"Startup strategy is like Kung Fu"
Why startups can screw up most things and still win, how it's always the right time to start a (not necessarily your) company, and asking extreme questions.
Welcome to a special edition of The SaaS Baton.
A slight break from our usual fortnightly programming to share an upcoming Relay AMA that we’re incredibly excited about. 🔥
Startup strategy is like Kung Fu. There are many styles that work. But in a bar fight, you’re going to get punched in the face regardless. I can only teach you my style. Others can only teach you theirs.
That’s just one classic, clear-eyed note from WP Engine’s founder, Jason Cohen. On his long-revered blog, Jason has devotedly probed — across 2 decades of building businesses — all sorts of startup hurdles, delusions, and fundamentals.
Next Thursday, we’re stoked to be hosting him and looking forward to learning from his unique SaaS vantage of having built several impactful companies along both bootstrapped and VC-led paths.
If there’s a current challenge on your mind or something that piques your interest in Jason’s journey, we’d love for you to participate. And if you’re a SaaS founder, keen on joining Relay, please request an invite here. ⚡️
Sharing 3 instructive and inspiring pickings from Jason:
#1: All startups are screwed up
(Source: A Smart Bear)
Even when they’re succeeding they are screwed up. (HT: Mike Maples Jr)
Corollary: A startup has to be so excellent at one or two key things, that they can screw up everything else up and not die. Sometimes that’s airtight product/market fit. Sometimes that’s defensible distribution channels.
Sometimes that’s product design so thrilling that every customer spreads the word to five more. Sometimes that’s a market insight that takes competitors five years to understand. Sometimes that’s a dream team that weathers the storm that sinks the other boats.
The bad news is, you don’t know ahead of time what that thing will be. The good news is, it’s OK that most things are screwed up.
Another Corollary: Your competitors are screwed up too. Don’t assume they’re smarter than you, faster than you, more strategic than you, growing faster than you, making better decisions than you.
They are doing that sometimes, but you are too, and all of you are screwed up. When you look at them, you’re seeing their best, exaggerated projection, which isn’t the truth.
Every time a company dies, read what they were writing a week earlier: proud, confident, optimistic, possibly even arrogant and boastful. Ignore all of it.
#2: The wrong question: Is now the right time to start a company?
(Source: A Smart Bear)
Yes. The answer is always yes.
But it’s the wrong question.
I started Smart Bear in a recession (2002) and it went great. I’ve been explaining for eight years why recessions are a great time to start a company.
It’s wise because costs are low (every vendor is thrilled to have new business) and if you can get people to buy when money is tight, you’ve really proved you have a desirable product. When the economy rushes back, you ride the wave.
I started WP Engine in a boom (2010) and it went great. When the economy is good and the product fits the market, sales are easy. If you choose a market that’s already large and growing (as we did), there are big opportunities with many niches.
Sure, when the economy turns south, if you haven’t built a sustainable company with solid financials, you’re in trouble, but an unsustainable company is always secretly in trouble.
It’s great to have at least some of the uncontrollable variables in your favor; starting up is hard enough and unlikely enough as it is.
So it’s always a fine time for a startup, which is why it’s the wrong question.
It’s always a fine time to start a company, but maybe not your company.
…
The right question isn’t: “Can a wonderful startup be started now,” the question is “Should this startup be started, right now, by me, solving this problem, for these people.”
…
Whether you’re bootstrapping like I did with Smart Bear or raising tens of millions of dollars as we did at WP Engine, this is the right question.
#3: No customers
(Source: A Smart Bear)
If all our customers vanished, and we had to earn our growth and brand from scratch, what would we do?
How would we distinguish ourselves with a unique compelling message, as a fresh competitor in our market? What would we put on our home page? Would we use a different pricing model to compete better? Would our brand need to change to align with the message?
Would we throw out some features that take a lot of work but not many people actually use (since there’s no pesky customers hanging on to the expectation of the old features)?
Would we build some new feature that would make us more competitive? Would we change our infrastructure or architecture or UX dramatically because of what we now know, since we’re not ladened with existing customers?
Often we don’t make important changes because we’ve gotten complacent with our marketing, or we never got around to having a truly compelling unique positioning statement, or we don’t want to incur the penalty of big changes on our customer base, even if it means we’re doing the wrong thing today from a competitive standpoint, and the wrong thing for the future.
We don’t want to make even 5% of our customers mad, even if it would be better for the other 95%. There will be 10x more customers in the future than there are now, but only if we build for them, today.
And here are some specific subjects that Jason would love to talk about:
Strategy, especially practical non-academic strategy, at any scale
Product, at any scale
Engineering challenges specifically due to scale
Bootstrapping vs Fundraising
Company culture/values – creating and inculcating, at first and at scale
Management/organization for people who haven’t done it before, and maybe even hate it
Role of the CEO and other executive positions as the company grows
Metrics/KPIs, whether operational or “SaaS” or how to figure out good ones
Managing your own turmoil, emotions, grit, despair.
Until next time,
Team Relay (Chargebee for Startups)