24th January 2021

Week 04/52

Photo by Brett Jordan

😝 Enjoy

I learned this week there are three types of fun:

Type One Fun: is fun while it is happening (aka “simple” fun)

Type Two Fun: is miserable while it’s happening, but fun in retrospect

Type Three Fun: is not fun at all, not even in retrospect (the canonical example of this seems to be Shackleton’s Expedition to Antarctica 🥶)

See: The Fun Scale, by Kelly Cordes

This is a sticky idea. I’ve already found myself using it way too many times. For example, to explain why I’m missing running so much at the moment - not because it’s fun in the moment but because I miss the endorphin hit I get when I’m done.

However…

There are two parts to these definitions: Is it fun in the moment (yes/no)? Is it still fun when you reflect later (yes/no)? That would suggest a quadrant. So I suggest there is an important type of fun missing from the scale:

Type Four Fun: fun at the time, but regretted later

Think eating too much, drinking too much, tweeting when you’re angry, and most things we call “procrastination”.

It occurs to me that a big chunk of the self-help industry is focussed on tricking your brain into less Type Four Fun and more Type Two Fun.

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🏷 Define

We talk about building an ecosystem of innovative technology startups in New Zealand.

But what are we actually talking about specifically?

Let’s start at the ... beginning ...

Q: What is a startup?

For many years my slightly cutting answer to this has been: any company where the founders can’t leave. Most startups exist only because the founders turn up every day, lean in and prop them up. If/when they stop doing that often the whole thing flops over like a deflated bouncy castle.

But attempting a more accurate definition is harder than it seems on the surface.

The obvious answer is any newly established venture. But there are many (most?) small businesses that more-or-less immediately take on their final form. When do they stop being a startup? That suggests there is an element of ambition involved - a startup is a new thing that is small now but aspires to be bigger. Or a transition - a startup is a temporary state between nothingness and an eventual steady state. Or uncertainty - a startup is something that might not work, and as a result we’re perhaps less surprised when they don’t.

The definition on Wikipedia talks about the search for, development and validation of a “scalable economic model”.

Perhaps it would be more useful if we break it down by stage:

Early stage - This is the genuine start, when you have a lot to prove (to yourself and others, even if you only outwardly acknowledge the latter) and only a limited time to prove it (typically constrained by how much funding you have available).

The questions at this stage are:

• Can we make the thing we have in mind?

• Does anybody want the thing we make?

• Will enough people pay for the thing (or is there some other way to sustainably finance it)?

• When we add up all of the costs involved in making the thing, telling potential customers about the thing, convincing them to buy the thing, supporting them after they have bought the thing etc, is there anything left over? (see: The size of your truck)

Marc Andressen famously defined this stage as the search for “product-market fit” (although that concept was actually first developed and named by Andy Rachleff).

When we dig into it there are many different philosophies for how to navigate this stage of a venture. We'll talk more about some of those soon.

High growth - assuming the answer to all of those questions is HELL YEAH! then in my experience the problem quickly shifts to how you cope with a rapid increase in multiple dimensions at once:

• More customers, including many who are not a great fit for our product as it is, and others who - as we push beyond early adopters - require more hand holding and convincing

• More team members, aka more payroll! - we need to hire people to manage the people and more people to hire and administer the people who manage the people etc, soon after that we won't know everybody's name

• More locations, if we’re lucky they will all be in the same timezone, but if we’re really ambitious then they won't - this used to be hard because of the amount of travel required to make it work ... it got 10x harder in the last year

• More product complexity, ref: more customers above, each of whom will likely have a small tweak they'd like us to make that needs to be prioritised

• More legacy, every single shortcut you took in the early stages is a debt that comes due in this stage - interestingly that's not an argument for avoiding taking short cuts in the early stages - but that's a topic for a whole 'nother post

• More competitors, it's pretty common to feel we’re in a sandwich between larger more established competitors and the smaller/nimbler early stage companies that will pop up in our wake as we grow

• More visibility, which is both a blessing and a curse

• More investors, given all of the above is expensive, answering the question of how to finance all of this is often the most important question in this stage - perhaps we also have smaller investors who helped us get going in the beginning who will turn their attention to getting a return on their investment

Of course there are many other possible startup states than just those two.

There are lots of new options emerging for founders who have gotten through the early stage but prefer a slower and lower risk growth trajectory after that (for good reasons). For example, check out Tractor Ventures.

I’m not sure it helps at all to label all of these different types of businesses under the single startup umbrella. We should be more specific:

Q: What do we have? What do we want? Why?

Spoiler: these are going to be the recurring questions as we work our way through these definitions.

Bonus: Russ Hanneman has some thoughts on startups - specifically startups started to help startups find startup buyers 🤯.

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🎧 Listen

Two recommendations:

Firstly, something epic … I’ve always struggled to get a finger hold on classical Greek mythology. But this audio book written and narrated by Stephen Fry has unlocked it a little for me. Come for the fun regional British accents he gives to the various characters, stay for … 11 hours 😳

Troy, by Stephen Fry

Secondly, something more in the type one fun camp: The history of the mullet is weirder than you think…

We learn how David Bowie, hockey players, the Oxford English Dictionary, the Beastie Boys, a mysterious Reddit user named Topsmate, and a group called Annoy Club all played a part in the strange history of the mullet.

Mystery of the Mullet, Decoder Ring

Enjoy!

Top Three is a weekly collection of things I notice in 2021. I’m writing it for myself, and will include a lot of half-formed work-in-progress, but please feel free to follow along and share it if it’s interesting to you. If there is something that especially interests you please let me know - that’s a useful feedback loop.