Startups and the expert opinion fallacy

Imagine 100 people in a stadium. Write down their heights, round it up and take the average. I don't know what your imaginary stadium looks like. Neither do I know who your imaginary 100 people are, but I can tell you for sure that the average you just wrote down is no more than 8 feet. Now, go back to the beginning and this time write down your contenders' wealth and take an average. This time, it would be impossible for me to give you a range of this average number. I can make a guess about the average height, because I know it to be impossible for a human being to be so tall to raise the height average of 100 people up by so much to take it over 8 feet. However it's completely possible to imagine only 1 of your 100 sample to take the average to $100M dollars or more from the global average of well below $10,000. By the way, how did you manage to get Bill Gates into a stadium?

If you are familiar with Nassim Nicholas Taleb's brilliant book, The Black Swan, you know that the above experiment is based on his book. Height, Taleb says belongs to Mediocristan where things live within normal ranges and events are more or less predictable with reasonably normal impacts. Wealth however belongs to Extremistan where there is no limit to attributes and highly improbable events have a huge impact. Now you can think of quite few attributes that belong to either of those universes: Weight, number of children or siblings and number of pages in a book belong to Mediocristan. Wealth, YouTube viewers and number of book copies sold on the other hand, belong to Extremistan.

The Black Swan, is about the impact of highly improbable. Until the 17th century people used to think swans are only white. It was simply not possible to think of a black swan. However, in 1697 the Dutch explorer Willem de Vlamingh discovered black swans in Australia. Following black swans, Mediocristan and Extremistan, Taleb tells us how predicting the future in Extremistan is impossible, futile and potentially a bad thing. He tells a convincing story of how self proclaimed "experts" fill up the airwaves and newspaper columns to tell us about the markets and other things from Extremistan where their opinions fare no better than a coin toss. In Thinking Fast and Slow, Daniel Kehneman, the Nobel prize laureate in economics, cites numerous experiments where not only the estimates of experts were worse than random guesses but actually worse than of the average population (who fared slightly better than random chance).

What about startups? Which world do they belong to? Repeating the same experiment with 100 startups this time, can you guess their average valuation? Would it be possible for a single startup in your randomly selected group to be as valuable as the rest put together? Common sense and our experience with Ubers, Dropboxes and thousands of failed startups suggests they certainly belong to Extremistan. This is confirmed if you believe how VCs think of their portfolios: most VCs think the Power Law applies to their portfolio where a single portfolio company can be responsible for the desired return of the entire cohort, hence their non-stop talk of the 10x return. Peter Thiel famously said of venture capital: We Don't Live In A Normal World; We Live Under A Power Law.

Now, don't get me wrong. I believe in mathematics as much as those VCs and cannot disagree with their logic of trying to find companies that will produce a 10x return for their funds to beat the market. My point is that, in a world so firmly grounded in Extremistan where events are unpredictable, improbable and have huge impacts, how do they pick the winner? More importantly, how do they, and the founders they pick predict the future, forecast it, plan for it and succeed?

Since predicting the future is not my specialty, let me rollback the clock and see how things turned out from no more than 15 years ago. It is 2003. You are an entrepreneur and founder of a new company that helps people connect with their friends online. You are sitting at a beautifully crafted walnut table in an amazingly designed conference room with a view of sycamore trees on Sandhill road, trying to convince a brilliant mind, reputable investor and Harvard MBA to invest in your company. To make your case, you produce charts, numbers and quotes in an attempt to show how the future is going to look like and how that future is going to make that man 10 times more money than he's investing in your company. This is 2003. Next year Google will be rolling out a social network called Orkut which for some reason will be very popular in a few random countries like Brazil and Iran but not in many other places. You've heard of a possible competitor called MySpace but not much more is known about them. Zuckerburg is still a spotty teenager living with his parents and Evan Williams has just sold Blogger to Google and it will be another 4 years for him to start Twitter. Snapchat founders are still asking their older brothers to buy them beer and What's App founders are in the queue of their local soup kitchen. Now, can you tell me how you predicted the way the world would turn out to be in the next 15 years, expressed your vision to the brilliant MBA in the room and avoided the people in white medical coats he consequently called in from the local mental asylum to take you there "to make you feel a bit better"?

I don't know the answer. If you are that person who's pitched a social network in 2003 to a VC, I'd love to hear your story. What I do know however is how things turned out to be, with the benefit of hindsight of course. I know Google abandoned Orkut for unknown reasons shortly after that. I know Facebook became popular with college students, until their parents showed up on the site so they had to leave Facebook for Instagram and Snapchat. I know everyone thought $1B is an insanely high price tag for Instagram until Facebook bought What's App for $19B and made Instagram founders look like losers. I know none of those who invested in What's App could give me a reason why they invested in it and more importantly none of those who didn't invest in What's App could tell me why they didn't. I know everyone thought Snapchat founders are rich, spoiled kids out of their minds for refusing a $3B acquisition offer until they went public. I know Twitter finally managed to be a business, more or less, or still is trying, this time in the public eye while Ev Williams started Medium to encourage long-reads, as if to resolve himself from his sins of making people's attention spans even shorter. I know once they realised they lost the social media game, Google tried to enter the market again with Google+ but didn't succeed and no one knows why they left the market they were in first and why they didn't succeed the second time with all their might.

I know all this because we all know it, and we all know it because it is 2018 now. We watched this crazy movie for 15 years and it's still not over. We don't know if the 2016 US elections is going to have a lasting impact on how social media advertisement is going to work and regulated. We don't know where the teenagers of tomorrow are going to hangout next year or if it involves disappearing pictures, enlarged eyeball video effects or cutified bunny ear face changers with voice modifiers that make you sound like a rat in a microwave.

We don't know these things because we haven't seen the rest of the movie yet but that's not the point. The point is there is nothing, absolutely nothing in the past events in this space that can be used as an indicator of what's coming next. In short, there is no value in history when you operate in Extremistan.

But now that the history has been played out, many "experts" have come out of the woodwork and tell us all about why Microsoft hasn't created it's own social media and why Google+ was a flop. If Facebook had sold to Yahoo! for $1B and turned into a social portal / media / advertisement entity with severe identity issues or had flopped and we were living in a Facebook-free world today, the same experts would have written hundreds of inches of OpEds on why and how accompanied by dozens of charts, numbers and quotes, trying to make sense of the highly improbable, high impact events and build their own personal brands and make a buck or two on the way.

The point is, startups are as extreme as Extremistan gets. As a founder, you can - and should - have a vision of the future. You can - and should - have faith in your ability to change the world (and reality) and execute your vision. Without the vision and borderline delusional faith, you won't be able to make it. You might even want to raise capital from some of those experts, known commonly as VCs to accelerate what's working for you. But don't confuse what's necessary for success with what makes you successful. More importantly, don't ever listen or believe the experts who weave stories about the past events to convince you they can use those events to predict the future.

Those experts, journalists, investors, MBAs, growth gurus or whatever, are like Turkeys thinking they've figured out life just because; today, they were fed great food for the 1000th day in a row just to learn today is this thing called the Thanksgiving! Those who survive, will be writing another story about what happened and how it can be avoided next time, until the next Black Swan event of their lives. Your job as founder is to avoid believing those who try to use the past events as a way to tell you how future would be in Extremistan.

On cancer and startups

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything—all external expectations, all pride, all fear of embarrassment or failure—these things just fall away in the face of death, leaving only what is truly important.

Around 6 months ago, I received an email from Laura, our financial controller. It was the monthly financial projection of our company, but it was different from the previous projection emails in one crucial way: it showed we are going to run out of money in 6 months. Suddenly we were going to die.

It was late at night and while the urge to pick up the phone and call Laura was almost unbearable, I managed to hold back and think. Reflecting on my emotions, I couldn’t help but to have the same feeling as when I had a cancer scare some years back. It was the same feeling: the feeling of facing imminent death.

Naturally I went through all of our available options: raising more capital, taking pay cuts, or letting people go. None of those were good or feasible options. It was like driving at 100 mph and suddenly seeing a concrete wall on the road 50 meters away. Being paralyzed from the neck down on a life support machine might be the best outcome you can hope for.

A cocktail of fear and anxiety about the future, guilt and embarrassment for not seeing this coming, and confusion and hopelessness about the next steps had such strong paralyzing effect that I couldn’t think straight for a couple of hours. Gradually I managed to calm down and think through the options we had. But before firing off any emails, I wanted to talk to Laura and go through the numbers again.

The next day, first thing in the morning, we sat down and reviewed the numbers. It turned out a misunderstanding on some cashflow realization and rent payment caused the “runway” to drop to 6 months. We were not about to die after all! We made the changes in the spreadsheet and the concrete wall in the middle of the road was gone.

That episode, while triggered by a false alarm, made me think about life of startups and how they are similar to our own lives. The prospect of death brings focus and attention to the most important things in life. This is no different in startups. When faced with imminent death, I didn’t think “maybe we should build a new feature to get out of this” or “perhaps it would help to release our product as open source and get out of this by increasing the number of retweets we are going to have on the story”.

One option however looks deceiving: raising capital. On the surface raising capital might look like a reasonable way to get out of a running-out-of-money situation. I believe that’s not the case. I would go further and say raising external capital has become an overgrown part of the startup life. It’s not the cure; it’s the cancer itself.

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice.

No matter what the latest article on HackerNews or your favorite VC’s blog post tells you, your aim should be to build a profitable and purposeful business. All the land-grab, moonshot, “reach for the Mars,” “you are the next Elon Musk,” “build the next unicorn” hoo-ha is self serving for the VCs who want you to raise loads of money and burn it fast so they can get a 10x return or stop wasting their time with you and turn over to the next entrepreneur.

The question we should be asking ourselves is, did we escape the dogma of “living the corporate life” so we can live the dogma of “raise tons of money, go big or go bust”?

It seems to me that we might have overestimated the role of external capital in building a business. Our industry’s over-reliance on VCs is absurd, unhealthy, and downright dangerous.

Let me be clear here, I am not against raising money to grow an existing successful model. I also acknowledge that some businesses can only be built at scale which requires external capital. But those are exceptions, not rules.

To be fair to VCs, I also need to clarify something: my issue is not with external capital coming from the VCs. It is with having too much cash in the bank. In most startups, this is either by raising money from a VC or by the virtue of having a rich founder. No matter where your money comes from, if it is not from your customers, you are harming your business by having it. Those zeros next to your bank balance take the focus away from what’s most important in your startup’s life. They will fool you into thinking you should be spending your day in upgrading your infrastructure or building your next awesome feature. Would you be doing that if you only had 6 months to live?

I find it ironic that while many might look for external capital as a way of getting out of deathbed, it is the cancer-like growth of venture capital in the startup business that’s causing a lot of those businesses be on deathbed in the first place. This constant demand for building more, capturing more, and grabbing market faster without solid foundations of a business, serves investors very well and that’s why they propagate it in the startup market so readily, but most of us started a business to live our own lives and not someone else’s. It feels to me that many of us are now in danger of living a VC’s life instead.

It is true that “If you live each day as if it was your last, someday you’ll most certainly be right.” It certainly applies to us mortals and while it doesn’t have to be true for businesses we build, living by it is the best thing we can do to stay hungry and focused, both for ourselves and our startups.

Quotes in this article are from the Commencement speech given by Steve Jobs at Stanford University in 2005. For many, Steve Jobs is the guy who brought smartphones to the world but for thousands of entrepreneurs around the world, he is the inspiration to take on the daunting challenges of building a business and creating something new from nothing.

I read this speech every year or two to remind myself why I do what I do and I know many others who do the same. I invite you to listen to his talk if you haven’t done so already.

This post was first published here

Party like it’s 1999

Getting old doesn’t have many upsides. But if you are my age, there is one good thing about getting older: You remember the happy days of 1999. The internet was new, content was everywhere, and the future looked bright. AltaVista and Excite ruled the world of portals, and “eyeballs” were the most prized commodity. In pursue of getting more visitors, dot-com companies would give you a lot of stuff for free as a “user.”

Sadly those days are gone (alongside my youth). Now running up four flights of stairs is not an option, VCs are more prudent, and users are more savvy -- all for the better, I would say. Well, that’s what I thought until I sat down with John, the young and clever founder of a developer-focused product.

John and his co-founder had poured their heart and soul into building an impressive product that can be used by IT teams in larger enterprises and were looking for investment to take it to the next level. Naturally, we went through the team, product, and technology. It was going so well that I was starting to think this might be it -- until I asked about their go to market

How were they going to sell their product? “We are going to open-source it,” John told me confidently and casually. His conviction in his answer was so strong that I cycled through three or four emotions and arrived at self-doubt in a couple of seconds. Did he know something I didn’t? Was open source actually the way to go to market with a product like this?

The truth is this is not an isolated incident. Everyday, talented engineers start companies and release their IP as open source in their insatiable thirst for developer mind share and adoption. Many times it works: They get more stars on their GitHub repositories than you need to make everyone in San Francisco an army general. My question however: Where is the business?

Open source is often pitched as the only way to sell software to the enterprise of today. The argument goes that since developers use what they like and not what they are told in their projects, they have become the kingmakers of IT enterprise. Get them all and get them soon, and you shall rule the world. Developers don’t love anything more than an open source product where they can look under the hood and tinker.

While all of those arguments are true, I am still looking for financially successful open source companies that can be reproduced. Looking around, Red Hat is the only company that makes money from its core open source offering. All other “success stories” of the open source world from 10gen (MongoDB) to Docker either make money by selling closed source tools or are still to show a viable revenue worthy of their billion-dollar valuations.

To be clear, while I agree that open source is a very effective and low-cost option to enter the enterprise, I also think it is not the way to build a software business without a plan. You simply cannot build a business around a highly popular open source project without having a clear plan on monetization.

Making a project open source is a one-way street in many respects: Once a project is open source it is almost impossible to make it closed source successfully again. Spending your money to build IP and making it available to everyone including your potential customers and competitors should also be a well-considered process: Which parts are going to be open source and which parts are closed source? How are you going to make money? Is it by selling services and support or by making your product “open trial,” while the actual “production worthy” and “enterprise ready” version is closed source? Are you building an ecosystem around your product, and if so, how are you going to nurture that without alienating other players in your ecosystem when you start making money from your open source IP?

All these are important questions that you need to answer before changing the type of your GitHub repository from Private to Public and enjoy those starts, forks, and pull requests.

I worry that GitHub stars have become the new eyeballs, and I fear this one might not end well like the last one I remember.

This post was first published here

The startup pitch: It’s a short elevator ride

If you've been part of any startup accelerator or have talked to a "startup mentor" you know how obsessed most of them can be with the elevator pitch i.e. the ability to explain your idea or business during a short elevator ride. During my time working at startups, I've heard different versions of this ranging from the beer mat pitch (a pitch that can be written on a beer mat and explained to a fellow drinker at the bar) to the grandma (or granny to my fellow Brits) pitch, which is describing your business in terms your grandma would understand.

I've always disagreed with these notions and at this point in my life, having founded several companies and running Cloud 66 for about 4 years, I'm pretty sure I'm right. The elevator pitch is useless, the beer mat pitch is a waste of time, and grandma's pitch is just plain old stupid.

Elevator pitch issues relate to two areas: context and goal.

To illustrate my point, allow me to introduce you to Paul. Paul is a Professor of Applied Mathematics at UC Berkeley. I'm sure you know what it means to be an Applied Mathematics professor. I wouldn't be surprised if you assumed he must be a good professor, since he teaches at a university like UC Berkeley. You might even be able to accurately guess his age and even picture his appearance in your mind.

This is because you have a great deal of context and an existing pattern in your mind about what Paul does. You know what Applied Mathematics is. You know what a university is and what being a professor means. You know UC Berkeley is a good university and might know it has a particularly good Applied Mathematics faculty.

Now imagine you didn't know any of this. Let's see how he'll fare pitching his work in an elevator:

Me: So, Paul. What do you do?
Paul: I'm a professor of Applied Mathematics at UC Berkeley.
Me: [looking confused]. Hmmm.... I know what mathematics is. But what's applied mathematics?
Paul: It's the practice of finding uses of mathematics in science, engineering, business, computer science, and industry.
Me: Right. I think I have an idea. So what's UC Berkeley?
Paul: Erm.... It's a university in Berkeley, California.
Me: University, eh? What do you do there?
Paul: I'm a professor.
Me: What's a professor?
Paul: [murmurs something] ... I help people gain a better understanding of the world by providing them with regular lectures and introduce them to instructional books.
Me: Ah! Now I get it! Like a school teacher, right? But what's your USP? Why not just call yourself a teacher instead?

At this point, we've ran out of beer mats, grandma is snoozing on her rocking chair, and the elevator has reached the roof garden and people are waiting for us to leave so they can get in.

OK. So this example might seem slightly bizarre. Paul's elevator pitch would have ended after his first sentence with a relatively good understanding of the job he's communicated to me. Because I have context.

But while it's difficult to think of someone who doesn't know what a university or professor are, it's completely plausible to imagine the same assumptions being impossible if Paul was pitching a cold laser surgical scalpel for retina surgery. In this scenario, it's not hard to imagine me asking him, what's a cold laser? What's retina surgery? Why cold? Is there a warm one? What's the USP? How is this different from any other scalpel?

The problem is, many startups work in cutting edge science and technology fields. Fields that inherently have few people with insights into them. That's the exact reason they can build something new: Because they know something others don't. The context is seldom as commonly shared for those types of companies. As a result, elevator pitches for startups have evolved to take on 3 different guises:

  1. Useless or meaningless: "We help companies turn into social enterprises"
  2. Incomprehensible: "We reduce tissue damage by using flexible fibre CO2 lasers"
  3. Relative: "We're the Airbnb for washing machines"

You can see how only the third one is useful in communicating something meaningful, because it benefits from a shared context. I know what Airbnb and washing machines are. Frankly this isn't unique or a particularly new insight. This is what communication is. This is what we humans do when we communicate: start from a common ground and build new pieces on top of it.

It's often said that the aim of an elevator pitch is to get the other side to ask intelligent questions and guide them through the course of understanding your business. While I agree that this is a method to engage people, the goal of an elevator pitch for a startup isn't to be a conversational piece. It's to go get investment, form a partnership, or sell a product -- not start a conversation.

Given the goal, it's justified to ask a simple question: "How likely is it to get investment from someone who doesn't even have a contextual understanding of your field? How useful is that investment going to be? And how likely is it to sell your cold laser scalpel to a removal van driver?"

While it's possible for those conversations to turn into a business transaction, it's not the most optimized way of approaching a business deal. The scarcest thing in a startup is time. Waste your time and you'll watch your startup die. It's the same thing.

But not all startups specialize in cold laser scalpels. A dating website, an online cookery school or a mobile gaming app startup can benefit from elevator pitches, precisely for the reason that people will share their context with you. But if you're building a business on new frontiers, solving hard or novel problems -- what Sam Altman called Hard Tech Startups -- elevator, beer mat, or grandma pitches are as efficient as advertising lease time of the Large Hadron Collider on TV during prime time Saturday night viewing. It might work, but it's quite likely not to.

So do your homework. Find relevant investors and business partners who don't need priming about your business. You have a short elevator ride. Don't waste it on context.

This post was first published here

Google's infrastructure for everyone else

Our office in San Francisco has communal bathroom facilities, which like other communal areas, gets thoroughly cleaned every morning. But everyday around 5pm, if you go to the men's restrooms you’re usually confronted with a pool of urine right in front of the urinals.

This is obviously not a pleasant experience for anyone, including those who contribute to the aforementioned pool of fluids. So it got me thinking: Why does this happen? And why would you not stand just that little bit closer to the porcelain to avoid pool formations by the end of the day?

I couldn't really think of a reason, but I thought of a solution: Printing a sign and attaching it at eye level that reads: You’re not as big as you think, please step closer!

I haven't tried this solution yet. I might report on the success or failure of it in a future post, however it made me think about a current industry trend: Google Infrastructure For Everyone Else or in short and cute form: GIFEE.

This term was coined by fellow container evangelist companies, who are trying to sell Google's way of managing its infrastructure to the rest of us. We’re told that Google is millions of light years ahead of everyone else in building and managing infrastructure. And we’re told that Google has been running containers in production for everything since the dawn of time in a system called Borg. We’re also told that products like Kubernetes are based on Borg and are built to help us benefit from their years of experience in the field.

I think most of what we’re told is true: Google is indeed light years ahead of many others in running infrastructure. I also have no reason to believe Google hasn’t been using containers in production, nor do I think systems like Borg don't exist.

I would, however, question two things: Kubernetes was built by Google to make us benefit from their expertise in running containers and that everyone is better off running infrastructure like Google.

The truth is, Google is unique. With all the talk about unicorns and the next Google and Facebook, the likelihood of your startup making it to unicorn league, let alone becoming the next Google is less than being hit by lightning, while eating an ice cream as you're swimming away from a shark attack during The X Factor final.

That's OK. Not being a unicorn with a valuation in billions and VCs falling over themselves to give you money, there’s a decent chance you can build a profitable business you can be proud of. Let's be honest with each other, you won't sign up Price Waterhouse Cooper (PwC) or Ernst and Young for your accounting, Merrill Lynch to run your current account, and attend Davos instead of the next Ruby Meetup.

But wait, doesn't Google use PwC and Merrill Lynch, and isn't Eric Schmidt part of the furniture at Davos? So why wouldn’t you do the same?

The answer is simple; those services are built for Google size. You don't find a company saying GAFEE (Google Accounting For Everyone Else). That would be ridiculously absurd, and we all know that. Interestingly, Google's accounts are more likely to look like a normal multinational than their infrastructure. I can think of at least a dozen companies that have the same accounting practices as Google: Unilever, Procter and Gamble, Glaxo Smith Klein, Volkswagen, Exxon Mobile, British Petroleum ... but none of them are anything like Google in terms of infrastructure sophistication, and we can imagine why.

“So what's the problem,” you might ask? "OK, we get the point, we’re not as big as Google and we don't use Google's accountants because their practices don't apply to us (or are too expensive).”

“But what's wrong with using Google's infrastructure when they’re giving it to us for free?" I hear you say.

In reality, it's not all about the nominal price. Getting Merrill Lynch to do your banking. even if it’s for free, might not be a good idea for your company because of the burden it puts on you and your admin department. The situation would be akin to taking a Formula One car to do the school run at best.

The issue is, by using tools that aren’t built for your goals, size. and achievable targets, you’ll be burdening your business with unnecessary complications that can be avoided both now and in the future. As software engineers, we’re familiar with Donald Knuth’s saying: premature optimization is the root of all evil.

Why does Google promote tools like Kubernetes? Google's promotion of containers is a lot about taking on Amazon. In short, Google has no way to take on AWS in their game of compute, network and storage -- the traditional blocks of cloud computing. But they have a lot of experience in running infrastructure that doesn't provide those traditional components since they’re using containers. By promoting containers as the building blocks of infrastructure, they’re hoping to leapfrog over Amazon to become the infrastructure setup of the future. Their advertisement campaign for Google Cloud Engine also points to this goal.

You surely noticed how I said “infrastructure setup of the future.” I see containers as the building blocks of this infrastructure (otherwise I wouldn't be spending every waking moment of my life building a business based on this premise). While I think we’re going to be better off building our next-gen infrastructure based on containers, I don’t think we all need to build and manage like Google via these super configurable and modular tools. Most of us need simple tools that just work and get out of the way to let us do what we should: build a business.

By using tools that aren’t right for our size, we run the risk of contributing to and stepping in a pool of urine as the day draws to an end. It’s not only harmful technically, the administrative costs can also quickly become a burden. As a start-up, we all want to believe we’re destined for greatness as the next big thing. Mentally, chasing after an aspiration to become the next unicorn makes us into an unsustainable business, addicted to where the next round of funding is coming from. We see this everyday in Silicon Valley, and trying to imitate Google’s infrastructure is just one aspect of this mentality.

And if all else fails, it's always useful to have a cautionary sign in front of us as a reminder: You’re not as big as you think you are, please step closer!

This post was first published here

Why tech journalism needs more tech experience

On last count, Jeremy Clarkson, the infamous creator and presenter of "Top Gear," the world's most famous car show owned a Ford GT, a Mercedes SL55 AMG, a Ferrari F355, a Lamborghini Gallardo Spyder, a Jaguar XJR, a Volvo XC90 SUV, a Toyota Land Cruiser SUV, and an ex-military Land Rover Defender. Richard Hammond his co-presenter, drives a classic Morgan, a Porsche 911 GTS, a 1965 Open Kadett plus 2 Land Rovers, while the other "Top Gear" presenter, James May has a pilot license and drives a Bentley T2, Fiat Panda, Jaguar XJS, Mini Cooper, Porsche Boxter S, Porsche 911 and a Range Rover. That's 21 cars!

It is no secret that these guys love cars and know a thing or two about driving them. Clarkson, Hammond, and May are lucky, rich, and influential because they have made "Top Gear" an extremely successful TV show about cars. Car companies fall over themselves to get a slot on the program for a review of their latest supercars and the commentary provided by the program has a great influence on serious car buyers' decision.

Watching an episode of "Top Gear," you cannot help but to feel the presenters' passion about cars and admire their expertise on the subject. I think that passion and expertise is an integral part of the global influence and success of "Top Gear" and the respect it rightly deserves.

Now let's imagine a car show where the presenters don't know how to drive a car, have no driving license, and never have owned a car in their lives. It is hard to see how a program like that is going to be successful, influential, or predict the next big thing in the automotive industry.

The sad reality of software journalism is that the number of journalists writing about the software business who can code or have written a line of code in their lives is less than the number of fingers on your left hand.

As someone who's developed software and read about software for more than 20 years, I still cannot comprehend how a software columnist can comment on success and failure of a product without having the skill-set to try it before forming his or her opinion on the matter. Read the writings of Joel Spolsky, a developer and creator of Stack Overflow and Trello and compare it with the commentaries you read about Docker or cloud computing on the tech media, and the difference becomes clear.

Examples of tech media missing the trend and trying to jump on the bandwagon after the horse has bolted is far too many to count. Github, Docker, and AWS are all examples of companies that made some existing technology easy to use by developers and there was no way for a non-developer to understand how they add value and why they are going to be successful. It's just impossible for someone who hasn't used Linux containers to predict Docker is going to be huge. 

It is interesting to see how Paul Graham writes about how you should build a successful company: Build something for yourself, he insists. As software developers, we are naturally going to build thing we use as software developers. Being our own first users enables us to build great tools and improve them every day. This is the story of Slack.

Slack was built by software developers to be used in software developer teams. That's what makes using it so great for everyone. First and foremost, it's the experience that made it great. As a software development team, we couldn't wait to get an invite for Slack so we can start using it. Two years later, many of my non-developer friends still don't get Slack. How can I ever expect them to have seen it coming before it was old news if they are not users of the product?

Open source is becoming more important in the enterprise and large companies are trying to court developers to have a place at the table for the next generation of the big companies. But tech journalists are still following the tired patterns about "the next big thing" -- the amount of money raised by the company or the moves of the largest players in the market -- instead of finding out what actually makes a product so successful in the developer space.

Let me be up front about this: I have nothing against tech journalists. However, I think we as a community will benefit from informed commentary on trends of our industry. A commentary fueled by knowledge, experience, and passion about technology in general and software in particular. After all, if software is eating the world, we developers of this world, should become better at writing about what we do, where we are taking software, and what the world can expect from the fruits of our labor.

That's why I accepted the offer of writing for InfoWorld: I am a developer. My work is eating the world, and I am best positioned to tell you about it. Let's talk!

This post was originally published here

Europe’s Startup Groupies

If you are starting a “startup” you have seen many startup groupies.

You know the type: you see them all the time at events, meet ups and drink ups, hanging around all the time. They are not part of a startup, they are not investors and they haven’t started a company before, but they are always there. I call them Startup Groupies.

Most startup groupies are harmless. They like hanging around with innovative, active and sometimes down right crazy people who work at startups. They don’t have the money to invest in startups or if they do have some money to invest, they lack the balls required. The same lack of balls (or abundant sensibilities) also stops them from jumping from their ‘consultancy’ roles at large companies to start or join a startup. So they just come for a drink, hangout with cool people and dream about the day they are going to turn their amazing idea into a killer company. Nothing wrong with that.

There is a secondary type of startup groupie that is harmful however. They waste your time, your most precious asset.

Just to be clear, I’m not talking about consultants trying to sell you their service: lawyers, accountants, office space brokers, SEO experts or social marketing ‘gurus’. Those guys will also often waste your time, but there is always exceptions. Just like cold-callers who mostly waste your time but sometimes albeit very rarely, have something you actually want to buy. And let’s not forget, they usually have started their own one-man-band businesses so they are mostly on your side.

Here I’m talking about the ‘community’ guys, ‘ecosystem’ builders, ‘initiative’ people. You can find them mostly in Europe sucking government and European grants to push self-defined vague metrics and make a living out of that. Not only these guys waste your time, they also hurt the economy in a greater way.

Let’s try and see how they operate:

How be a startup groupie?

First define a bullshit word: “digital skill” is a good one. “social economy” is another candidate. “social enterprise” perhaps? Just make sure it doesn’t mean anything and is vague enough.

Now start an outfit with a big name: “Startup Europe” sounds good. How about “National Association of British Entrepreneurs”?

Remember: You have to call yourself an entrepreneur. It doesn’t matter if you haven’t built a company in your life, you can always make up those stories later.

Now, armed with your bullshit word and big-sounding outfit, go around looking for likeminded people. (Pro tip: You will have a much better chance in the PR industry).
Your likeminded people probably already have their own bullshit word and big-sounding outfit made up. That’s actually better since it helps you congratulate each other publicly, become part of a larger “initiative” or “group” and sound even bigger than you actually are.

The next step is grant hunting. There are plenty of those around: the UK government has some, so does the European Union and most of the European governments. Set a goal for your bullshit word and go for it. Say it in your mission statement: “Startup Europe’s mission is to progress digital skills within social enterprise”. Who can measure progress of that?

Keep at it. Tweet pictures of yourself at the doorsteps of Number 10 or shaking hands with HRH Duke of Never-Done-A-Day-Of-Work-In-His-Life or some other VIP. Make sure your LinkedIn profile mentions Davos, Office of Prime Minister, European Parliament and other important sounding places. Again, it doesn’t matter if that’s true or not, if those outfits have anything to do with starting businesses or what you’ve actually done there: Just mention their names. Again, bonus points for pictures.

Now you have a job, money and get to hangout with cool people.
Moreover, if you play this game long enough, you will be recognised by the same establishments and hopefully you will get an OBE or some other ancient badge of honour for your services to progress of modern technology.

Sad as it is, I have seen many of these people and their outfits. The truth is the real progress is not made by these charlatans.

I personally have little issue with people making up bullshit words or organisations and getting OBEs, MBEs or WTFs for it. I am happy to have drinks with them and fake amazement at their ‘achievements’ and breadth of their networks. Let them namedrop until they are blue in the face.

But they usually do more than that. They might waste your time, but have control over that. What you don’t have control over is the fact that they take up and waste resources that are allocated to help small businesses at a large scale. They usually become the gatekeepers to who gets those resources and they are not qualified by any standard to be in that position. They are trusted by establishment policy makers because of their association with you, the real entrepreneur, and that is what I have an issue with.

So the next time you see a startup groupie, you know why they are wasting their time with you, the unwashed, overworked, crazy startup person instead of drinking Campari with the Prime Minister at Davos!


Don’t read the TechCrunch.
Don’t obsess with the latest story on the HackerNews.
Don’t worry about growth hacking.
Don’t waste your time ‘measuring the opportunity size’ for your next VC meeting.
Don’t obsess with the competition.

Just build a fucking awesome product.

Build something for yourself. That is the only way you can tell if you have done the right thing. Listen to your customers and be your own customer. Obsess with product. Make it perfect. Don’t compromise on quality. You know if you have when you are using it every day.

VCs want you to tell them about the customer acquisition routes, market size, pricing strategy, distribution channels, competitive landscape, funding roadmap, growth strategy and a lot more.

They ask detailed questions that no one knows the answer to that early in the business. They never ask you, how you’re going to make your product perfect? No one knows the answer to that either. But they just don’t ask that.

The problem is, when a company like WhatsApp is acquired for $19B the first things VCs do is to check their email boxes to see if they said no to WhatsApp before. What they don’t do is to ask is how did WhatsApp grow to be so big to be so valuable to someone like Facebook? And if they do ask or answer that question, it’s all retrospective analysis. Hindsight.

The reality is that no one knows why Candy Crush is so popular? No one knows how Angry Birds got to be so big?
No one knows this including the companies behind them. If they did, they would have reproduced the success. Where is OMGPop? Do you know any other games from King, the makers of Candy Crush? Have you seen anything else making money for Rovio apart from Angry Birds merchandise?

But all you hear is “How are you going to be the next King, Rovio, Facebook or WhatsApp?” when neither side of the conversation knows how they got to be what they are. Your ansswer might as well be “I’m going to use black magic. I know an old witch”.

You can waste your limited resources in trying to answer those questions. The reality is that you might have to do that. If you don’ have money to carry on and need an investment, then you will have to try and answer questions like that. Leave the old witch out of it and try your best, but remember: don’t confuse the answers to those questions with anything real. Don’t believe for a second they mean anything when you don’t have a great product. Don’t lose your focus on your product.

The only thing that matters, the only thing that is guaranteed to help with making a business is a laser-sharp focus on product. You might not build a WhatsApp by only focusing on product, but no one knows any other way.