June 14, 2011

Build your business around an idea

Living in San Francisco and working in tech right now is absolutely insane. Employers and recruiters battle for employees while VCs rain down millions of dollars without meeting founders or even knowing what kind of company they’re building. It’s a crazy world to live in and can feel like money is growing on trees and the only spending limit is your imagination. If you have just a little bit of initiative, you can take any idea and start a company with absolutely zero personal risk.

And that’s one of the biggest reasons San Francisco is so special to me. Everyone out here knows they can do anything. Spend a few weeks hanging out in bars and cafes asking what people do and you’ll hear some of the most idiotic business ideas in the world. A lot of journalists use this argument to call San Francisco an echo chamber whose sole purpose is burning money. And you know, they’re right.

This city does burn through money on terrible ideas. But that’s a tradeoff for fostering a city of people who believe they can do anything. And that spawns an incredible number of amazing companies — so it doesn’t bother me. What does bother me is the lack of imagination most startup founders have.

Build something incredible

Most founders I talk to are pretty complacent building something mediocre. They won’t admit if you flat out ask them — but try pressing them to describe what makes their company special. Most cop out and give you an answer like:

We’re building [technology x] because [company y] hasn’t built it and [people z] need it.

Want a more concrete example? How about something like:

We’re building a cloud sync solution for iOS because Apple hasn’t built it and almost every iOS application needs sync.

There are thousands of people building products like this. They’re filling holes. Filling holes is mediocre and boring. Dare to build something incredible – something unique, something lasting, something special.

Ideas are lasting, products are not

The easiest way to build something incredible is to base your business around an idea. Products are just the manifestation of the idea.

This is something I think about at GitHub a lot. We’ve built an amazing product (github.com) — but when you ask us what the company is about we say:

We make it easier to collaborate with others and share your projects with the universe.

There’s a lot of interesting things you don’t see it that description: Git, version control, issue tracking, wikis, or website. We know that our product (a website hosting git repositories with built-in issue tracking & wikis) is great — but if it doesn’t serve a higher purpose, it would be mediocre. So we focus on the idea.

That means looking at version control, wikis, and issue tracking as tools for collaboration. It means that as important as it is for our website to be easy to use — it’s equally important for Git to be easy to use. Or to create tools that let people use Git without even knowing they’re using Git.

If I look into the future, I know that the idea of collaboration is lasting — but Git? That’s a hard bet to make. I know that if we focus our business on collaboration we can build something lasting. If we focus our business on being a Git host we’re doomed.

Ideas are sexy

One of the more awesome things about building your business around an idea is how easy it is to pitch to others. Ideas are sexy and draw people in — they invite passion and commitment. And pitching people is all about displaying passion and commitment. It doesn’t matter if you’re pitching for VC funding, trying to land a new customer, or interviewing a prospective employee — having a good pitch is critical to any successful business.

People want to be part of ideas. Being part of a company who builds a successful product is cool… but being part of an idea is a lot more attractive. If you can build a business where both your employees and your customers think they’re part of an idea, you’ve created something special.

Evolving ideas from products

The trouble is that founding a company around an idea doesn’t actually work. Apple Computer is a great example. They take bleeding edge technology, marry it with exceptional design, and sell it at a premium price. But the company wasn’t always like that. It was founded around a product — the personal computer. Yet in 2011, Apple’s biggest business is mobile phones.

You have to ask… how did a company founded around building personal computers come to generate most of its revenue from mobile phones? They evolved. They found their strengths (design, technology), and evolved the company around those values. This manifested itself into new products — the iPod, iPhone, iPad, TV, MobileMe, Airport Expresses, Cinema Displays, etc. Some successes. Some failures.

The core component of all these products is that they are manifestations of an idea. When the iPod took off in popularity, Apple didn’t rearrange the company around portable music devices. They kept focusing on building exceptionally designed hi-tech gadgets with bleeding edge technology.

So it’s okay to focus on a product at first. But as soon as you find your strengths as a company, abstract it out into an idea and focus on that. Do that and you won’t have your entire business invalidated by a feature that Facebook or Apple rolled out at their last keynote. Because ideas will last, products won’t.

If you'd like to keep in touch, I tweet @kneath on Twitter. You're also welcome to send a polite email to kyle@warpspire.com. I don't always get the chance to respond, but email is always the best way to get in touch.