I like the long-standing definitions of the words: the company is the entity composed of the workers in their official capacity as well as its other resources, legal rights and so forth, and the project is the work the company has undertaken, and you are a beautiful if monomaniacal human being.
>It’s far better to be thought of—and to think of yourself—as a project than a company for as long as possible.
'You' are neither the company nor the project, even if you are the sole person in the company. Startups are of course typically single-project companies, but the two are still not to be conflated.
If any of these things were synonymous, there would be some serious implications. If your project fails, then you as the projectcompanyperson, are a failure and may cease to exist(instead of you still being an alive person whose project failed and whose company may or may not be on the rocks). If the company is the project, then after a pivot the company is not the same company (instead of it being still the same company with a different project). But with the real concepts, definitions and identities, these are different abstraction layers essentially, and everything is more transferable, fault tolerant, and so on.
I get that with sufficient dedication and focus these things can feel like the same. I also believe that I have been someone's project.
This being said, I agree with the general analysis of the essay, specifically with regards to throwing bureaucracy to the wind in favor of lean-and-mean experimentation (and who really wants to grow up?).
I also agree with Sam's thesis, and I also strongly agree with your addition.
It's very easy for startup culture to fall into the trap of equating the people with the project/company they're working on, resulting in unhealthy consequences when things don't go perfectly. It's a tricky thing to come to terms with, because in the early days that overlapping identity—while never healthy—is probably critical to having the momentum to carry on. But as time passes, separating your own identity from that of your project/company is critical to avoid burnout and depression; the company will always crest and trough, but you can't be pegged to its state anymore.
> If any of these things were synonymous, there would be some serious implications. If your project fails, then you as the projectcompanyperson, are a failure and may cease to exist(instead of you still being an alive person whose project failed and whose company may or may not be on the rocks)
Fear of (personal) failure can be a strong motivator though; "One of the most interesting things we've discovered from working on Y Combinator is that founders are more motivated by the fear of looking bad than by the hope of getting millions of dollars. So if you want to get millions of dollars, put yourself in a position where failure will be public and humiliating." [1]
Or if you already failed (and we all fail to various degrees all the time) then fear of looking bad can prevent you from doing the right things to manage the consequences of failure. It is a double-edged sword.
The point of incorporating a company in the first place is to create a fictional persona that is independent from the person(s) who manage it and/or work for it. To conflate a company with its owner(s) completely undermines the purpose of a company, both legally and psychologically. If you're willing to die with your company, you might as well just register as a sole proprietor.
Equating yourself with your project with your company is one of those grossly irresponsible things that self-made people tend to boast about and romanticize, along with pulling 18-hour workdays and subsisting on ramen. It's a shame that we as a society are complicit in this kind of romanticization. We should treat them as symptoms of a problem, not glorify them as rites of passage.
I've been my entire life working on projects, where I'm from no one knows anything about startups. I didn't know anything either. I thought Google and Microsoft had been there for years and were created like any other traditional company. Couldn't imagine anything built out of a garage or a dorm room.
I got money from all my different projects but never thought about them as companies, I used them to learn and pay for my hobbies. I never thought they could turn into real companies so I worked on them at night after my normal job.
Right now I got back to a project and idea I had back in 2008 when I even registered the domain and created the landing page and sketched a logo. Finally, I want to turn it into a real thing, into a company, but I still think about it as a project.
Same happens when I have to explain to family and friends why I left a well-paid job on tech in Ireland and moved back to my parents home in Spain to work on a website while the country is still broke. By saying "I'm working on a project" seems less serious. They still ask if I can live out of that but if I try to explain I'm working on a company people just freak out and things get really difficult to justify taking the attention out of what's important. Hope one day they understand.
"All of these were ideas that seemed bad but turned out to be good, and this is the magic formula for major success."
I see this sentiment expressed often, like it's a good thing that you want to pursue an idea that seems bad.
If I were to think about founding a start-up, I'd rather find an opportunity that makes sense and sounds good, validate the opportunity, talk to potential customers, and do as much diligence as possible before diving in. So essentially, if something seems like a bad idea, I'd move on to the next idea.
This may make it harder to create a unicorn (since I'd clearly miss some aspect that makes the idea not bad), but I bet it's a better, less risky way of trying to achieve a high-growth start-up with great potential. Good ideas fail as well, but I'd wager it's less often than bad ideas.
I vaguely remember sama had a comment some time ago, kind of related to what you are saying here (paraphrasing here): "being contrarian is easy, being contrarian and right is hard." Working on a seemingly bad idea is being contrarian by definition, that's the easy part. And if people just take the advice at its face value and intentionally work on "bad ideas", that's being a fool. The real hard part is "being right", which requires the founder to have a unique vision or belief in his idea, and drives it really hard, maybe even to the point of being "delusional" to outsiders, but again, being delusional about your own idea doesn't guarantee it's "right".
I think you misunderstood the point of "seemingly bad ideas".
This is not about ideas that seem bad to you.
This is about ideas that seem bad to others, i.e. ideas that seem okay to you, that you probably even verified in the small, but still have trouble convincing others.
Yea, but how much of that is actually [clear understanding of idea + execution of idea] versus [marketing].
I'd say that probably at least partially depends on the group of people you know. The last set of people that I would think would be representative of a random distribution worthy of being a statistical sample is my set of friends, because not only is my idea biased, but I have also selected all of my friends with bias as well.
My general rule of thumb is 'bad ideas come out of nowhere' and 'good ideas are things that require effort'. If you are just throwing stuff at the wall to see what sticks, probably not the best way to go about doing things.
Other than that, I think the idea is hardly representative of the product. I would guess that there is probably no reliable correlation between the evaluation of the idea, and the evaluation of the execution. The examples people mention are cherry picked examples. You can hardly evaluate your own potential based on comparing that to a few select examples that have been selected specifically to demonstrate a rhetorical opinion.
> This is about ideas that seem bad to others, i.e. ideas that seem okay to you, that you probably even verified in the small, but still have trouble convincing others.
Won't a skeptical person find flaw in every idea he is confronted with? In that case, I guess it all boils down to execution. In my opinion, the "idea" need not be very clear but it is okay for it to be filmsy. Building a minimal product with a filmsy idea can help "project" to head in the right direction when you start seeing the facts.
Perhaps, the reason why Google and Facebook succeeded wasn't that the ideas were seemingly bad but "idea" didn't exist in the first place. They just wanted to build something for their own and started getting serious when it got traction.
I think the more nuanced version of the prevailing wisdom is "it seems like a bad idea to everyone else, because of a key set of facts that you know that very few other people know."
Knowing that secret, whatever it is, probably requires special insight into a particular area of the world, special ways of thinking that few others are using, and perhaps special methods of operating that few others are using.
That's how an idea that looks bad ends up being good.
Well put and totally agree - in other words, as the start-up founder, you know it's a good idea.
My cynical take on "many bad ideas become major successes" is that as an investor betting on 100 companies, your best economics are from 1 or 2 unicorns, and not 50 base hits.
The investor optimized approach is 1 or 2 crazy ideas ended up being prescient and create awesomeness, but the remaining 98 ideas are indeed bad and go nowhere. The founder optimized approach is 50 good ideas create meaningful outcomes that aren't outsized.
About a year ago I started being careful to call my things projects too.
In the current climate people want to hear what your monetization strategy is first, or they think you're a loser. And a lot of the time I don't have one, or it's really vague. I just have an idea that seems like it will be really important to at least some people.
Calling it a project also liberates me from feeling guilty about not having a corporation around it, or going to meetups to yammer with my city's alleged startup entrepreneur scene, etc.
> The best companies start out with ideas that don’t sound very good. They start out as projects, and in fact sometimes they sound so inconsequential the founders wouldn't let themselves work on them if they had to defend them as a company.
Isn't this just cherry-picking of examples that validate a preconception? What about Uber? Dropbox? Amazon? Xiaomi?
Theranos:
> In the fall of 2003, Elizabeth Holmes, a 19-year-old sophomore at Stanford, plopped herself down in the office of her chemical engineering professor, Channing Robertson, and said, “Let’s start a company.”
DropBox fit that category. It was a solved problem for the people on HackerNews. "Oh we already have rsync for that". They had a very critical reaction here, most people thought the idea didn't have any value, but now look at where they are.
I also think that back when Amazon started, a lot of people laughed at the idea of selling books online. In fact for many, many years with Amazon making huge losses people predicted they would fail.
But I agree there are always exception to the rule. The question, I suppose, is which one is the rule?
> In fact for many, many years with Amazon making huge losses people predicted they would fail.
Amazon has been making huge losses for many years because they were reinvesting in expansion, which is very expensive for them. Amazon's investors understand and support these efforts.
Does a limo service as a startup idea sound cool to you? What about just another online file storage service when there are hundreds of others out there already without any significant traction?
> Does a limo service as a startup idea sound cool to you?
Do you think they didn't recognize the potential to move downmarket right from the beginning? Starting as a limo service was just a way to delay regulatory issues. Travis shot down Garrett's idea of owning the assets right at the beginning.
> What about just another online file storage service when there are hundreds of others out there already without any significant traction?
It definitely wasn't the presence of "hundreds" of competitors (at least not ones that didn't require sysadmin expertise) that people were criticizing at the time: https://news.ycombinator.com/item?id=8863
Your argument actually supports my argument. Yeah that's why the expression is "looks like a bad idea", not "it is a bad idea". It looks like a bad idea to others, but not to the founders because the founders obviously know (or believe) something that others don't. Otherwise, if the founders were working on something even they thought was a bad idea, that would be an idiot.
No, you're missing the point. The idea was obvious to plenty of others (Box in the case of Dropbox, Lyft/Sidecar in the case of Uber).
The difference for Uber was that they were able to raise an enormous amount of funding, then use it to subsidize their service to the hilt while expanding to as many locales as possible. It's still not clear that the business is sustainable: http://gawker.com/here-are-the-internal-documents-that-prove...
In the case of Dropbox, they just eschewed profitability and instead pursued consumer traction, whereas Box pivoted to enterprise. And it's still not clear that Dropbox is a better company than Box, especially if Box can get its CAC under control. After all, most people are using Dropbox for free, which is one reason Box pivoted to enterprise: http://www.businessinsider.com/dropbox-ceo-drew-houston-grow...
The differentiating factor between the founding teams wasn't knowledge of some secret, but the social capital needed to raise the financial capital to run a lossmaking business for years on end.
I've been thinking about this recently. Especially as the term "startup" feels distasteful, a verb that's been turned into a noun. I'm not building a startup. Nor am I continually starting (though sometimes it feels that way.)
So what's the right word?
Project - Sam gives good reason why this word works in the beginning, so long as you're not looking for external validation. At some point though, your project becomes something more.
Company - the people working on the project, and all the processes and resources that go into supporting those people.
Business - the transactional model that enables the company to make money and keep doing what they're doing.
Mission - for some people, the business is the mission. But for most success stories, even in the beginning when it was just a project, there was an underlying mission, a purpose and a plan. Unfortunately, the word feels mushy. I'd hate to hear people going around saying they're "working on a mission."
Ultimately, the word I use will likely depend on the context.
Peter Thiel has a famous Venn diagram with two circles: "good idea" and "sounds like a bad idea". He says that the best opportunities fall in the overlap between the two circles.
Calling an effort a project (or even, an experiment) helps free us up to be more flexible and receptive to the market, and removes a bit of our personal identity from the mix. Sam's great point is for a "project" we're more likely to pursue an idea inside the magic overlap zone of Thiel's diagram
GitLab we always talk about GitLab the company and GitLab the project as separate things. This because the open source project is bigger than the company. Hopefully this helps us keep thinking like a project.
I'm not sure the words "project" and "company" are the best words for it, but this idea is definitely important. It's a general principle in life to never take yourself too seriously.
If you find yourself not doing something because you don't think it's worthy of the fine company you've built, you're thinking way too much about the formal company and not enough about the ideas, work, and vision that made the company what it is.
The point about having self-discipline to work on projects is very true. I have found that the best way to stay motivated is to write as little code as possible and deploy as mush as possible. My usual commit is never more than ~50 lines of code. There is no better satisfaction than seeing your code doing magic in the wild.
> If you don’t have the self-discipline to work hard without external pressure, projects can be a license to slack off.
I agree with this, with one caveat. Some of my most productive bursts of output or problem solving have occurred right after a self-imposed, brief period of slacking off. There can be a tremendous benefit from the mental break that goes with 'controlled slacking off,' so long as it's intentional rather than an indication of something more serious (like not wanting to work on the project).
While Sam may ultimately be correct, in practice this is only great advice if your a nth time entrepreneur who has made VCs a lot of money. The problem here is that most entrepreneurs don't fall into this category and most investors don't want to invest in projects. Unless you have an extremely compelling mission driven project you also won't be able to attract talent in this market.
Most projects will never get to that phase. If its successful and gets traction, then it can become a company. If its not, then you move on to something else. Its a mental hack to keep you flexible and creative, rather than being locked into the pressures of running a "company".
I've always liked the word project when talking about startups. The word inherently conveys the idea that you're building up to something that will exist in the future (in Latin it means "throw forward"). It gives you the flexibility to change and evolve. "Company" feels like something established and somewhat static.
I've had a similar-but-different experience around being taken seriously with my app Complice. I'd be making small talk with other entrepreneurs (often students or whatever) and people would regularly break the ice with, "So what's your idea?"
...and I'm like "idea? I have a business. I make my living off of this idea."
This paragraph is basically the whole point of the post:
When you’re working on a project, you can experiment with ideas for a long time. When you have a company, the clock is ticking and people expect results. This gets to the danger with projects—a lot of people use them as an excuse to not work very hard. If you don’t have the self-discipline to work hard without external pressure, projects can be a license to slack off.
The idea that people were calling his startup a project instead of a company irked him because he perceived that, in their minds, they were putting his startup in the category of things people pursue without any intent of completing or being accountable for. That's how most people regard their projects: as hobbies.
That's at least what I was thinking to myself. The reaction I had when reading this essay was to think to myself "well, how do you expect to be taken seriously if it's not something you intend to deliver and be responsible for," but then he delivered this gem above.
The company doesn't deliver that level of intention, you have to generate it. Once you have it, the company is just a legal entity, and if you don't have it then no amount of incorporation, schedules, meetings etc is going to compensate for that.
I think the middle road between a project and a company is a small business.
Company over project is probably a bigger problem in SF/SV than anywhere else. I see a lot of people in both hardware and software making very elaborate and technically successful projects that never graduate from being projects.
(Although most real lab rats will admit that they can't always experiment like they want to because reagents and instrument time are often expensive and samples are often irreplaceable. Enter: computer modeling.)
> The best companies start out with ideas that don’t sound very good. They start out as projects, and in fact sometimes they sound so inconsequential the founders wouldn't let themselves work on them if they had to defend them as a company. Google and Yahoo started as grad students’ projects. Facebook was a project Zuckerberg built while he was a sophomore in college. Twitter was a side project that started with a single engineer inside a company doing something totally different. Airbnb was a side project to make some money to afford rent. They all became companies later.
This is hardly a list of the best companies, and a few of them don't support the argument:
1. The search/portal market was already significant when Google launched. Companies like Yahoo, Excite, Lycos were already public traded at the time, and were some of the hottest issues in the tech space. So it's no wonder Andy Bechtolsheim cut Larry and Sergey a check for $100,000 before a corporate entity even existed.
2. When Facebook launched, Friendster already had millions of users and had received a $30 million acquisition offer from Google. MySpace, which was created by people who saw Friendster's popularity, was founded by people trying to capitalize on the social networking hype that was already present in 2003.
3. Even Airbnb is hardly a post child for Sam's argument. Homeaway, VRBO and Couchsurfing were all well established when Airbnb launched.
For most entrepreneurs, "start out with an idea that doesn't sound very good" isn't likely to turn out very good.
Google was a bad idea because at that time Yahoo, Excite, Lycos and all those "portals" were making money by keeping the traffic on their site instead of sending them away. They didn't even invest much on "search" as we know it because it's better if users generate more pageviews while trying to find something they want. Now google adsense and adwords sound so obvious but nobody knew they would be so powerful. Google was no doubt a cool "project" but no one knew how it would sustain itself (nowadays it's taken for granted you would make money by advertising but back then that was not so obvious probably) Same goes for Facebook. One big distinction between a company and project is company makes money and project doesn't necessarily have to.
Starting a company when there are already established and strong competitors probably counts as "looks like a bad idea". I think the point is that the company (or project) seemed like a bad idea, not necessarily the market as a whole.
Google and Facebook are both often used as examples exactly because they were "late" to the party. That seemed like a bad idea, but they both had a secret (as Peter Thiel likes to say), that made it not a bad idea.
When Google came about I don't recall anyone thinking that it (indexing the web, page rank, etc) was a bad idea. Everyone knew search was horrible at the time and many established players were simply directories with thin search layers. Yes, there were established competitors, but none of them were really strong aside from a tiny minority (altavista for example).
I don't recall anyone considering Facebook a bad idea either, just that it was "yet another social media" site. Facebook mostly lucked out because of MySpace's user exodus.
I agree that when Google came out it was far better than its competitors.
Facebook is a bit different in that the market they went after was the right one not that their product was that much better. Zuck may have been lucky at the start, but he soon realised that he was on the right path and stuck to it.
Facebook had a secret ingredient too, they were one of the only sites on the Internet to use exclusivity correctly. They built up hype and got users drooling by slowing becoming available to more groups, and once they became available to everyone they were already established and validated. Of course luck and a simple design factored in too, but I think the exclusivity was the biggest part.
Existing competitors means two good things: customers exist, and the product is understood in the market. Building a better mousetrap is the ideal startup. There's nothing wrong with competition.
> Starting a company when there are already established and strong competitors probably counts as "looks like a bad idea".
First-mover advantage is overrated, and in the tech industry, you'll notice that many if not most successful companies were not first-movers. Often, first-mover advantage is a disadvantage.
In even the most established markets, you can find meaningful niches and adjacencies that the big players aren't tapping. Many times, the untapped adjacencies can expand the overall size of the market significantly (see Airbnb).
>It’s far better to be thought of—and to think of yourself—as a project than a company for as long as possible.
'You' are neither the company nor the project, even if you are the sole person in the company. Startups are of course typically single-project companies, but the two are still not to be conflated.
If any of these things were synonymous, there would be some serious implications. If your project fails, then you as the projectcompanyperson, are a failure and may cease to exist(instead of you still being an alive person whose project failed and whose company may or may not be on the rocks). If the company is the project, then after a pivot the company is not the same company (instead of it being still the same company with a different project). But with the real concepts, definitions and identities, these are different abstraction layers essentially, and everything is more transferable, fault tolerant, and so on.
I get that with sufficient dedication and focus these things can feel like the same. I also believe that I have been someone's project.
This being said, I agree with the general analysis of the essay, specifically with regards to throwing bureaucracy to the wind in favor of lean-and-mean experimentation (and who really wants to grow up?).