Joel warns entrepreneurs

This is a good warning for entrepreneurs. Think that getting talked about on blogs is a good thing? Joel Spolsky says that this could work against you (talks about 30 Boxes that I found interesting). I don’t agree with Joel’s thesis that people only give companies one chance, but you could have guessed that.

That just hasn’t been proven by history. Lots of products sucked on the first version and then later on went on to be great businesses. Both Macintosh 1984 edition and Windows 1.0 sucked raw eggs, for instance.

It took my dad at least 50 tries before he switched from AltaVista to Google. He thought Google sucked raw eggs when he first saw it.

I found this comment pretty funny, though: “So people aren’t really building calendars to sell to people like me who need calendars: they’re building calendar companies to sell to Yahoo!, which, for some reason, has given up on the old concept of hiring programmers to write code, and is going with this new age concept of buying entire companies on the hopes that they might contain a good programmer or two, which, by the way, is a sure sign of trouble for a technology company.”

I keep hearing that companies like these are built to flip, but when you talk with entrepreneurs in this space, they tell me that’s not their motivation. Now, of course if someone comes and waves a check in their face I’m sure they’ll at least sit down and talk, but that doesn’t seem to be driving the folks behind 30 folders (I asked, believe me!)

Truth is big companies don’t acquire companies unless they have something useful. Believe me, I’m pushing to get a few companies acquired and it’s REALLY HARD. There’s one company that a group of us have been pushing to get acquired and we’ve been working on that for more than a year.

If you really want to get acquired you better be prepared to go it all the way by yourself first. In fact, what makes an acquisition more likely? One thing: a growing pool of passionate customers.

There’s nothing that gets executives at big companies excited more. (Look at the other acquisitions Yahoo has made, for instance. Del.icio.us. Flickr. Or look at the ones Google has made. Google Earth. Picasa. They all had growing pools of passionate customers/users).

More commentary on Joel’s post is linked to over on Memeorandum.

34 thoughts on “Joel warns entrepreneurs

  1. Pingback: No Soap, Radio!
  2. Occasionally, one of the first questions a potential investor will ask is “What’s your exit strategy?” And my gut reaction is always the same: that there is something inherently dishonest about the idea of building a company where the exit strategy = the business strategy.

    It’s the way that the question is asked that makes me so uncomfortable. I’m building a company because I believe in my technology solution and the power it has to change the world. That vision needs to drive my development and strategy, even though an exit should be considered ahead of time (as should many contingencies).

    When the vision can be best served by letting a larger corporation drive continued development, then that is the way to go. But when I hear someone building for “exit”, I sense a lack of underlying integrity, which makes me question the entire premise of the company.

    (Of course, for exit to be the goal of the VC is reasonable. It’s when exit is the founder’s goal that my skin crawls!)

  3. Occasionally, one of the first questions a potential investor will ask is “What’s your exit strategy?” And my gut reaction is always the same: that there is something inherently dishonest about the idea of building a company where the exit strategy = the business strategy.

    It’s the way that the question is asked that makes me so uncomfortable. I’m building a company because I believe in my technology solution and the power it has to change the world. That vision needs to drive my development and strategy, even though an exit should be considered ahead of time (as should many contingencies).

    When the vision can be best served by letting a larger corporation drive continued development, then that is the way to go. But when I hear someone building for “exit”, I sense a lack of underlying integrity, which makes me question the entire premise of the company.

    (Of course, for exit to be the goal of the VC is reasonable. It’s when exit is the founder’s goal that my skin crawls!)

  4. I both agree and disagree with you. On the one hand, true, Windows 1.0 sucked. As did Windows 2. And Windows 3. And Windows 95, though a little less. Ditto for 98. And 2000. And XP. With each new release Microsoft fares slightly better on the Suckometer — hey, that would be a great marketing slogan for our MS and the upcoming Vista release: “We still suck, but at least not as much as before.”

    I disagree with you regarding Macintosh 1984, however. It did not suck. It was leaps and bounds over anything else on the consumer market at the time, something Windows sadly has never been.

  5. I both agree and disagree with you. On the one hand, true, Windows 1.0 sucked. As did Windows 2. And Windows 3. And Windows 95, though a little less. Ditto for 98. And 2000. And XP. With each new release Microsoft fares slightly better on the Suckometer — hey, that would be a great marketing slogan for our MS and the upcoming Vista release: “We still suck, but at least not as much as before.”

    I disagree with you regarding Macintosh 1984, however. It did not suck. It was leaps and bounds over anything else on the consumer market at the time, something Windows sadly has never been.

  6. “big companies don’t acquire companies unless they have something useful”

    Complete and utter rubbish – the majority of acquisitions denude shareholder value (that’s the dark secret of investment banking) and from what i’ve seen the number of acquisitions in the tech sector that lead to zero is higher than average. Think back six years!

  7. “big companies don’t acquire companies unless they have something useful”

    Complete and utter rubbish – the majority of acquisitions denude shareholder value (that’s the dark secret of investment banking) and from what i’ve seen the number of acquisitions in the tech sector that lead to zero is higher than average. Think back six years!

  8. Quote:
    I found this comment pretty funny, though: “…they’re building calendar companies to sell to Yahoo!, which, for some reason, has given up on the old concept of hiring programmers to write code, and is going with this new age concept of buying entire companies on the hopes that they might contain a good programmer or two, which, by the way, is a sure sign of trouble for a technology company.”

    Yeah, sounds pretty familiar to me too. Any guesses as to which company I’m thinking of?

  9. Quote:
    I found this comment pretty funny, though: “…they’re building calendar companies to sell to Yahoo!, which, for some reason, has given up on the old concept of hiring programmers to write code, and is going with this new age concept of buying entire companies on the hopes that they might contain a good programmer or two, which, by the way, is a sure sign of trouble for a technology company.”

    Yeah, sounds pretty familiar to me too. Any guesses as to which company I’m thinking of?

  10. Ack. Touch-type TAB submit Hell again. Don’t hold me to my broken Blog Comment English. Hey, a new TLC. BCE. ;)

  11. Ack. Touch-type TAB submit Hell again. Don’t hold me to my broken Blog Comment English. Hey, a new TLC. BCE. ;)

  12. Salesforce itself — the real Web winner, never mind all this alpha-quality Web 2.0 landfills — is becoming Salessludge. Slowdowns, poor quality of service, lots od downtime, complaints at all time high, support near nil. And this is the best of the Webby lot, a good deal to look forward.

    I asked, believe me!

    You can’t be that naive can you? No one is going to admit wanting to flip, such an admission just means you have no customers, but read between the lines for once. And stop taking start-up company Exec’s at their marketingese-jazzed-up word, this is how vaporware and fuzzy accounting scandals start.

  13. Salesforce itself — the real Web winner, never mind all this alpha-quality Web 2.0 landfills — is becoming Salessludge. Slowdowns, poor quality of service, lots od downtime, complaints at all time high, support near nil. And this is the best of the Webby lot, a good deal to look forward.

    I asked, believe me!

    You can’t be that naive can you? No one is going to admit wanting to flip, such an admission just means you have no customers, but read between the lines for once. And stop taking start-up company Exec’s at their marketingese-jazzed-up word, this is how vaporware and fuzzy accounting scandals start.

  14. “There’s one company that a group of us have been pushing to get acquired and we’ve been working on that for more than a year.”

    If you’re talking about who I think you’re talking about, I hope you never succeed. Microsoft would destroy or at the very least, render unuseable, everything they’ve done.

  15. “There’s one company that a group of us have been pushing to get acquired and we’ve been working on that for more than a year.”

    If you’re talking about who I think you’re talking about, I hope you never succeed. Microsoft would destroy or at the very least, render unuseable, everything they’ve done.

  16. The “problem” is that it’s just plain hard to write excellent software. Passionate developers or not – it takes more black magic than making a good movie does (and there are far too few of those), and THEN you have to figure out how to market and sell it too.

    At least two of those calendar companies do seem to have most of the formula, I’m sure Joel’s ideas will probably be incorporated soon. And, I hope that several of them do get bought out. I’d like to be able to drag-n-drop between webmail and my calendar. …or, if I trusted one of the calendaring companies I’d just give them my webmail password so they could handle the messages intenally.

    As for giving software more than one chance – that may have been VERY true for desktop software but web-based software seems a lot more fungible. Of course, this also means that you have to have an incredible product to get people to move their data over & then to keep people from switching to something else once they know how to move their data easily (unless you’re charging usage fee by the year, like Flickr).

  17. The “problem” is that it’s just plain hard to write excellent software. Passionate developers or not – it takes more black magic than making a good movie does (and there are far too few of those), and THEN you have to figure out how to market and sell it too.

    At least two of those calendar companies do seem to have most of the formula, I’m sure Joel’s ideas will probably be incorporated soon. And, I hope that several of them do get bought out. I’d like to be able to drag-n-drop between webmail and my calendar. …or, if I trusted one of the calendaring companies I’d just give them my webmail password so they could handle the messages intenally.

    As for giving software more than one chance – that may have been VERY true for desktop software but web-based software seems a lot more fungible. Of course, this also means that you have to have an incredible product to get people to move their data over & then to keep people from switching to something else once they know how to move their data easily (unless you’re charging usage fee by the year, like Flickr).

  18. I have to agree with Joel in many aspects, there are way too many companies popping up trying to produce the next Google, calendar apps are one example. This whole Web 2.0 craze looks way too much like Web 1.0 with companies producing software that is barely garbage quality.

    I think companies like 37Signals are doing the right thing, trying to build a product that users actually can use and making money doing it.

    The only purpose of a Web 2.0 company like these silly calendars as well as these other free applications are to attract as many users as possible in the hopes of getting bought. How else can someone make a living off of giving away a lousy calendar?

  19. I have to agree with Joel in many aspects, there are way too many companies popping up trying to produce the next Google, calendar apps are one example. This whole Web 2.0 craze looks way too much like Web 1.0 with companies producing software that is barely garbage quality.

    I think companies like 37Signals are doing the right thing, trying to build a product that users actually can use and making money doing it.

    The only purpose of a Web 2.0 company like these silly calendars as well as these other free applications are to attract as many users as possible in the hopes of getting bought. How else can someone make a living off of giving away a lousy calendar?

  20. Creating a great calendaring service is hard. Convincing yourself (and/or others) to create a free Web 2.0 one is harder.

    I’ve been trying Kiko about once a week. It looks shiny and works until I attempt to invite somebody. Then, it says it can’t talk to the servers.

  21. Creating a great calendaring service is hard. Convincing yourself (and/or others) to create a free Web 2.0 one is harder.

    I’ve been trying Kiko about once a week. It looks shiny and works until I attempt to invite somebody. Then, it says it can’t talk to the servers.

  22. The odds are stacked against you as an entreprenuer to begin with. The odds of successfully flipping are even slimmer than the odds that you can build a viable business. Building to flip is hard to justify in my books…

  23. The odds are stacked against you as an entreprenuer to begin with. The odds of successfully flipping are even slimmer than the odds that you can build a viable business. Building to flip is hard to justify in my books…

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