Startups: Bands for Hackers
Growing up as a young musician in suburbia, I fantasized about being in a band: playing music in front of thousands of people, signing a record contract, enjoying the successes (and excesses) of stardom and celebrity. As I grew older, I began to realize how difficult it would be to achieve that goal.
Years later, as I started university and was accepted into VeloCity, Waterloo’s startup incubator, I noticed a lot of familiar dreams. Although their domains are vastly different, startups are just bands for hackers.
Like many bands, many startups begin in parents’ garages - serious business in a non-serious atmosphere. Founders (or band members) spend every waking moment together, working hard to perfect their craft and their endeavour. While bands work to perfect their lyrics, melodies and rhythms, startups work to perfect their pitch, product and business plan. Instead of fans, startups get users; instead of trying to impress the A&R rep that may show up to a performance, startups try to impress the investors in the audience on demo day. For bands, this demo is a rough CD - for startups, it’s their first product. Both are MVPs.
Then comes recording. Record labels often finance their artists, allowing them to spend months in studio making a record, toiling day and night behind a recording console. This is where the product comes from, the hard work that is initially the band’s raison-d’être. (Their private IP, if you will.) Startups are often financed by VCs, or by themselves, to make their initial product. For months, they toil in their studio apartments, toiling day and night behind a Linux console. By now, both band and startup have something nobody else does - their work. While they both have funding, neither of them have revenue.
Then comes touring. It’s no secret that this is how many musical artists make most of their revenue. While the original music may be great, one purchase of their album makes them pitiful amounts of money. Many SaaS startups are in the exact same position. Selling their software directly would be equivalent to selling the copyright on a band’s music - a nice one-time sale, but the loss of all of the private IP. Startups tour just like musicians do, and attempt to generate revenue. They acquire customers, attempt to gain virality, live off user (fan) counts and try to bring in whatever cash they can. They could take the advertising approach, and play a show sponsored by a large brand, or they could make money from their users directly by charging for tickets.
Then comes the pivot. A startup can quickly realize that their idea isn’t profitable, or that nobody’s interested. Their team obviously has the skill, so they choose to make a different product. A band can quickly realize that their music isn’t liked, or that nobody’s interested. They obviously have the skill as musicians, so they broaden their artistic horizons and make new music in a different genre. Neither type of pivot is bad for the organization, although they will both lose fans or customers. In either case, the funding party (VC or Record Label) will definitely be involved in the decision.
Bands and startups are also identical in one other important area - motivation. There exist bands that are motivated by money, just as there exist startups whose sole goal is to generate income. These bands still make art, although it is rarely well accepted (or noticed) by critics, and often written for hire. (The Backstreet Boys and Justin Bieber are two examples that come to mind.) Startups with the one goal of profitability may achieve success, but are often similarly panned, and often stumble frequently on the way. (Groupon.)
On the other hand, musicians who set out to make great music are, at the very least, taken seriously. Music reviewers devote their attention to those who care about their work, and it’s rare to see a “classic” or universally-adored piece of music that was written for hire*. Startups that set out to make a great product are, on the whole, adored for their work, and often enjoy success as a side-effect. Google was originally a PhD research project, motivated by passion and interest rather than profit. Dollar signs were not the focus of Zuck’s attention when he frantically wrote the first incarnation of Facebook, nor as Jack Dorsey brainstormed how Twitter would start.
The best bands are made of those who care about their music, not their profits. The best startups are made by those who care about their work, not their profits.
*EDIT: A few good commenters on Hacker News have reminded me that European classical music (i.e.: Mozart and the like) was most certainly for-hire. My point here was merely to highlight the commodity of modern, hired pop music, and I neglected to think about any time period other than our own.