Boot-Strapping before Scaling #2

from Y-Combinator 7/13 enhanced by Peter/CXO Wiz4biz 8/13

Fragile Beginnings. When you start, you’ll probably have to recruit users from family, friends & the people in your network. As you grow you’ll have to do more online promotion to attract users.

EXAMPLE. Airbnb.com is a classic example of this technique. Marketplaces are so hard to get rolling at first, that you should expect to take heroic measures to get traction. In Airbnb’s case, these consisted of going door to door in New York, recruiting new users & helping existing ones improve their listings. When I remember the Airbnbs during Y-Combinator days, I picture them with their baggage, because when they showed up for meetings, they’d always just flown back from somewhere. Airbnb now seems like an unstoppable steam-roller. But early on it was so fragile that about 30 days of going out & engaging in person with users made the difference between success/ failure.

Fragility. That initial fragility was not a unique feature of Airbnb. Almost all startups are fragile initially. And that’s one of the biggest things inexperienced founders & investors (and reporters & know-it-alls on forums) get wrong about them. They unconsciously judge baby startups by the standards of established ones. They’re like someone looking at a newborn baby and concluding “there’s no way this tiny creature could ever accomplish anything.” It’s harmless, if reporters & know-it-alls dismiss your startup. They always get things wrong. It’s even okay, if investors dismiss your startup; they’ll change their minds when they see growth. The big danger is that you’ll dismiss your startup yourself. I’ve seen it happen. I often have to encourage founders who don’t see the full potential of what they’re building. Even Bill Gates made that mistake. He returned to Harvard for the fall semester after starting Microsoft. He didn’t stay long, but he wouldn’t have returned at all if, he’d realized Microsoft was going to be even a fraction of the size it turned out to be.

The Question to ask about an early stage startup is not “is this company taking over the world?” but “how big could this company get, if the founders did the right things?” And the right things often seem both laborious & inconsequential at the time. Microsoft can’t have seemed very impressive when it was just a couple guys in Albuquerque writing Basic Interpreters for a market of a few thousand hobbyists (as they were then called), but in retrospect that was the optimal path to dominating micro-computer software. And I know the 2 founders of Airbnb didn’t feel like they were en route to the big time as they were taking “professional” photos of their first hosts’ apartments. They were just trying to survive. But in retrospect, that too was the optimal path to dominating a big market.

How do you find your first Users? If you build something to solve, then you only have to find your peers, which is usually straight-forward. Otherwise you’ll have to make a more deliberate effort to locate the most promising market of your potential users. The usual way to do that is to get some initial set of users by doing a comparatively un-targeted launch, and then to observe which kind seem most enthusiastic, and seek out more like them. For example, Founder Ben Silbermann noticed that a lot of the earliest “Pinterest” users were interested in design, so he went to a conference of Design Bloggers to recruit users, and that worked well.
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