Runway doesn’t Guarantee Success

Oct 23 2020

<p>Runway doesn’t Guarantee Success</p>

In the world of Silicon Valley, there is only one way of being called successful.

Here is how to become one:

Think of a product.

Make it into a nice business plan and presentation.

Pitch to Investors.

Raise money or sell your company, depending on how you look at this process.

If you do that, people will applaud, they will go crazy with excitement about how amazing you are. They will say things like “Oh I cannot wait to see New York Times, Washington Post and Verge writing articles about your startup.

To tell you the truth, most of this excited and really motivated startups fail miserably. Don’t get me wrong, some succeed but it is only a survivorship bias that lets you think that anyone can do it and it is easy.

Have you heard of Quibi?

Quibi logo

I bet that you have. It was a hot new thing online. A replacement for Netflix at work and while commuting. Well good things come to an end and now it’s Quibi.

A player with $2billion in runway. And most importantly, they started 6 months ago.

Shall we do some maths?

So $2 billion in 6 months.

That is $333 million in 1 month.

Or $11 million per day.

Or $450 thousand per hour.

Or $8 thousand per minute.

I wonder, what can you possibly spend that amount of money as a start up. How can you possibly do that and still look into peoples faces.

How much is $2 billion

If you want to get a perspective of how much 2 billion is, here is visualisation:

This is 1 billion dollars:

1 billion dollars in 100$ bills stacked

And this is also how a 1 billion dollars would look like

stacked 1 bill of $100 on each other

How can you spend that much in 6 months and get NOTHING?

My first thought that some amateurs got the money off a huge round of raising capital. They didn’t know what to do and so they just flushed it down.

Let’s go to the team section of Quibi:

team of Quibi before the fall

Wait. What? How? When?

I had so many questions. I actually started doubting that I was on the correct website.

This gotta be some kind of a record.

First interaction with Quibi

I got hit by one of their ADs once. I thought to myself - “Oh cool, I need something like that”.

I was expecting high budget movies with cool plots hit me. Or maybe something funny that can be consumed in bit size information, Rick and Morty style.

Nope, nothing. Not a single good looking show or movie. I didn’t ever recognise or liked a single actor on the home or landing page. Straight away I left and of course used up a click from the ads they have targeted at me.

Looking back at it, I wasn’t even sure why I was being targeted. I was in Russia back then travelling and they had no Russian language support.

I also wasn’t signed up to any tv or other similar Instagram accounts. It looked like I was targeted broadly just with bunch of people. Do they not know how Facebook ADs work?

Have you seen a single AD by Netflix? I am not sure why, but I haven’t. But for some reason people can’t stop talking about it.

There is even a saying that is actually commonly used in everyday language “Netflix and Chill”. This is the best marketing.

When a word becomes a description of an activity or when you start hearing the name of an app or a company is everyday songs, you know the product is integrated so deeply that it will be impossible to over compete it.

So how did they waste so much money? I think we will never know. What we know though, is that investing into big names is not always the play.

What will come of it:

I am actually sure that this incident will be like a small mosquito always reminding investors and putting just a little bit of doubt into their way of thinking currently present.

I hate how everyone thinks of startups as potential unicorns.

How big is your market? Wow, only $20 million? Why are you waisting our time telling us about this, you will never create a unicorn like that.(Not something I experienced but I have seen similar thing happen)

It is all about yourself when you are indie maker. No-one cares if you going for a 1 billion market or 1 million market. If you are getting monthly above $10k you have become a top 0.2%. I am sure that all of this is just some bubble that will be popping at some point.

Why should you care?

So get this, a startup just raised $2billion and became a unicorn. It need to create a product or scale it.

This comes with SO MUCH WORK. They will need contractors, outsourced, solutions and talent to deal with all of the new challenges.

You as an entrepreneur can start solving their issues.

Check theirs specifics.

So lets look in particular at Quibi and see how can we, indie hackers, benefit from this ridiculous spending budget.

See who they are hiring, check what similar companies are doing, what they require and what exactly they can get from you.

Go to upwards and see what this industry is always outkoucind. Is it ADs on some platform? Is it programming? What is it?

Okay, so you figured out what they can potentially need, let’s say Facebook ADs targeting for a specific region you live and know specifics about. Come first, give best prices, present yourself fully and get a chunk out of their budget.

You can imagine if you can do one thing for them better than others than, that enables you to get the smallest part of the budget. For them(remember they are spending $11 per day) a small chunk would be 10k per month. That give you a $10 MMR, is that not enough to call a company successful already?

The problem with this big startups is that they need services immediately, they can’t afford to wait. Give them that. Be the first when they have a problem to solve it.

Be the first to tell them about a problem or pain point that they don’t even know they have yet, solve it for them.

You see where I am going with this?

quibe platform image

Make money by knowing WHO HAS money available and are actively looking to spend them(startups).

Advice to entrepreneurs

Jeff Bezos picture performing

Jeff Bezos has this amazing quote where he says that it is always DAY ONE at amazon.

That is something he came up with in of his letter to shareholders back in 1998 and it means that:

  • Focus on results over process
  • Make the best decisions always
  • Embrace and try to hedge external trends ASAP
  • Over-perform customers expectations

If all of this is kept like that, then you are granted to grow and over perform the market.

So if you would like to grow exponentially like Amazon, make sure to embrace Day One approach and not Quibi approach.

I hope that you grow because you are a startup or because of a startup 😉

Good luck!

Klim Y