Startup Therapy Podcast

Episode #131

Ryan Rutan: Welcome back to the episode of the startup therapy podcast. This is Ryan Rutan joined as always by my friend, founder and Ceo of startups dot com Wil schroder.

Wil Schroter: Well as

Ryan Rutan: founders, we spend a lot of time beating ourselves up over the quality of our ideas, right, particularly that really, really early stage where we've just come up with the idea. Um, we're trying to get onto something new. Um, and it's that really early kind of raw clay stage and we spent a lot of times really, really beating ourselves up over our own feedback on the idea over other people's feedback on the idea. Um, how many, how many companies, big companies like well known companies, can you name that started off as great ideas?

Wil Schroter: None of them dumb ideas. Right, let's go through the list. Let's go through the list of how many dumb ideas started off and ludicrous at the time. What's so funny is people have revisionist history right now. They look back and say, well that makes complete sense. Uber made complete sense. No, it didn't. I remember

Ryan Rutan: when Travis was running

Wil Schroter: around L. A. Trying to talk to folks like Jason Calacanis hoof, aimlessly invested and people are like, wait, what? You're gonna have strangers getting other people's cars and that's just gonna work out okay, you're

Ryan Rutan: nuts. Right?

Wil Schroter: Or I'll give my feedback mid 90s ebay. So let me get this straight. Anyone that takes a picture or downloads a picture of a Rolex watch can say that they own a Rolex watch and we'll get money for it and it may or may not show up at somebody's house, that is a terrible idea, kind of

Ryan Rutan: kind of working for Ebay and Paypal, right? But this is going to work for anybody else didn't seem so at the time. Yeah, the

Wil Schroter: list goes on Airbnb, so let me get this straight, you're gonna let people rent out spare rooms in their house. How long before somebody winds up dead right in an Airbnb like a week, Right? That sounds like that would never possibly work. Um,

Ryan Rutan: one of the U. S. S most famous serial killers ran a rooming house, right? Like that was that was where most of the victims came from, a lot of evidence, it was a bad idea,

Wil Schroter: right? Right? Um, or things that weren't a bad idea, they just wanted like a great idea like facebook being a yearbook app for Harvard, right? Like that doesn't sound like

Ryan Rutan: the social network, that's

Wil Schroter: gonna change everything. Right? And yet it is, I think the problem that we have as founders, especially for founders who haven't done this before, which is most of them. Right, Why would you have Right? Right. Why do you, why would you have, we're at a point where we think because we imagine this this actually isn't true. We think that we have to have this genius idea because we think Airbnb or Uber or facebook or even Ebay back in the day, was the idea today that it was back then that they had this vision for it, I always tell people we're using google version 1000 at this point when they, when they put it together and if you do a little bit of your homework on that one, you'll find out that the google guys were looking to sell all of google back in the day to excite, Which doesn't even exist anymore for $1 million. That's how, that's how confident they were. That Google was gonna be the juggernaut that it is today. Right?

Ryan Rutan: How excited you think? Excited is that they missed that one, right? Oh my God, right. I mean, although arguably arguably under under their guidance, we, we may not have ended up with version 1000 of Google. Um so who knows what we'll be doing right now.

Wil Schroter: Who knows? But look today, today, let's talk about how ludicrous this idea that I have to have a great idea in order to build a startup is. And let's also more importantly, talk about why it's ludicrous, like, like, like what actually happens? How do, how do dumb ideas go on to become great ideas and what is that process? Kind of digging in that a little bit. Alright, so before we get into this next topic, I just want to let you know what we talk about here is like 1% of the conversation, you know, really, this conversation is going on all day long online at groups dot startups dot com where Ryan and I pretty much talk endlessly with founders about every one of these topics. So if by the end of this discussion, you like the topic and you want to dig into it a little bit more with Ryan and I just had two groups dot startups dot com and we'll pick it up from there. Sure,

Ryan Rutan: Sure. And I think, I think that's, that's perfect, um, sort of C2 major flavors of this where there's startup founders get stuck on this idea that like my idea needs to be better and there's sort of 22 major versions of this that I see. The one is, I'm just going to keep thinking, and and iterating until I have the final great idea and then there's the founder who does recognize that like what it is today isn't what it's going to be 10 years from now, but they end up stuck in the same problem, which is that they, they want to figure out what that endpoint looks like. They want the 10 years down the road version before they start and they're like, I need to know where I'm going. I have to have my North star, I have to have like this, which like I agree with all that stuff. Be nice to have, but let's be realistic about how far we can push that. Um, before, before we we actually start, because I think that's, we can talk about what we think that the major pain points around this are um, but you and I have talked about this for sure. We hate to see founders not start because of this and that happens all the time. Right? That's the issue. If you never actually start moving forward, the idea is never going to change enough or in the right ways to actually get you where you want to go. So you're, you're actually, it's counterintuitive, but by, by starting off with a dumb idea, you're iterating, you get there faster, right? If you just, if you're like, I'm just gonna keep thinking and I'll wait to start until I've got the right one that will catch on the market and we'll move forward. You never end up starting and you never end up polishing the stone and you're just stuck with what you've got. Um, and it never goes anywhere. And to me like that's the saddest thing is that dumb ideas die on the vine. They could have grown into something really cool.

Wil Schroter: You bet. And so imagine if all of those founders of all those companies we just listed failed to start because they looked at the idea in its current form, everybody gave them terrible feedback, which by the way, some ideas, some ideas are just dumb ideas,

Ryan Rutan: some dumb ideas are dumb ideas, right?

Wil Schroter: But what's missing there? Ideas are a process. Ideas are not a final step, right? We don't just have the brilliant idea at the start, we have the formation of an idea and that idea will change 1000 times like every major company ever has until it becomes the great idea that it will be, I think part of this and I'll just, you know, kind of add this as well. We also assume that the great idea must also have a great founder. We always forget that many of the founders that we're talking about, we're like in study hall in high school a few years before they started these companies, they were by no means qualified dumb idea, totally unqualified founder for the biggest companies out there today. And so if you can't see a pattern here, you're overlooking how ideas actually develop. Ideas develop as a process, we have the start of an idea and we say to ourselves, I can't possibly know where this is going to wind up, I can't possibly know how many, I think the trips of fate that it's going to take in order for me to get to where I need to be, but I know that I have to start the ball rolling if I fail to start will never end. It's kind of that simple,

Ryan Rutan: that's that's the that's the first failure, right? And it's the one that runs the startup to ultimate failure is just simply not starting right? Nobody can say right from the beginning again, some, some ideas are just dumb ideas, but even those need to take a couple steps before, before they trip falter and fail, right? Because you know, we've, we've seen this and again, like, because you don't know how things are going to involve evolve, right? Sometimes it's the idea that needs to evolve. Sometimes it's the market at large that needs to evolve or some piece of infrastructure. Like if we look at netflix as an example, right? Where they're like, okay, we're gonna ship people dvds by mail. Ultimately, that wasn't right what they became, but they couldn't become a streaming service because at the time, um, the proliferation of band with broadband internet wasn't, wasn't fully there yet. Not everybody was on it. So streaming just wasn't possible for a vast majority and it was too much of a leap in changing behavior. People were used to dvds what they wanted, it was higher quality. So you had, you know, some of the video files wouldn't have accepted the streaming anyways, but that was out of their hands, right. They needed broadband to catch up with them, they needed streaming technology to catch up with them before. They could do that. Were they thinking about at the time? I'll never know right, that maybe they've, they've talked about that somewhere. I've, I've never seen it, but that idea evolved as the market evolved if they had just said, like, you know what mailing people Dvds is not the long term business, we want to be in, it doesn't make any sense. We're not gonna start because, you know, we can't ship it by the internet, we can't get it to people instantly, like we really want to. So let's just not do it doesn't make any sense. We're just making this incrementally better. So let's just not do it

Wil Schroter: right.

Ryan Rutan: That would have been a huge miss on their part, but a huge failure and I'd have to drive to video stores still, which seems like so ludicrous now, right? Um so I'm glad that I'm glad they stuck with it. Right,

Wil Schroter: Well, you know, Ryan, there actually was an interview, I'll never forget this. It just kind of like stuck with me, there's an interview with Reed Hastings in the very, very early days and they said, why is the company called netflix? Shouldn't you be called male flicks? And he said, he said it's a netflix because the goal is to be able to deliver these over the internet.

Ryan Rutan: That's right, that's right. So they did give evidence of this, I just forgot about it

Wil Schroter: And I'll never forget at the time they were like, you're out of your mind, right? And it just, and this is like 99 2000 ISH. And to be fair, like, people still had dial up accounts right,

Ryan Rutan: right.

Wil Schroter: The concept of, of being able to deliver movies anything close to what we have now was absolutely ludicrous, right? And but what was interesting to me was what he was thinking was people are gonna want an on demand way for movies now right now. I'm gonna ship them through the mail, not the coolest way to do it, but that's what I gotta do right now. But I want to be an on demand service provider when I say it was a dumb idea how he was going about it, mailing dvds compared to what he actually wanted to do was dumb, right? But often it's a step toward the mechanism you're actually trying to get toward. And I think people overlook that, you know, by the way, I just want to mention if what we're talking about today sounds like the kind of discussion you wish you were having more often you actually can, you know, we're online all day every day working through exactly these types of topics with founders, just like you. So any question you would have, or maybe some problem you just want to work through. We're here and we love this stuff and we're easy to find, you know, head over to groups dot startups dot com and let's just start talking.

Ryan Rutan: Yeah, I mean it's, and like you said, it's a problem with revisionist history, right? We look at the final product and then we go and then we start to compare our idea to the final products that we're looking at around us. And I think that's one of the biggest problems we've talked about this before, like comparing your startup to another startup is a sure fire way to make yourself feel worse about your startup, like there's, there's no better way to, to feel bad about yourself than to take somebody else's instagram version of how they built their company and compare it to what you're going through. You're never going to feel good about that, stop doing it. It doesn't make any sense. That's a dumb idea. Um and that won't get better with time. If you keep doing that, you'll keep being miserable. So it's, it's about recognizing that none of those companies started anywhere near where they were right and we don't need to, you know, flog the horse here, but it's, it is worth hammering on a bit. It didn't start that way. And in most cases like, so they had the vision for delivering um via the net, so they had a version of what that looked like, but they couldn't be clear on that. They certainly wouldn't have told us um that by 2021 you'd be streaming four K uhd because that didn't even exist then, right? Like what we're doing now, we have better quality than we were getting on DVD at the time, right? Which was one of the other things that, you know, there was one of the other the concern points, like, will we ever be able to deliver the level of quality and in a, in a reasonable amount of time, right? If it's actually at that time based on it was funny, I remember seeing in comparison, um, at some point, someone did, at the time they started mailing them. It was actually faster to mail them than to download a movie via

Wil Schroter: dialogue. Right?

Ryan Rutan: Amazing. Right? So, you know, again, like the market matures, the idea matures much in the same way that we grew up over time. So do our ideas, but we have to give them that time and we have to give them the practice, right? Uh we don't learn by just sitting around and thinking about stuff, right? We have to experience, we have to try, we have to fail. Um, we have to be dumb and that's how we get smarter, right? It's it's it's as simple as that.

Wil Schroter: I agree. I think people have this, this, this concept as founders. We have this concept because again, we haven't done this before. Why would you? Um, the ideation and and the development of our of our company's idea is fundamentally linear process. So, so here's how people think it

Ryan Rutan: works. Right.

Wil Schroter: I have the start of a really great idea. Of course it's small. You know, I'm Mark Zuckerberg at Harvard and so I'm just doing the yearbook app for now, but I'm fairly confident that this is just gen one and it'll just eventually become facebook, that is not at all how it works. Right? Here's how it works. I started, I actually use our own example at, 10 years ago we had no idea. We'd be what we are today, hell a year ago. We didn't know we were going to be where we are today. So I just wanna be very clear and we've done this forever. and so 10 years ago we got started because we knew we wanted to work with startups for the rest of our lives, but we didn't know how to do it and we looked at it and said, um we don't want to be like a venture firm, just not our style, we don't wanna be a consultant, so we're trying to figure out how do we spend time with founders all day long At the time? Crowdfunding was really starting to like, become a thing. It was early, early, early days, like 2010, But we said, let's start there, It's not exactly all of what we want to do, but it gets us in the game, gets us talking about the rallying point, that's

Ryan Rutan: it exactly gets us in the game right? That it was, it was a hot topic at the time. Um so we knew we'd be able to drive interest around it. There was already interesting, we're just able to capture that and that was sort of all that mattered, right? It was like, are we going to end up in the room with the people that we want to be spending our time with. That was all that mattered to us at that point. Like what room are they going to? We'll follow them. Right. That was sort of what we do at that point was we followed the market and we said, where are they going to be? We'll go meet them there and we can generate. Um, I don't know if you remember, but like we have some really funny old PDFs and, and photos of whiteboard sessions where we did do a bit of, of sort of product road mapping. Um, and thinking about, you know, what this thing looked like by the time we're done. And it's funny to look at, you know, sort of where we were right and where we were wrong, um, right. And there's a lot of both, right. And

Wil Schroter: point your, you're

Ryan Rutan: going to draw some inferences, you're going to draw some vectors, some of them are gonna hit and some of them aren't, and that's okay. That's how you figure out what works and what doesn't, um, to your point, it's what got us in the game. If we had not done that. If we'd been, let's sit around and wait, let's wait a year and see if crowdfunding takes off the way we hope that it will and then we'll jump in. We never would have jumped because a year in we would have been like, this isn't moving as fast as we thought. This is gonna be the business that we wanted to build, um, not worth

Wil Schroter: interim. Right?

Ryan Rutan: So it's,

Wil Schroter: you just

Ryan Rutan: hindsight is so, so clear, it's so easy to see how easy it would have been to fall off that path and to not move forward. I'm super glad that we did, but it's, um, it took some vision and some luck to put us where we are.

Wil Schroter: Well, I want to talk about what would actually happen during the process, right. Things that we couldn't have possibly, uh, you know, foretold, um, first was we got into crowdfunding. Again, it was, it was hot at the time, Kickstarter was starting to become a thing. Indiegogo started to become a thing. Equity crowdfunding was becoming a thing. And, and so we had the momentum, right, exciting. However, we found out it was a year and a half into it, that this wasn't gonna be that big of a thing. Uh, you know, a little known fact, I don't think Kickstarter has grown in like five or six or seven years, or the same with Indiegogo, right? Any of them, right? And we saw it before they peaked, even when everybody was sweating those companies and again, we weren't doing crowdfunding the way they were, but even within equity, it was even worse. And we looked around and like, you know what, there aren't that many people investing in these companies, There's a million companies that want to raise money, but if you look at the number of people that are willing to invest, it's just not that many. So here's what we did. We zoomed out and we said, what do we like about what we're doing right now? Okay, well from the start, we still love working with founders, we love helping solve our problems, we're on the phone with them all day long because it's a big part of how you do crowdfunding, you know, you talk to the companies and kind of get them, et cetera. And it turned out that that was what the game changer was. It was just essentially our sales and consulting arm that changed everything for us because they said, you know what these founders, the ones that want to raise with us, they can't use our platform, they don't have a business plan, they don't have a pitch deck, they don't have, you know, anything, it is collateral. And that's when we said, oh shit, like we need to be solving all those problems too. And that was the genesis of startups dot com, where we started to say let's build a platform for the whole startup journey. And that, that was a hard right turn that we had no idea was in the cards a couple of years prior, but we had to get in the game and get the momentum going

Ryan Rutan: right with without that, we never would have known the answers to all these questions around which parts of this are, are we actually enjoying which parts of this to excel at which parts of this are the most valuable to the clients, right? There is no way to sit around and whiteboard your way into that, you cannot do it, it's not possible. Uh so you know, we, we fortunately stuck around long enough, you know, it took enough lumps um that we sort of figured out which direction we need to move in and and then we did that right? But you know, it did not start out as the idea that you see now startups dot com not even close, right? And and even as we look back to those early kind of projection maps and things that we were, we were thinking about iterating on more than half of it never came to fruition because it didn't need to,

Wil Schroter: you know, right? I agree, but you know when we think about where we stand with dumb ideas and kind of what they offer us and it sounds silly to think this, but like they actually do have some redeeming qualities, you know, one of those things is we're not married to it and when we're not married to the idea, it fundamentally forces us to keep iterating on the idea when we think it's a great idea, we hold onto it too tightly when we think it's a dumb idea, we push away from it, we test more things, we try to figure out exactly where the good idea might be and I think that's the value in starting with, you know what we're gonna call dumb ideas. The value is being able to step back and saying this idea needs to go through 100 iterations, maybe 1000 before it becomes a great idea. And I'm going to keep pushing from now until then, until it becomes that great idea and the whole team is going to get behind it, and that's how we actually find a great idea. Alright, so that was fun. But let's actually keep this conversation going. You've heard what we think about this, but you know, Ryan and I would really like to hear what you think and we're online, like all day long, pretty much talking about every startup topic you could think of from fundraising, the customer acquisition to just really how to get all of this crazy startup stuff out of your head. And there's tons of other founders, just like you, they're weighing in on these topics, so you'll get a chance to just hang out and meet some really smart founders were also super, super easy to find you head over to groups dot startups dot com and let Ryan and I hear what's on your mind, let's get to know each other a little bit and let's just start having more of these conversations

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