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- Hacker News
- > But all these strategies for making startups more powerful have one thing in common — or more precisely, have to obey one constraint. They all have to make things better for the customer.
Good thing we have venture capital to alleviate that constraint by enabling selling a dollar for 50 cents.
by alexashka - Is open source still viable these days for a business model that relies on a single large customer and anyone else that also happens to need that solution?by smashburger
- I feel like the basis of this post is that in the current state of software development, SaaS alone holds very limited power.by danvoell
- if so, are Salesforce and Oracle in trouble yet?by Animats
- In India we have company that enable gig workers - maids, drivers, beauticians, fixing aircons etc. Company charges so much that people try to cut way from the aggregator. Instead a fixed number and vision to reduce that further would these companies much bigger.by jayanmn
- This is one of those essays you print out and read every week because its that good. Just one of the operating insights like "being generous makes you more powerful" took me years to understand. I phrase it as "helping people win" instead.by carlsborg
- > "helping people win"
That's a great way to put it!
by kagevf - I would say, the author does have a point.
Playing for the long game is good. But that sentence is too lossy to decipher the meaning unless you know what it means.
Instead of making the company more powerful, I would recommend making the company more aligned with truth and the real world which has a nice side effect of being resilient.
Add to that, preparing for scale.
We have dedicated an entire year for nothing but architecture, correctness, distributedness and scaling.
The economic perspective of the same would be reducing the cost of software development (not in the LLM massive code generation way but the opposite with architecture).
Its been 5 years since we have been building Slyp and SlypBusiness along with the plethora of technologies around it.
I don't know whether we are powerful as per the author's definition but we are damn resilient.
by elendilm - The comments here are taking a very uncharitable definition of “power”. If I take that definition I can see how people are being so negative. But just a slightly more positive definition and this all seems like reasonable dialogue to have with an early stage startup.by fhub
- > Since startups make the best stuff, they're strongest on level playing fields. They're weakest in markets dominated by companies you'd describe as mafia. Record labels are mafia. PBMs are mafia. In these worlds you don't win by having the best product. Indeed you may only even exist for as long as the mafia chooses to allow you to. Which is not to say they can't be defeated. They probably can be, but you'd have to do it by coming in from the side — by somehow making them irrelevant, rather than by frontal attack. Then you wouldn't depend on beating them to succeed; it would be an ancillary benefit of winning in another dimension.
I think this is the strongest point being made here. It so accurately describes the situation in every category of software that it almost makes the rest of the post obsolete advice.
by sublinear - You’re saying there’s no level playing fields left?by titanomachy
- > Another thing I'm always looking for is tails that could wag the dog. The history of startups is full of these. Paypal started out doing security for hand-held devices. They created Paypal as a demo of their security software. But then eBay sellers started using it to take payments, and after a couple months the founders acknowledged that this was the business they were now in, even though they hadn't meant to be. So whenever founders build something peripheral to the main product I always ask: could this be the real product?
Reminds me of Slack. https://techcrunch.com/2019/05/30/the-slack-origin-story/
I never understood why anybody would pay for Slack when its based on IRC and IRC is free, but whatever. I guess when you are spending other people's money and all your employees are super insecure these kinds of things pay for themselves... maybe?
- IRC doesn't work in a mobile context because it relies on a TCP connection staying alive.by mitxela
- > I never understood why anybody would pay for Slack when its based on IRC and IRC is free, but whatever.
Comparing IRC vs Slack maybe made sense when Slack was very young, and it was like buying a Honda Civic vs a Ferrari, where one is obviously nicer but the other still accomplished the same thing with less frills.
These days it's the choice between buying a Honda Civic vs a Boeing 747. They both get you from one place to another (communicating between employees) but that's where the similarities end now. Slack has way too many API integrations, historical search, features for everything from compliance message archiving to embedding images to dumb GIF searches that people seem to like. The fact that it has irc-like channels and chatting isn't really the point of the platform anymore.
Yes you could code this all yourself using IRC bots, but at that point IRC is no longer free, it's costing you time. If you get to that point, Slack does it better and cheaper.
by mjr00 - > There's a variant of going full stack where you eat your way gradually through the customer by doing all their hardest work for them.
One of my clients provisions front office applications for banks and the conversation has come up more than once regarding the client evolving into a bank themselves and building up operations around the capabilities of the product stack.
One good multi-regional partner and it could be a radically different animal. Providing software to one very big customer tends to be a lot simpler than providing it to 20+ smaller customers.
by bob1029 - In my experience it depends on the nature of that client. A drawback to having a dominant client is that they have a lot more leverage in roadmap, prioritisation, and product fit. That can seriously impact the internal coherence and maintainability of the product. Too many bits of business logic lodges in weird places because the client didn't want to write custom behaviours, and no time to tidy it up because they're always demanding their next wishlist feature to be deployed yesterday.by n4r9
- > Being generous makes you more powerful. As Tim O'Reilly said, you should create more value than you capture. Many hard-headed business types would write this off as idealistic hippy stuff, but in fact this is the route to becoming really rich.
> Hired CEOS take the power of the companies they run for granted, whereas founders remember the days when the company was so weak that it had to delight users to survive.
I've always instinctively followed the generosity path, and have experienced that when customers are delighted and that when frictions are removed (or not added in the first place), good things will follow.
However, I have not always been able to convince others to trust in and follow this path. Can anyone offer any advice or experiences on talking people out of trying to prematurely squeeze out every last penny?
by dqh - >bootstrapping a textiles business
Exactly what I came to say. This 100% is hippy dippy head in the clouds stuff. Sure if your product is 100% digital you can "be generous" in so far as it costs you nothing. Real products, real services. Hell no. You will get robbed blind if you give people too much slack or come off as willing to easily pay out.
I learned this the hard way early on doing contract work. Multimillionaires would actively try to take advantages of my naivety and inexperience to coerce free work out of me. Also I highly suspect many of them get a sick sense of pleasure out of it. Good luck being "generous" to those types.
Take a look at those donate for pain videos on tiktok if you don't believe there is significant population of sadists out there.
by citizenpaul - As a startup with deep pockets, you think you can afford to be generous, without realising it is made possible due to borrowed time and money. When the bills come due, generosity ends and enshittification onsets.
- This depends on what you are building and what your goals are. What pg is referring to is how to build transformative companies, unicorns if you will.
There's plenty of businesses where you are simply optimizing a funnel, and driving more revenue at all costs is fully aligned with the goals of the company
by arnorhs - my advice? be the boss.
before the pandemic hit and most of the world was quarantined, we decided to give loom away to students and teachers for free and made the service 50% off indefinitely. this was generous but also strategic. we made the simple deduction that, should people be locked inside, they would naturally see their sons/daughters using loom as students. or their spouse or roommates as teacher/staff.
by vhiremath4 - > Can anyone offer any advice or experiences on talking people out of trying to prematurely squeeze out every last penny?
Yes. Lend them many more pennies, removing the necessity for short-term profit taking and allowing them to run at a loss until they decimate the competition, capture the market and then start raising prices to the point that they are more profitable than had they taken the short-sighted approach.
- > always instinctively followed the generosity path
> experienced that when customers are delighted and that when frictions are removed
Charlie Munger:
> not always been able to convince othersWhen other companies find ways to save money, they turn it into profit. [Costco] passes it on to customers. It’s almost a religious duty. [They] sacrifice short-term profits for long-term success”.Many different ways to conduct business. "Lean Enterprise" might be in line with your thinking: https://en.wikipedia.org/wiki/Lean_enterprise
> talking people out of trying to prematurely squeeze out every last penny?
I'd say this is a wrong framing. It isn't the people; it is the systems & environs they are in, the incentives they operate under.
Economists have a term they call "willingness-to-pay", using which some business might optimize for "consumer surplus" (low price), some for "producer surplus" (high margin).
See also, The Economics of Customer Businesses, Michael Mauboussin et al, https://www.eatonvance.com/insights/consilient-observer/the-... (2021).
Or Bezos' "Create more than you consume": https://www.aboutamazon.com/news/company-news/2020-letter-to...
by ignoramous - My sense is that it's context dependent. If you've got VC backing (or could soon) and are making deals in SF, the generosity path makes a lot of sense. Limited downside, infinite upside. You can afford generosity.
If you're starting with $2000 and bootstrapping a textiles business out of Kolkata, it's a terrible idea, you're likely going to immediately get burned and never recover.
(take with a grain of salt as I have no experience, just stating my observations)
- There is some really good advice here. Honestly, I think this might be one of the most important takeaways you can have as a startup founder/CEO in general:
> It's exciting when you notice users "misusing" your product to do something you hadn't intended. This means there's something they want so desperately that they'll not only use any solution you offer, but even use things that aren't meant to be solutions. When you see something like that, don't be annoyed that your users are using your product wrong; listen for the message they're sending, because it could be valuable.
A lot of very specialist businesses seem to fail this test, and lose out on the potential for a huge market because of it. Like it sounds ridiculous as hell, but I remember when GoAnimate had a huge audience among kids and teens looking to make silly videos for sites like YouTube. I also remember the company feeling uncomfortable that they were getting known for that online, and trying to refocus their product/service towards business users instead.
Maybe they should have not done that, and realised that the periphery demographic was a potential customerbase that could have used a slightly different, perhaps more focused product with features relevant to their usecases.
Similarly, I remember an example of a business creating software meant for designing signs for road and metro systems being surprised that toy train and simulation game enthusiasts were using the software for other uses. Again, feels like they should have treated this as a business opportunity, not a cause for confusion or concern.
> Squeezing every last penny out of customers is a distraction. It gets you 2x returns at most. Whereas discovering some new thing you could make for them could easily get you 10x or 100x returns. They're two different ways of looking at the world, and the O'Reilly way makes more, for those who can do it. [5]
This feels like a perfect condemnation of how a lot of private equity firms manage businesses. These sorts of tactics make them money sure, but a lot of the businesses they buy up would probably do better if they held off on the whole 'squeeze resources to breaking point' philosophy in favour of a much more customer focused one.
by CM30 - I miss the pre-https-by-default days where I could see what search terms people used to land on my blog. Have excellent topic ideas for unmet needs.by Scoundreller
- I miss the pre-https-by-default days where I could see what search terms people used to land on my blog. Gave excellent topic ideas for unmet needs.by Scoundreller
- I think the interesting failure mode is when a company sees unexpected users as a branding problem instead of a product signalby Ouman
- >A lot of very specialist businesses seem to fail this test, and lose out on the potential for a huge market because of it. Like it sounds ridiculous as hell, but I remember when GoAnimate had a huge audience among kids and teens looking to make silly videos for sites like YouTube. I also remember the company feeling uncomfortable that they were getting known for that online, and trying to refocus their product/service towards business users instead.
I was testing ISP billing software a decade ago, and there was a product we had already committed to buy and it was 99% feature complete, there was just 1 little thing it wouldnt do. And they refused to implement it. Not only that but they told us "Actually we have been acquired and we aren't allowed to implement any new features anyway."
Anyway we went with our second choice, who are now very famous in the space, but at the time were still getting a foothold. And they were only 75% feature complete. But they brought themselves up to 100% over 3 sprints. Other than them using an old version of a single package, they never gave us any grief. They know that their customer needs are what they build software for.
by protocolture