Through a Mirror Darkly - The Not So Positive Look At Startups From The Inside - Part 3

This is Part 3 of my thoughts on the things that can go wrong in a startup.

Beware of Idea People Bearing Contracts

Startup weekend style events are numerous.  They are a great way to flesh ideas out and to build a Minimum Viable Product (MVP).  The idea is that a team of people comes together, works together, and at the end of the event, presents their idea, some market place data, judged by a group of entrepreneurs that have successful started and either have a running company or have successfully exited, and hopefully win the event.  After the event, it is hoped that the team will stay together and push their idea forward.  Granted all of this is a tall order, but startups are hard, not easy.

Unfortunately, there is a disconnect between what the hoped for at startup weekend event, and how people with ideas view them.  Many entrepreneurs that are idea people have a different view.  These people view their idea as the be all and end all.  They don’t want to share that idea with anyone else. However, they are stuck in that they do not have the technical skills to push their idea forward.  Somehow, the idea entrepreneurs have decided that these type of events are a good place for them to find “free labor” for their idea.  I have seen several that have come to these events with contracts that will allow them to get this “free labor” and leave the developers with nothing.  Ultimately, the problem here is that an idea entrepreneur sees:

·       Anyone could steal my idea.  Ideas have little to no value on their own.  Unfortunately, many people think that the idea is everything.  If the idea is everything, they feel that they are within their rights to attempt to keep people from stealing their idea.

·       With the view that the labor is free, there is no differentiator between developers.  One developer is as good, or bad, as any other developer.  The problem that entrepreneurs need to understand is that people do matter. 

·       Based on the concept of no differences between developers, there also tends to be a lack of understanding of the difference between an offshore and onshore development.  Onshore development tends to work better for a startup.  This is due to multiple reasons.  For example, the developer having an intrinsic understanding of the user.  I would expect an Indian developer to understand an Indian consumer.  The same is true in the United States, Europe, China, and everywhere else.  Another issue is timeframes. Startups need quick turnaround. Communication when everyone is not in the same area is hard.  There are advantages to offshore development, however, that is a different article.

Most people at startup events are well meaning people.  Not everyone comes bearing contracts. Unfortunately, I have seen several that do.  From experiences, these never tend to work out.  The people tend to have interesting ideas that have potential.  Good developers tend to not want to work with these people. Instead of an idea that can grow, they end up being stuck by themselves.  If success is a function of the team, they are stuck without a team to move their idea forward.

Who Owns the Code?

Clearly everyone in the startup owns the startup, and they own the code (or graphics, marketing documents, etc).  That’s the popular thinking.  Nothing could be further from the truth.  Barring a contract that states otherwise, and no one ever pays attention until it is too late, code is owned by the person that created it.  This is a common problem in startups.  The code for a startup is not owned by the startup unless it is explicitly handed over to the startup.  

Coachable

How coachable are people?  How coachable are you?  Can you stand the critics of your existing idea?  I can guarantee that people get too attached to their ideas.  I know I do.  Why?  Because it is a product of my brilliance (not really, but you get the idea).  Several instances that I would like to mention:

·       We were at a Saturday morning meeting of our startup years ago.  We were trying to explain to the managing partner that his initial idea needed some tweaking and how to move this forward.  He could not accept that no one wanted his idea that he had crafted 125 pages of documentation into.  While his general idea had merit, we needed to move it about 20 degrees to be right of his target.  He refused and kept saying “It’s not my plan, it’s not my plan.”  Some key changes to his plan, and we would have been winners.  But we couldn’t get him to change his idea, so we were all losers.  It is quite an amazing site to see that some people would rather be wrong than to make a change to their idea and be a big winner.  Ego is an amazing thing.

·       At one startup weekend event, during the discussion we were having regarding business models, she wanted to give everything away for free and to mine the data on the backend for income.  That can definitely remove the “stop sign” for users to use the product, but isn’t really a good mechanism to grow income.  I stated my objection to this and that we needed to have a licensing model to generate income.  I left it at that, so we standing up doing our final presentation on Sunday night, and she goes into the “give it away and mine the data on the backend business model.”  I could not have looked more disappointed as I am running the demo.  When we asked why we only finished third, the feedback from the judges was “horrible business model.”  We wouldn’t have won, but we would have finished second.  Here was someone that had been specifically told, “don’t do that” and did it anyway.

·       People are not going to automatically buy “your genius.”  You have to go out and sell it.  That could be “buying ads” on facebook, google, or somewhere else.  If you are in the SAAS world, its probably shoe leather and knocking on doors.  So, let me get this right, you want to be the “sales” guy, but don’t want to sell?  SMH

·      I often think back and look at the post mortem of “99 dresses.”  What did this person (Nikki Durkin) do that was so bad?  Clearly, she was not a bad person.  She had to have a tremendous level of smarts to get something going.  She got accepted into Y Combinator, which is an accomplishment in and of itself.  But, It seemed that there was a problem, and that problem was that the technical people kept leaving.  Finally, down in the blog post describing their post mortem, it all comes together for me with this paragraph:
I remember one day Marcin joked that I was a control freak, and I was really surprised. I’d never perceived myself that way — I just liked things done a certain way and to a certain standard that matched the vision in my head. When it came to non-99dresses related stuff, I thought I was pretty chill.

This person had several versions of their product all built by different people.  It all came together for me.  She had replaced multiple technical cofounders.  When you are too controlling, you tend to push people away.  Sometimes you have to let go.  It doesn’t matter where your buttons go.  It doesn’t matter if the buttons are blue, red, or green.  Think about solving the problem, not the specifics of the buttons.

The stories go on and on and on.  You have to be all in on a startup.  You have to do things that have worked.  You have to understand your situation.  You have to do things that you may not agree with, if for no other reason than to just try something different to see if the angle has some success.  You have to be coachable, you have to be open to new ideas, and you have to be open to your ideas not being that good.  And yes, that means that my ideas may not be very good.

Summary

Startups have risk.  They have risk for the developer.  The risk needs to be shared by everyone, not just lumped on a single person.  Hopefully, this article has brought out some of them.  Sometimes you may need to just walk away.  It is up to you to decide if the scenario is bad enough.  Good luck on your startup.

Resources

99 Dresses Post Mortem - https://medium.com/female-founders/my-startup-failed-and-this-is-what-it-feels-like-c5d64b3ae96b