Web development, rockets, startups, and noninertial reference frames
First up, continuing the theme of web development and learning to code over the holidays, check out this week’s episode of Ventures:
We dive into a ton of detail that will be insightful for software engineers, those learning to code, and anyone interested in the world of web development and/or technical entrepreneurship. We talk about the last few decades of web development, David’s twelve years at Amazon Web Services, Joe’s serial entrepreneurship, and the balance between web development at startups versus enterprises “at scale”.
If you missed the announcement from last week, I’ve written ten installments thus far in this tutorial series teaching students to build web/mobile apps as entrepreneurs. I’ve had an encouraging response from folks interested in following along, including parent/child teams planning to work through it together. No matter your life stage, let me know if you want to dive in with this initial cohort before the paywall goes up (details TBA). Thanks!
Startups as Rockets
If you aren’t yet familiar with Startup Rocket, it’s a web platform that guides founders through multiple frameworks and learning materials to build new ventures. It also has a solution for organizations that work with founders, to help guide and provide mentorship for teams of founders at scale (for example, check out how University of Washington is using it here).
This past week I’ve been ruminating on the analogy of designing, building, and launching a rocket compared to a startup. Not that I have a ton of experience in aerospace, but we’ve all seen enough documentaries, movies, and SpaceX launches to know for sure there is a massive amount of planning and engineering that goes into getting a rocket into orbit (to say the least!).
I wonder if the era of The Lean Startup has cost us something significant with regard to the thought process of the good ol’ business plan and strategy development before embarking on a venture. I’m all for rapidly jumping into testing new ideas to see what happens (since most startups pivot significantly along the way regardless) but it’s worth pausing to think about this for a minute.
We can imagine rockets of all sorts of shapes and sizes in the sky, traveling at various heights and velocities. Big, loud, and heavily VC-funded startups tend to occupy all the media attention, but there are plenty of smaller rockets out there that have made their way to orbit (a sustainable business). In the end, the goal is to achieve enough velocity via revenue, investment, and/or debt to achieve a sustainable state of “profit”, even if you are creative with your accounting and bonuses to technically run a loss every year. The goal is to wean off of debt and investors and fuel your business with revenue from customers (right?).
As a massive aside/tangent, I wondered my way into this article recently about centrifugal force and gravity. It’s fascinating to think about the same force (gravity) that would cause a rocket to crash back on earth is also the same force that keeps it falling in orbit. Centrifugal force is therefore made up. As the article says: “Centrifugal force was invented to allow us to do proper bookkeeping in a noninertial frame”.
Anyway, back to startups, this is why I keep coming back to the importance of financial modeling for early stage founders. The article series that my friend Troy and I wrote a few years ago on the topic was recently featured on Hacker News. If you can’t pencil out how to build a sustainable business, then “the idea” probably isn’t one worth pursuing. You could try to launch the rocket, but there may be forces at work inherent in your market, product, and/or unit economics that will keep you out of orbit and heading for a flaming crash without more VC/angel money or debt. Sometimes this can work out “indefinitely” through many rounds of VC funding and a big fancy IPO, but eventually the stock price will tank.
So, back to what founders should be thinking about, it comes back to the basics: can you acquire users/customers? Is that acquisition sustainable? If not, can you afford to keep tweaking your product(s) to find a sustainable acquisition channel(s), and/or can you convince investors that such a horizon is reachable?
The more that can be done in advance before building your first rocket to test with real people, the better. The more you can pencil out in advance the financial model and underlying assumptions about costs, timelines, acquisition costs, the better. For most people, this requires education and practical examples. Startup Rocket does this, but the ideal scenario is to find a coach and “super advisor” that can work through the education with you, unique to your venture, and create a space where you can ask the seemingly embarrassing questions so you don’t need to remain in the “fake it ‘til you make it” culture that is all-too common in startup land.
It’s a whole other article to talk through why that culture is so problematic for founders (and their teams), But for now, know that it’s important to think carefully about what type of rocket you are building and how fast you want to get into orbit. Maybe you can (or cannot) bootstrap your way up. Maybe you need to raise a LOT of money. Maybe you only need one strategic round.
Food for thought.
Have a great rest of your week!