View profile

What Happens When You're (Startup) Too Early? 🤑

Revue
 
 

Drew's Letter

January 6 · Issue #85 · View online

The latest things I've dug into including books, quotes, songs, gadgets and other things I've found interesting.


Hello lovely earthlings! 🌎 Today is #6 in the 💯 Stories in 💯 Days Series. In case you missed it, yesterday’s was The Rise And Fall Of Tea With Strangers 🍵. The story for the day is…
What Happens When You’re (Startup) Too Early? 🤑
I hate it when a guest shows up early. Yes, I am excited to see you. No, I’m not ready, which I why I said to get here at 7 o'clock. Be prepared to help clean, or I’ll send you back to the streets.
No, I won’t kick you out of the house. But, being early is an etiquette faux pas. It’s not talked about as much as being late. It’s a different kind of slip up. It’s totally cool if you help me get ready. That’s the type of guest I love. It’s a kind gesture. It lightens the workload. It dispels the awkwardness. If the house is messy, they get a realistic view of how I live. This displays vulnerability and builds rapport.
Or, they judge me as a freak and try to leave ASAP. This is also a win, helping us vet each other quickly.
With startups, the case is about the same as at dinner. 🍴If you’re too early for the market, they will throw you on the street. Or, you have to do a lot to help them get ready. When I was in college, I was working on a startup called DrinkUp. This was in 2013. I know it may be hard to think back that far, but try your best! Cellphones were around. But the infrastructure is different now than then, even though it really wasn’t that long ago.
I remember turning 21 and exploring the nightlife. I was one of those kids who drank a ton in the dorms and house parties, but getting a fake ID was a bit too far outside my comfort zone. So, turning 21 was a time for me to explore a whole new world.
I was shocked.
The customer service was horrible.
Seriously horrible. I couldn’t believe it was this bad.
Luckily, this is where opportunities come from! Seeing problems where other people don’t. Seeing opportunities where other people don’t. At a restaurant, you tell the waiter what you want and then go about your business. They bring you the food when it is ready. When it’s crowded at the bar, everyone queues up and mobs the bartender at once in a sea of chaos.
To me, this was silly. The USA was already at 80% smartphone penetration for adults, and that number would only go up. Why couldn’t I tell the bartender what I wanted with my phone and grab it when ready? It’s not that hard of a problem.
Haha, boy was I wrong!
It wasn’t a hard technological problem. Granted, it was difficult enough that no one had done it. But it was entirely possible.
What killed us was that we were too early.
People weren’t ready for the change in technology. Most startups die because they run out of cash. Some startups are bootstrapped. If they didn’t raise funding and are too early, they limp around for a while. Sometimes they quit. Sometimes they eventually grow. Other times, when the time is right, someone else hacks something together, raises money, and crushes them into oblivion.
This happened to my former boss. He made skype before skype. It was a niche enterprise product. They were making some money, decent money. But, most people had no clue they existed. There had a technology adoption problem because the product was expensive. Then skype came along. You probably know skype. They were free and killed his company overnight.
With DrinkUp, I imagine you have a list of objections in your head. Reasons why it wouldn’t work. Trust me, we thought of them all! When you are in the weeds on something, spending most of your waking hours working on it and most of your sleeping hours dreaming about it, you quickly become a worldwide expert. This is especially true if you are creating something novel. You live at the edge—both your personal edge and the edge of what is known.
We had answers for all the objections. Facial image verification to know who’s drink is who’s. A small designated area in the bar for pickup- remember, cocktail waitresses are moving hundreds of drinks a night, all from a small designated area. This wasn’t a crazy idea. Digital payment processing end to end– turns out, when a bar is crowded, it takes 120 seconds for an order to complete, after you have the bartender’s attention. Mind you, getting their attention might take 10 minutes away from your friends amidst the mob of drunken stinkiness. Only 30 of that 120 seconds are making the drink.
Swiping the card adds no value for anyone. It’s a necessary evil in the process. Except, it’s not necessary. Yay, computers! 💻
It turns out, none of this mattered. Early on, I had a networking meeting with a guy who had run a similar business in the Bay Area. They had made it into several coffee bars, but it couldn’t quite catch on. A few minutes into the call, he said, “FUCK”.
I will never forget it.
I was still in college, in that awkward I’m-totally-a-kid-pretending-to-be-an-adult-phase, and oh my god, this guy I met five minutes ago in a professional setting just said the F word. I was shocked.
He said, “Drew, people who own restaurants are stupid. People who work in restaurants are really fucking stupid.”
Now, taken out of context, this probably sounds horrible. Even taken with the context, it may sound horrible. But, this was the voice of a person who had a genuinely awesome idea. Something that can and would make the world better. It was just combined with the bitterness of struggle. He was TOO EARLY.
Fast forward to 2021. Mobile ordering and payment at Starbucks are common enough now that you probably don’t care. Apple Pay is still a bit weird but probably doesn’t shock you when you see it. Kenya has been using M-PESA long enough that you probably have no idea what I just said, but it’s like breathing to them.
Seven years ago, if you saw any of these things, you’d think you were on Mars. That is how much the world can change in seven years.
But, what does too early mean for a startup? How does it relate to a technology adoption problem? What’s a tech adoption problem anyway?
Well, let’s call levitation a tech problem. It’s something we haven’t figured out yet. But, assuming we did figure it out, we can guarantee that tons of people would want it. As long as it is safe enough– some people will get it first and die, then we will work out the bugs, and then it’ll spread en masse.
But technology adoption problems are different. They generally occur when something is slightly better than the existing option. When this happens, it’s much harder to get people to use it, and it takes much longer. Credit cards are a great example. They are only incrementally better. They aren’t obviously way superior. People need a lot more time to be convinced.
This was our problem with DrinkUp. Bar owners didn’t care if we could seriously boost their earnings on a busy night. They didn’t feel the pain. Busy nights weren’t a problem for them. They wanted to increase traffic on Tuesday’s when the place was totally dead.
A lot of bar owners aren’t in it for the business. Many think it’s cool to have a bar, and the business is good enough. The industry doesn’t attract as many megalomaniacs hell-bent on world domination as tech does. There’s a special kind of humbleness associated with running a restaurant. Sometimes as the owner, you’re literally cleaning shit. I don’t hear about tech founders doing this. And, VC blogs would triumphantly tell you about it if it happened.
DrinkUp was better than all existing options. We could prove it. But traction wasn’t happening. To test our software, we offered bar owners 30 patrons any time they wanted and would buy a ton of booze. This was a no brainer. We met with many bar owners. There were lots of soft no’s. That’s when they don’t say no to your face but say it with their actions. It’s really confusing at first.
We had 15 competitors around the country, even one backed by NFL 🏈 star Jonathan Vilma. Some were funded. Some weren’t. They all began to go out of business. For a while, we had stories about why we were better. Coaster, one competitor, required 8 taps on the screen to buy a drink. We could do that in 4. Our UX was superior, using features like slide to unlock instead of 2 separate buttons. The slide is better because it is a single, fluid action that is too hard to happen accidentally.
This wasn’t the right way to frame the problem. The competitors weren’t dying because they were crappy, and we were better. They were dying because the market wasn’t ready. And, if you think you’re different, then it’s like poker.
If you play poker and look around the table and don’t know who the sucker is, the sucker is you. It was us. We were forcing a square peg into a round hole.
It’s a confusing thing to grapple with. We had good tech. We had good design. We had a problem. We had a solution. But, it wasn’t a big enough problem, and our solution wasn’t different enough from current options for people to care.
Someone told us- if it’s too early for Google, it may be for you too. They were right. Often big companies don’t go after small problems. This wasn’t the case here. The big companies were going after it. Even they weren’t getting traction. They have deep pockets and are willing to burn cash for years to make this work. Besides, for them, this is just one of many bets. For us, we were all in. It was the only bet.
We shut it down. Today, there’s some mobile ordering and payment in-store, but it’s not ubiquitous. It’s still too early. Sometimes that is just how it goes. Self-driving cars are similar. They may seem weird and scary now. But, eventually, they will be so safe that human driving will become illegal- it will be too dangerous. When, who knows. Tesla is making the best cars money can buy, whether or not they are self-driving. This will keep them going till the robots take over.
As always, thank you for reading 📖 Tomorrow, we are going to dive into Rope Flow, because why knot?
Sawubona,
Drew
PS-if you know anyone who is too early, please share this with them. Some of us are ahead of our time, and that’s just how it is 😜

Did you enjoy this issue?
In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue