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- 5 Billion Dollar Startup Lessons
I’ll keep this email short and sweet so you can enjoy this fine Saturday morning.
In the past couple of weeks I’ve spent hours analyzing the interviews of billion dollar startups founders.
And I’ve noticed some common lessons in their stories.
So this week, we’re going to review some of those lessons.
Lesson 1: Don’t discard ideas just because you’re “inexperienced”
Some entrepreneurs have the habit of discarding startup ideas just because they think they don’t have enough experience.
Although for something like health tech you might want to be an expert, most industries are open to be disrupted by outsiders.
“There is something said about that the entrepreneurs that are successful in an industry seldom the people with the best knowledge about it. It’s usually outsiders or people that have somewhat of an insight but aren’t full deep in the weeds of why things are working.”
Great examples being Doordash & Spotify. In both cases the founders had no idea how their industries worked.
Delivery is super complicated and yet Tony Xu, Andy Fang, and Stanley Tang had no experience in delivery. In fact, they worked as delivery drivers for Dominos, FedEx, etc to understand how the industry worked.
The same thing goes for Daniel Ek and Martin Lorentzon where they had no idea how music copyright and record labels worked.
And in both cases things worked out.
Lesson 2: Find ways to improve (speed up, make cheaper, make easier) existing processes in the world
This is a pretty cliche business saying. Yet it’s such great advice, it’s worth repeating.
So many of these huge tech companies are built on the simple premise of making an existing business faster, cheaper, easier, or a combination of the three.
Canva took Photoshop which costed too much time, was hard to use + learn, and slow and improved it ten fold by making it affordable, super easy to learn, and fast to get designs done.
Netflix took the process of going to the store to rent DVDs and made it faster + easier by shipping them to the customer via an internet website.
Lesson 3: Operate at the lowest level of detail
“Operating at the lowest level of detail is pretty much trying to find your way to the right problem. And it’s almost never at the surface.” - Tony Xu, CEO & Co-Founder of Doordash
One of the things that made the Doordash founders successful was they took a very analytical approach to dealing with business problems.
They always went deeper then the surface to find the root cause of things - they call this operating at the lowest level of detail.
For getting to the lowest level of detail, the founders of Doordash use the 5 whys formula.
Example:
“We received lots of angry customer emails today”
Why?
“Our website was down”
Why?
“We had faulty code”
Why?
“Because the intern made an accident”
Why?
“Because we didn’t provide training and guidance”
For Doordash, this looked more like:
“Delivery was late”
Why?
“The Dasher picked up the order later”
Why?
“The restaurant took too long”
Why?
“One of the employees called sick”
…
This approach + building an understanding of even the smallest details of delivery by working for FedEx, etc is what made Doordash such a successful company.
Data, according to Tony Xu, never reveals the mechanics behind a problem. You almost always need to go much deeper than the numbers to understand why things are the way they are.
Lesson 4: Every major and minor inconvenience around you is an opportunity
The “aha” moment for Airbnb was when Brian Chesky & Joe Gebbia noticed the hotels for an international designer conference in San Fransisco were sold out.
They immediately found airbeds and rented 3 airbeds out to three strangers visiting San Fransisco for the conference.
A seemingly minor inconvenience created a 75 billion dollar company (that is of course a gross oversimplification).
Pay attention to even the smallest irritations you come across in your daily life - if you think hard enough you could find a way to turn it into a business.
Lesson 6: Don’t attach your motivation to the highs
Startups have extreme highs & lows.
There is constant fluctuation & turbulence.
One of the most fatal mistakes you can make is attaching your motivation & moods to the fluctuations.
All the founders I’ve studied so far have had the exceptional ability to remain stoic through periods of extreme highs, lows, and stagnation.