myself or work 100 hour weeks. Effort is important for success, but marginal effort is just that, and it seems a horrible waste to labor under the delusion that another few hours of work will be the difference between a decent living and early retirement.

Let's Partner Into Prosperity

Most business partnerships are a waste of time. Guy Kawasaki says so, Paul Graham says so (see the section at the bottom), and I have learned from personal advice that both men speak truth. The thing is, partnering is most appealing and dangerous to a startup early on. In those critical months and years where credibility is scarce, partnerships seem to offer a quick path to legitimacy and (your partner will lead you to believe) wealth. So it's imperative to develop resistance and skepticism to partnership offers. But how?

Well, one method stumbled right into my lap recently. This is a spam message that I received last week:

"LET'S PARTNER INTO PROSPERITY:  Kudos!!! You've got a very good work going here. I've been contracted to develop a website and a phone application that can help people in a particular Country to learn their three different dialects. It's a multimillion $ Project to be funded by the Government. I understand that a lot of scamming bullshit is going on online but you won't need to spend a dime of yours, all we need is the service of a person that has the knowledge required which would be magnanimously remunerated. I don't know much about language software design, if you do or if you know anyone that can partner with me on this please mail me now without any delay: address@yahoo.com Do you have a website? If yes, what's your website? I'm waiting ... Success!!!"

It's got all the elements of a bad partnership: vague intentions, an appeal to the legitimacy of some large organization (the Government!), a nod to skeptics, and call to action. My advice to you: the next time someone proposes a partnership, simply tack "... Success!!!" to what they say to remind yourself that most partnerships are a waste of time. What's scary is that many seemingly legitimate partnership offers are more dangerous than this example because they lure you into wasting time on them. At least in this case I can just click delete and get on with my day.