There have been 10 of these already! 🎉
As I’m enjoying learning about the world of insurtech, I still speak regularly to founders and to-be-founders about startups and starting up.
Here is the number 1 resource I keep coming back to:
Jason Cohen’s design of the ideal bootstrapped business
TL;DR:
Predictable acquisition of recurring revenue with annual prepay in a good market creates a cash machine.
This video from 2013 has been recommended to me on multiple and totally separate occasions by the very few but very effective founders from our region.
Two points here:
You can build a great business from the Eastern Europe just like the few founders I know who followed the advice in this video (both knowingly and unknowingly)
You can be smart about building your business and picking the right opportunities
If you’re wondering who Jason Cohen is and why anyone should watch an obscure 10-year-old video on YouTube, I don’t blame you. Great businesses are often unsexy. His latest WPEngine, for example, drives in more than $200M annually valued at more than a B.
Of course, there are (sometimes) great businesses that come out of stealth after being funded for 10 years. But I prefer a business that can make money first and borrow second.
Whatever happens, you will have to face those damned customers and sell them something. If you do it before you sell a part of your company, you have a better position to negotiate the terms.
Jason Cohen’s myth of exponential growth — and what it means for product managers
Latest long form from Jason about how the dubbed exponential growth in tech is really a different phenomenon even in the most hypergrowth cases. From the introduction:
This article suggests an alternate model for how fast-growing companies actually grow. Understanding the model is useful not only for predicting growth, but because understanding the foundational drivers of growth allows us to take smarter actions to create growth in our own companies.
The whole article makes great points but the advice for product managers is gold:
It’s great to add a feature to an existing product, but significant additional growth comes from increasing carrying capacity or creating a new avenue of growth. Early on you should focus on winning market share in one space, creating the first Elephant Curve, but after the product matures, something more drastic is required: Wholly new products, or updates significant enough to address new markets.
It’s well-known that companies need to add additional products to continue fast growth after achieving scale. However the second product is highly unlikely to achieve same market share and monetary scale as the first, so there needs to be multiple, not just one1. This requires serious investment, parallel efforts, and the chutzpah to kill off the ideas that aren’t working.
Well worth reading the whole thing here.
Well done, keep going ⚡️
As it happens, I wrote this on Wednesday and scheduled it for Friday. Then on Thursday, this came out - “Better Stack raises $18.6M for a ClickHouse-based Datadog challenger“!
Better Stack is my one of, if not the favorite startup in the region. Juraj and Veronika are vicious in execution and bright in thinking. This is one of the companies I have the highest hopes for, and I hope they take it as far as it can go. And then they start another thing. Let’s say in nuclear. Or carbon removal.
Also, Juraj is the one that told me about Jason Cohen’s talk on the ideal bootstrapped business I reference in this issue. So now you know it works ✨
From Jason Cohen’s article:
This is true at any scale—advertising is still 82% of Google’s revenue; of that 71% is advertising from search alone (i.e. excluding YouTube and other properties). Apple revenue is 60% iPhone. Even at smaller scales: Basecamp (neé 37signals) built multiple products over nearly two decades but only their first was successful enough to be worth working on; the company divested itself of the rest and rebranded to be identical to that product. It is possible for second products to eclipse the first; the iPhone was of course not Apple’s first product; The Tesla model 3 outsells the earlier model X, And at my own company Smart Bear our second product ended up being 95% of sales, and we essentially did the same as 37signals and went to a single product model.