Paul Tyma's Tips for Startups

Paul Tyma, a senior engineer at Google, has written a two-part series of articles (here's part 1, here's part 2) with points to help you evaluate your startup ideas. Tyma advises that these ideas are for the canonical one- or two-person startup; as he says, “if you have 8 million in VC, there's a lot of other magic you can do.”

  • If there's no business model, it's just a hobby. “There's nothing wrong with hobbies, as long as you know what they are.”
  • The best ideas make your customers money. “If your idea can say 'If a customer uses our product, they will make X% more money' (where X is a positive number, even if quite small) – you have won the game.” Note that he said make money, not save money.
  • B2B2C is the best place to be. “That is, you want to be a business that serves businesses that serve consumers.” Another reason to be happy that I'm one of the most visible guys at Tucows.
  • If you're going B2C, look for revenue models that don't come right from the consumer. “If you can get the eyeballs, you can sell them. Just try to do that instead of charging them directly. They'll be ornery about it and demand support.”
  • Revisit every bad idea every once in a while. Sometimes ideas are bad because of current technological limitations or circumstance. Consider Ajax, which has been possible since 1997, but at the time was limited to IE (which still had serious comptetition in Netscape), a lack of broadband adoption and even a lack of internet adoption. Keep checking on those bad ideas every now and again; their time might be now.
  • Do your best to create a system of recurring revenue. That's what Microsoft is doing when they change Word's formats, what HP is doing with printers and ink and what “software as a service” is all about.
  • Let ideas gestate. Mull over an idea for 3 days first, and see if it's still good. “Ideas always look better the fresher they are. You're looking for ones that look good even when not fresh.”
  • Consider the size of your market. You'd better have a big market, because you're going to be able to get only a sliver of it.
  • “Building a business around a new developer tool” is wrong on so many levels. Developers love to build developer tools, so many think that they can build a business around one they've built. The problem is that sp many developer tools are gratis — think Eclipse and Rails. You may have an option if the tools you're developing are for an ecosystem where there's a you-must-pay culture, such as Microsoft development.
  • Ideas really aren't worth all you think they are. As Grandpa Simpson said, “The fax machine is nothing but a waffle iron with a phone attached.” Very few ideas are truly novel; they often arise as technologies converge. Execution is more important.
  • Competition is good. “If you don't have competition, you don't have an idea. Competition tells you and investors that your idea isn't wacky.”

Link to part one | Link to part two