For Startups, Less is Mo' Better
As my little startup nears its beta release, I keep thinking about the business plan in Neal Stephenson's wonderful book, Cryptonomicon:
Phase 1: After taking vows of celibacy and abstinence and foregoing all of our material possessions for homespun robes, we (viz. appended resumes) will move into a modest complex of scavenged refrigerator boxes in the central Gobi Desert, where real estate is so cheap that we are actually being paid to occupy it, thereby enhancing shareholder value even before we have actually done anything. On a daily ration consisting of a handful of uncooked rice and a ladleful of water, we will [begin to do stuff]. - Model Business Plan, Neal Stephenson, Cryptonomicon
When you're just starting out in a new business inadequate capitalization often seems like the biggest problem you'll ever face. That's the way it feels anyway, but often the real problem is much more general than that: it's money itself, no matter how much you have or how much you need. How you approach money will be the real challenge throughout the lifetime of your business.
Four Operating Principles
A solid approach to this problem is to establish early on a set of operating principles to guide you through tough times and uncertainties. Throughout my years as a "serial startup employee" I've seen a lot of good companies and bad companies, helping me avoid survivor bias and learn to spot a host of anti-patterns. These experiences have led me to a set of four principles that should keep my company on track through early stage capitalization worries and beyond. Maybe they'll help your company too.
- Own Your Systems
- Deliver on the Plan
- Minimal Staff, Minimal Features
- Apply Best Practices
Boiling down an operating philosophy into an enumerated list is a kind of artifice, an artificial construct, a strawman. Life is not so linear as this, but instead is interrelated in all its parts. So as we walk through these four principles bear in mind that they are all related, all in fact are one and the same.
Principle #1. Own Your Systems
Whether you're cloud computing, rolling your own or buying off the shelf, owning your systems means knowing your systems and committing to them deliberately with a view of the long term. Too often a startup's founders cannot convincingly articulate their reasons behind the stack they've chosen. Now is the time to ask yourself, is there a connection between the environment you've chosen and the product you're building? Are you committed to your decision, and confident you won't need to switch platforms later? Are you ready to articulate the reasons for your decision in front of wary investors?
For my startup, I settled on the LAMPy stack: Linux, Apache, MySQL, and Python. I chose the Debian flavor of Linux and Python's Django web framework. I spent a long time making these decisions, starting out with a day at the bookstore, then hours online, consulting with friends, and a lot of back and forth with my ISP. In the end the decision I came to made sense for the problem I was trying to solve, the resources at my disposal, and the time that I had.
A lot of startups these days make the mistake of offshoring. Many startups see offshoring as a way to quickly deliver software, usually in order to get a demo off the ground they can show investors and early users. The investment looks good at first, and indeed sometimes it pays off, but more often than not outsourcing an initial product leads to an unmaintainable heap, a ball of mud that either must be abandoned for a green field project or despite the best of intentions, slowly morphs itself into a legacy, stove piped product: brittle, duct taped, and exasperating to maintain.
What does owning your systems buy you, in terms of early capitalization? It's a matter of setting out on the right foot and laying a solid foundation to build upon. You only have to begin once, avoiding the costly process of going back to the drawing board. Instead of spending your early years reinventing the wheel and banging your head against an intractable system, you set the stage for effortless growth, so that your new employees can avoid lost effort and hit the ground running. Taking ownership of your systems simply means approaching your early architectural decisions as a strategic investment. It costs virtually nothing, and pays off for the life of your company.
Principle #2. Deliver on the Plan
We all know why we should have a business plan. It focuses our mind, it sets the objective, it's something tangible to show to investors. Yet at one of the most successful startups I've known they didn't even have a formal business plan, or investors for that matter! They got away with it because their business objective was so obvious and so unique, it was woven into the culture and constantly at the front of everyone's mind. They were the exception though. At so many other startups, each with a long and detailed business plan, professionally written and tailored to mesmerize investors, if you asked the employees what exactly the company did what you got back was never much more than a blank stare.
When you have a plan that's woven into the very psyche of your company, delivering on it early sets the stage for virtually everything else. Just like owning your systems, delivering on the plan avoids costly mistakes that kill most startups: needless complexity, lost time and effort, aimlessness and misdirection. Many startups find themselves lost for weeks and months at a time in a confusing mishmash of feature creep, busy work, and thrown away code. Ironically, for a company that's lost its way the agile methodology can even make things worse, as the team struggles to reinvent its own plan in the absence of the proper leadership and the shared vision that delivering on the plan brings.
Whether you're one person working in a home office or a small startup on your way to greatness, delivering on the plan early on provides the technical and business foundation upon which your company will be built. Again we see that these operating principles, owning your systems and delivering on the plan, are merely different aspects of the same thing. It's too easy to circle the wagons every week reinventing yourself with every change in the wind. Delivering on the plan focuses the company just like having a plan focuses the mind, and getting it right from the start saves you money through achieving just those objectives you need to achieve.
Principle #3. Minimal Staff, Minimal Features
This may be the most important of all the principles, and on the surface it looks like two different ideas, keeping head count low and the product simple. But both these ideas are encapsulated in the simple proposition that you should never take more than you need. Don't be greedy in other words.
A lemma for the first half of the principle could be "everyone is an owner" and a corollary to that is "every feature belongs to every employee". Thus we'll see that the second half of the principle, minimal features, arises from the first.
It's often repeated that employees are the single greatest investment a company will ever make, but all too often startups neglect this simple idea. The best way to keep this principle alive at your startup is to remember this: always treat every hiring decision as the most important decision you'll ever make. Approaching your hiring decisions carefully ensures you're building the strongest and most committed team possible, leading to the best and most elegant product possible.
You can tell when a startup is managing hiring successfully. Every new employee is welcomed and wanted by the whole team. Each arrives fully committed, feels a part of the team and knows what they're doing from day one. Treating your hiring decisions as sacrosanct keeps the team strong, keeps payroll in check, and strengthens that sense of shared purpose and vision that owning your systems and delivering on the plan already bring.
Too many startups grow unnecessarily and too quickly, adding mediocrity and dead weight to a team that is already too large. Usually one or more organizational and technical anti-patterns are at fault, often working in concert. A common pattern is pressure from customers or the company's board of directors for new features or a new direction, bringing sudden edicts down upon the development team. The team in turn looks at the big ball of mud that is their intractably complex software architecture and pushes back, demanding more new hires. New people are brought in too quickly, communication interfaces grow exponentially (the mythical man month), the team gets bogged down in training, shifts into hero mode, works later and later nights as quality slips, and in the end you're left with a frazzled, bewildered group of people, a massive increase in cultural and technical complexity, and a myriad of new features that you probably didn't even need.
Even in the best of circumstances, keeping the team lean eliminates "stealthy loss". When too many people are on a team there's an impetus to keep the team busy, and people start inventing work. This leads to feature creep and more product complexity. But you already know that your customers are not looking for complexity, and you do not need more complex features to compete. What you are after is elegance, and a lean, committed, involved team is best equipped to handle that.
In software development, elegance is usually described by the KISS principle, "keep it simple, stupid". A variant is called the "Einstein principle", after a quote by the famous scientist: "everything should be as simple as possible, but no simpler". I however prefer a similar passage by Antoine de Saint-Exupéry, author of The Little Prince.
"Il semble que la perfection soit atteinte non quand il n'y a plus rien à ajouter, mais quand il n'y a plus rien à retrancher.." - Wind, Sand And Stars, L'Avion, 1939
Roughly translated, "It would seem that perfection is attained not when no more can be added, but when no more can be removed."
Principle #4. Apply Best Practices
Applying best practices sometimes seems like a slippery slope, but approached from the outset and always from the perspective of the previous operating principles, owning your systems, delivering on the plan, and taking only what you need, best practices can inform and enhance every aspect of your business.
The important thing is to get your best practices methodology into the culture and the architecture from the very beginning, because they are difficult to apply retroactively. As time slips by you will find yourself more susceptible to fads and the latest industry snake oil, when you haven't established your methodology from the outset.
Best practices enhance not just your architecture but your culture as well. Companies with best practices instilled in their corporate DNA avoid the perils of unnecessary practices and unneeded software like expensive time tracking and project management tools. These often go hand in hand with organizational anti-patterns such as management by perkele, design by committee, and mushroom management. By having the right tools and philosophy in place from the beginning your company can avoid these pitfalls and have the healthy culture, insight, and passion for cutting edge thinking that's going to be necessary to survive the rigors you'll face as you grow in the years to come.
Even if you're a just one person shop, you should start out at minimum with a wiki containing business and technical sections, a documented domain model, a code repository, and a solid development framework. This small, up front investment will pay off immediately with cleaner code and a clearer purpose. Like having a plan, keeping a wiki will focus your mind and organize your thoughts, while the code repository and framework will protect your architecture and be greatly appreciated by your future employees.
Four Principles, One Idea
Best practices take us around full circle, showing us how by simply adopting the right philosophies and with a few good practices we can solve one of the biggest problems a startup can face: what to do about money. The problems we face as an early stage startup are not so much different from those we'll face later on, but the solutions we apply will set the stage for all that follows. A few costless investments, focusing on simplicity, elegance and sound practices prove themselves to be the best investment possible.
As strange at it may seem, sometimes having less really is having more.
This blog entry was written for Inspired Startup's Startup Challenge, benefiting future hope.
Posted by LocaVori on August 29, 2009 at 12:11 p.m..
2 comments so far
On August 31, 2009, John said:
Joe, great blog post!
I too have been a member of both successful and failed startups and having seen firsthand the impact of what not following your rules of operation can result in, I cannot emphasis enough how important they are.
Thank you for so eloquently stating them, I’m a 20 yr veteran of producing software in both large and tiny companies. During my time with startups, I have been asked to justify my decisions but in some cases I wasn’t able to articulate my reasoning in a compelling way and was overturned. I wish I had your blog post when I was young and just starting out. The current startup I’m with is violating rules 1, 2, and 3 (some to more degree than others) and as you might imagine is in serious trouble and I fear that we've gone so long that we won't be able to turn it back around, but we are trying.
I especially like how keeping a healthy startup culture is an unstated fifth principle as it’s emphasized in the original four.
All the best in your venture and thanks again for your words of wisdom!
On September 3, 2009, joe said:
Hi John -
I think you are spot on that building a healthy culture is the fifth principle. When we worked together that had to be one of the two best cultures at any company I ever worked at (the other was Senada.com, another shop that *almost* made it) - best of luck, I'm really hoping you'll make it!
All the best,
Joe
