Y Combinator: “At first, some of the largest technology companies look like toys”
At first, some of the largest technology companies look like toys. From the classical point of view of building a business this should not be. Toys for fun. Businesses, especially huge ones, are designed to make money. The toys are small and limited use. Large companies contain many people and perform a huge range of functions.
This trend also does not fit into the story. Standard Oil, US Steel and Boeing were traditionally huge companies that were created as a business. None of them went through the stage when they looked like toys. However, startups may be different depending on their expectations and the seriousness with which people approach them.
If you give people a tool and tell them that it will perfectly solve an important problem, any imperfection of the tool will make them angry. If you give someone a toy and say: “Look what I did! Is not that great? That's what she can do, ”so you set yourself and people to respond positively. It is much easier to exceed low expectations than high ones, so you will significantly increase your chances of having a happy user.
And “happiness” is exactly what is worth thinking about, especially in relation to the first users. People spend more time with something that makes them happy, especially when they don’t expect it. Happy users give feedback easily because they know that you can make the product better and make them happier. They are also likely to tell friends about the new cool product they are using, which means that you are starting to attract users without plunging into the dark art of marketing.
The translation was made with the support of the company EDISON Software, which is professionally engaged in the development and testing of software .
When you look at something that you are building in terms of how it can make someone happy, or how it can annoy someone, it becomes easier to experiment and put your inventions on display. It is not only about low stakes, but also about how seriously you take what you are doing and how seriously other people take it, at least at first glance.
Business is making money and working with clients. These are very serious and scary things. Toys for games and in order to try something new. This is not serious at all.
It may seem like a bad thing if your goal is to turn your toy into a startup, and your startup into a big company. This means that you must be serious right from the start. But if you are serious right from the start, some things start to go wrong.
The first thing that goes wrong is the fact that you do not want to experiment with ideas that clearly do not correspond to the creation of a large company. This means that people who create serious things quickly focus on income. They cease to be prone to risk and innovation. Companies based on new technologies should benefit from non-obvious ideas that would not occur to large corporations. Otherwise, large existing companies will produce these things themselves.
Facebook is a great example of this approach. At the beginning, all the users could do was find people from other hostels with whom they met at parties at the Harvard campus and get laid with them. It seems stupid because it really was stupid. Few people saw this as something more than a toy, so they wanted to devote time to it. It was possible to play with this during off-hours. I don’t think we would be ready to play with something that would seem like a serious business, which would mean that Facebook wouldn’t get its first happy and enthusiastic users.
The second thing that goes wrong when you take your toy too seriously is that you signal to larger and better-funded companies that are already on the market that you are entering into something important and profitable. This is bad because these companies will start paying attention to your toy too soon and copy / buy / kill it. Airbnb for a very long time looked like a dumb hipster thing for hotels. And then, when it was too late, people realized that this was not a toy at all. By that time, Airbnb had enough customers, revenue, and financing to survive the rival attacks.
The third thing that goes wrong when you take your toy too seriously is that you immediately begin to optimize what you think serious companies should do — income and profit. Although these things are important in the long run, too early concentration on them leads to a number of things that are impossible for an early startup.
All that startups have is time and focus. At the earliest stages, emphasis should be placed on creating things that users love and with whom they want to play. The first and active users of a startup are his only real strength and chance for growth. Focusing on something else puts them at a disadvantage to more well-funded, organized and widely spread companies.
When toys become companies
Not all large companies start as toys, just as not all toys eventually become large companies.
This is the question of motivation and purpose for the creator, and the question of whether the toy was good or bad. Most people who create things do not want these things to become companies, and this is great - it would be regrettable if every interesting thing created in this world had a commercial purpose.
The founders who turn toys into companies are, as a rule, those who tirelessly talk about what they have done to users, and obsessively perfect the toy by reacting to feedback. Then they must master a whole set of skills that are directly proportional to the creation of things - recruitment, management, building a business, fundraising, etc.
This is not a typical path, which is why it is so fascinating. When we meet with founders who, in our opinion, are going to combine the toys they create with the ability to create something that can serve for a long time, we usually finance them, regardless of whether we are sure that the toy is actually a business.
1. Two examples: Facebook allowed people to spend time, while Apple helped hackers create home computers before any business case arose.
Thanks to Jeff Ralston, Craig Cannon, Sam Altman, and Michael Sabel for reading my sketches.