Launching

You really can’t be too specific about your first customers. Being specific means creating a spreadsheet with their names, phone numbers, and exactly what you will tell them. Precommit to approaching a set number of customers; then you won't get discouraged if one rejects you. If you get none after you’ve completed the set, work on a new strategy. (This applies to many things in life.)

Investors care about the future of your product; customers mainly care about the present.

A new product can never be superior to an incumbent in all respects. Launch means criticism.

To attract attention is to attract negative attention. People expect product launches to be a time for compliments. Actually, launching a product often means people either ignore you or attack you. The attacks come if you are actually solving a problem. Your solution may be ten times better on one axis, but it is always inadequate in some other way.

When you launch something new, people will say, “This product sucks, this company should die, and you are a horrible person.” Actual translation? Sell more units.

This is counterintuitive. Why would many of the people who seem to want the company to die actually want you to sell more units? Short answer: because sales give you social proof the product doesn’t suck after all and gives you revenue to improve it. Over time, skeptics flip.

Longer answer: your staying power shows that haters can't beat you. So they join you (by buying). The crowd's expectations change quickly. Many will strike out at you casually. Later, they will recant, also casually! That's the bit to remember: most hatred is a mile wide and an inch deep. Strip away the negative adjectives and distill legitimate criticism into bugs to fix. Then just plow on.

With most businesses, the main problem is indifference—people don’t even care. If you polarize people and 20 percent (or less) who hear about you love you, you can make a business from that.

Every startup starts out cute and wants to become a utility. The rapid growth phase is where startups are most unpopular—and most at risk. Visualize a U-curve on a graph where the x-axis is revenue or company age and the y-axis is popularity. At zero revenue, your startup is a baby, an innovation on a napkin. So cute! No one gets mad about napkin drawings or innovation in the abstract. No one is hired; no one is fired. Praising brand new companies is easy. You start at least not hated. You’re on the top-left side of the U-curve.

On the right side of the U-curve are companies that won and won big, like Google and Facebook. Inside an industry you see many companies, but from the outside, people see only the winners. The companies on the right side of the U-curve have gone mainstream. They might be criticized, but they have institutional acceptance. These are the utilities. A link to a utility isn't perceived as an endorsement because the company already won. Using it is no longer "controversial." This is why the government prefers to use big companies. The companies that get links from .mil/.gov sites are the utilities: Adobe (PDF), Twitter/FB (social), and so on.

So, babies are okay to endorse (innovation in abstract), and no one ever got fired for linking to PDFs (utilities are also safe). But in between…

Once your company starts, you will find launch means hatred. No longer an abstract innovation, your product is now taking "their" revenue! It's not just competitors who will hate you. It's all their supporters; the incumbents have marketing teams and loyal fans. They'll come up with good reasons to hate you because a new product can never be superior in all respects. It must be better in one key feature. They'll attack you as deficient on the other features, as unsafe, with no track record. You need to sell anyway—and make updates fast.

Things get worse if your product takes off. Rapid growth means ten times more users than the system was designed for. Everything and everyone is stressed to the max. There will likely be some failures just as the spotlight is on you. Competitors and regulators will seize on them and highlight them.

This is the point where you could get banned for a serious failure. You are all working overtime. Customers are pouring in. Many startups fail here. Friendster, famously. Napster too. PayPal and YouTube both came very close to death—but made it.

The key point: expect peak hatred just as servers are melting. Survive to the utility stage and you win! Prepare yourself for the U-curve.

There are at least two models for doing innovation on a really, really ambitious scale. I call them The Paladin and The Dark Knight.

The Paladin model takes something that is extremely popular and tries to make it profitable. Elon Musk is taking popular, supported ideas like solar power and electric cars and trying to actually make them feasible. (One proof point of “popularity”: both these ideas were supported by tax credits.) Elon’s danger is not getting banned. His danger is going bankrupt.

The flip side is The Dark Knight model. The Dark Knight is like Uber and early PayPal. The market popularity of it, the customer demand for it, is unquestionable. People want to buy from them. But the companies annoy enough people that their ideas are not immediately popular in the same way. The Dark Knights are not going to go bankrupt because demand is so high, but they might get banned.

Those are two different models for innovation on a large scale. The Paladin has to get profitable to avoid bankruptcy, and The Dark Knight has to get to a certain level of popularity to avoid being banned.

First they’ll argue it won’t succeed. Then they’ll argue it’s too successful.