Teach me something 5: Paul Graham “Do Things That Don’t Scale”
When it comes to building successful startups, theory often takes a backseat to experience. Paul Graham, co-founder of Y Combinator, delves deep into this concept in his popular essay.
Experience Beats Theory
Startups are at the heart of innovation in the world. They bring big values and they always bring new approaches that we can apply to almost every part of our lives. That’s why, every one of us has something to learn from one of the best articles that written about startups.
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When it comes to building successful startups, theory often takes a backseat to experience. Paul Graham, co-founder of Y Combinator, delves deep into this concept in his popular essay, “Do Things That Don’t Scale.” His insights reveal that the success of a startup is less about the perfect theoretical plan and more about the hands-on, often laborious efforts of the founders. Today, we’ll explore how Graham’s emphasis on practical, experience-driven approaches can guide aspiring entrepreneurs to navigate the unpredictable waters of startup life.
The Myth of the Better Mousetrap
The traditional belief is that if you build a better product, customers will naturally flock to it. This idea, rooted in Emerson’s famous (albeit misquoted) notion of the better mousetrap, suggests that quality alone is enough to drive success. Graham argues that this is rarely the case. Startups don’t succeed simply because they have a superior product; they succeed because their founders actively make them succeed. This involves a significant amount of manual, unscalable work, especially in the early stages.
Just like startups, in everyday life, we must actively pursue results rather than assuming our efforts alone will bring it.
Manual User Recruitment: The Case of Stripe and Airbnb
One of the most critical unscalable tasks for a startup is manual user recruitment. Stripe, one of the most successful startups backed by Y Combinator, exemplifies this. Despite solving an urgent problem in online payments, Stripe’s founders, the Collison brothers, didn’t wait for users to come to them. They aggressively sought out users, often setting up their service directly on potential customers’ laptops. This hands-on approach, known as the “Collison installation,” was instrumental in their early growth.
Similarly, Airbnb founders Brian Chesky and Joe Gebbia took extraordinary measures to recruit users. They went door-to-door in New York City, helping users improve their listings and ensuring they were satisfied with the platform. This level of engagement, which might seem excessive and unsustainable, was crucial in transforming Airbnb from a fragile startup into a dominant player in the hospitality industry.
The Power of Compound Growth
Founders often resist these labor-intensive methods because the initial numbers seem discouragingly small. However, Graham emphasizes the power of compound growth. Even a small, consistent growth rate can lead to significant numbers over time. For example, if a startup with 100 users grows by 10% each week, it will have 14,000 users in a year and 2 million in two years. This incremental approach might seem slow, but it’s a proven path to substantial growth.
Delight Your Users
Another critical aspect of experience over theory is the emphasis on user delight. Graham recounts how Wufoo, a form-building startup, sent handwritten thank-you notes to every new user. Such gestures might seem minor, but they create a strong emotional connection with users. Early-stage startups have the unique advantage of being able to provide personalized service that large companies cannot. This exceptional attention to user experience can significantly impact user retention and word-of-mouth growth.
Learning from Direct Feedback
Direct engagement with users not only helps in acquiring them but also provides invaluable feedback. The first version of a product is rarely perfect. Continuous interaction with users allows founders to refine their offerings based on real-world usage and feedback. This iterative process is far more effective than relying solely on theoretical models or assumptions about what users might want.
The Contained Fire Strategy
Graham also introduces the concept of the “contained fire” strategy, where startups focus on a narrow market initially to build a strong foundation. Facebook, for example, started exclusively for Harvard students. This narrow focus helped create a critical mass of users who felt the platform was tailor-made for them. Once established, Facebook gradually expanded to other colleges and eventually the general public. This strategy of starting small and expanding gradually can be more effective than trying to capture a broad market from the outset. Similarly, focusing our efforts on excelling in a specific area before expanding can lead to more effective success in our daily endeavors.
The Value of Over-Engagement
In some cases, Graham advises startups to over-engage with their users to an extreme degree. This can involve acting as consultants for a single user or manually performing tasks that will later be automated. For instance, Viaweb, an early e-commerce platform, built online stores for merchants who were hesitant to do it themselves. This hands-on approach provided critical insights into user needs and helped refine the product in ways that wouldn’t have been possible otherwise.
Avoiding the Big Launch Pitfall
Graham warns against the misconception that a big launch can catapult a startup to success. He argues that startups are more like powered aircraft than projectiles. Their success depends on sustained effort and user engagement rather than a single, high-profile launch. Many famous startups, like Google and Airbnb, grew gradually through continuous user engagement and product refinement rather than relying on big initial launches. Similarly, steady effort and gradual improvement are often more effective than seeking immediate, large-scale success in our daily tasks.
Embracing the Unscalable
The overarching theme of Graham’s advice is to embrace unscalable tasks in the early stages. This might seem counterintuitive, especially in an era where scalability is often viewed as a hallmark of success. However, the experience gained from these unscalable efforts lays the foundation for sustainable growth. The insights and relationships built through direct user engagement, personalized service, and manual processes are invaluable. They provide a depth of understanding and a level of product refinement that theoretical planning alone cannot achieve.
Conclusion: The Two-Dimensional Approach to Startups
In conclusion, Graham’s essay encourages founders to view startup ideas as vectors, with one dimension being the product itself and the other being the unscalable efforts required to get it off the ground. By focusing on both dimensions, founders can navigate the initial fragility of their startups and build a strong foundation for future growth. The real-world experiences and hands-on efforts of engaging with users, refining the product based on feedback, and providing exceptional service are what ultimately drive a startup’s success. This approach, rooted in experience rather than theory, offers a pragmatic roadmap for aspiring entrepreneurs aiming to build impactful and lasting businesses.
I recommend reading Paul Graham’s full essay here: https://paulgraham.com/ds.html
Thank you for reading my fifth “Teach me something” article. This was my personal favorite among all my articles. You can always reach me for any recommendations or feedbacks, I would be happy to talk. Here, you can subscribe to “Teach me something” newsletter to get notified.