Silicon Valley distortions

What tech gets wrong about business

I met a guy who bootstrapped a business profitably to $1M in ARR… and now wants to be a product manager at a tech company.

I was in disbelief. Most PMs would love to be the CEO of a profitable business — why go backwards? Here’s what he said: I don’t know what’s outside of my bubble. I want to learn the craft of building great products.

He had a point. His products had some odd color schemes, redundant copy, clunky UI — not the polish of your typical trendy startup. But what he did have is what so many trendy startups would kill for: happy paying customers supporting a profitable business.

Our conversation reminded me of things people in tech believe that distort how business works. Our friend, let’s call him Steve, is in a bubble, but so are we.

Craft is critical 

A lot of my time as a PM was spent on craft: how do we make this look, feel and sound better to customers? We debated over pixel placements, naming, even the number of steps in a flow. Collectively, all the tiny details felt like ~the most important thing~.

But if product craft is critical, what is it critical for? I assumed it was always critical for the success of the business because customers prefer easy-to-use and well-made. Yet there are successful businesses whose products are notoriously clunky.

Here’s my theory: customers are picky when they can be picky. When customers are highly sought after, they have plenty of solutions to try, so every visible edge matters. Selling cool things to cool people requires craft — no doubt.

But the point of building a durable business is to escape competition, right? To find overlooked spaces rather than flock to the new hip thing. So focusing on spaces where product craft is critical from the start can lead to more fragility. It’s doing business in hard mode.

The perfectionist in me enjoys craft: sanding down the edges, making things faster. But I now understand that a starved audience doesn’t need craft to start, they just want something that works — and that’s a very good sign.

Be a problem solver

Another common belief is that problem solving is the #1 skill. If you can solve any problem that comes your way, you’ll always be in demand. While true, the curse of success applies here: the better you are at solving problems, the more people will give you problems to solve, leaving you with less bandwidth to develop other skills… like problem finding.

Steve’s first feat was finding a promising problem: people who had a pain they were willing to pay for to go away, who he could target easily and cost-effectively because they were a starved audience. And while the solutions had to work, they didn’t need to be masterpieces to break $1M in ARR. Steve did the opposite of selling cool things to cool people.

A drawback of working at successful tech companies is that people hone their solving skills at the expense of their finding skills. After all, once a company finds a goldmine, they hire people to extract as much out of it as possible. Solving the original problem better is the most important thing. Another drawback is that a lot of tech companies focus on selling cool things to cool people, exposing us to only the hardest sliver of the universe of possibilities.

If you want to build your own thing, problem finding is the most underdeveloped muscle. And the problems that your peers with similar skillsets overlook tend to be the most promising of all. Less competition = more time to develop an edge, cheaper to acquire customers, cheaper to retain them, less need to craft a masterpiece.

If you can find these opportunities and solve them, nobody can stop you from doing what you want.

Limited view of success

Paul Graham wrote about how every city whispers a message about ambition. New York tells you to make more money, Boston tells you to get smarter, LA tells you to be more famous, Silicon Valley tells you to be more powerful.

Every message is its own limited view of success.

Some years ago, a founder, let’s call him Ed, was asking me what I wanted to do in 10 years’ time. I said I wasn’t sure, but I liked the idea of starting my own business. 

Ed: Oh, like raising money from VCs?
Me: No, not that. Probably bootstrapped.
Ed looked at me, stunned: well, how will you ever do that?


The irony was that Ed ran a B2B business whose very customers were bootstrapped businesses. The Silicon Valley message of billion-dollar-or-bust stopped him from seeing what was right under his nose. Bootstrapping was an alien concept to me too.

Part of the problem is connotation. Bootstrapping sounds sad, like you’re pinching pennies on the street. But the reality is that it’s about starting a business funded by paying customers — the real market — rather than investors betting on you eventually figuring out how to be self-sufficient.

Part of the problem too is not having enough model examples. Figma’s $20B exit is headlined everywhere, but people don’t hear about Steve’s $1M ARR business. I’ve been looking out for lean but mighty businesses, and have found some inspiring examples:

  • Pedal Tavern bootstrapped to $8M in annual revenue
  • Streamyard bootstrapped to $12M in ARR with just two founders, then sold to Hopin for $250M
  • Nerdwallet bootstrapped for its first 6 years to $100M in annual revenue


This isn’t to say that bootstrapping is superior to raising money. It’s that limited views of success are everywhere. 

There’s always a prevailing message of what ambition looks like. Inevitably, there’s also a rat race from people playing the same games to win scarce prizes. But as it turns out, prizes can be abundant if we free ourselves to look beyond the well-carved path of prestige.

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-Linda

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