Ep. #54, Paul and Edith Dissect Startups

Edith Harbaugh: Hey, Paul. What advice would you give to somebody starting a startup today?

Paul Biggar: I think the obvious advice is don't do it. Go back, get a real job.

Edith: You don't think startups are a real job?

Paul: No. They're not a real job. It's like you're playing around with shit.

Edith: Tell me more.

Paul: No, I'm completely joking about that.

Actually I would go in the opposite direction, I would say that if you're thinking of starting a startup now and you're like "All I need is another year to like build up--" whatever justification you give yourself.

Stop what you're doing, quit your job, start a startup this moment.

Put the podcast down, go to Stripe, Atlas or Clerky or whatever you use to incorporate, and then just go.

Edith: As somebody who did do Clerky, I do agree with that one.

I think the counter I would have, I mentor a lot of startups through accelerators.

I do 2 a month and I've been doing this for three or four years, plus informal. People confuse their hobby with a startup.

I mean by that, the very dangerous advice of "Do what you love."

There's a corollary that what you love doing does not equate to somebody wanting to pay you money to do that.

Paul: There is a feeling that any startup is valid, and that any idea is valid, and that the thing that you need to do is you need to wait until you have an idea.

Edith: I think we are completely agreeing. I don't think you need to have a fully baked idea, I think what people confuse is that something that you really like doing equates to people wanting to pay you enough money that it's a living for you.

Paul: Right. I would say that there's a lot of people who have no idea what they're doing and who play startup, and when I've done any random mentorship, like when I went to Web Summit that time and they pair you up with people.

I would say half of them just did not know what they were doing.

Edith: Like, "Doing" on what front?

Paul: It's the very basics, the "We need to validate as cheaply as possible."

"We want to iterate quickly to get to product market fit." "Product market fit is the thing that we're actually looking for."

The startup 101 thing, they see some of the trappings of startups, they see speaking at conferences, or "I have this idea and I'm just going to build it, and once it is built the world will see the value of my startup."

Edith: It does not work that way.

Paul: I've seen people who've burned a fortune doing this.

I remember talking to these people who had spent $70,000 of their friends' and family money and they had very little left, and they were building a social network.

Edith: Oh, God.

Paul: I was like, "You're completely screwed, actually."

Number one advice I have for startup founders, "Build a nice B2B startup."

Put down whatever consumer thing you're doing, whatever variation on Instagram or Twitter or Spotify that you think is going to be a really good idea, especially if you're young.

Put it down, talk to some business that has some problem that they're currently solving in Excel and build that, and you will make money.

Edith: So, Paul. By the way, I completely agree with you, I am just pushing back now because-- Snap and Instagram.

Paul: That's exactly it. You've got these exceptions.

For Snapchat to succeed or for Instagram, these are all Facebook with some twist.

There were 10,000 startups that died for Instagram to survive or for Snapchat to survive.

Edith: That's very Darwinist.

Paul: Yeah. So many people were trying to do something, and these ones which were well-funded and had people who were well-connected, those ones survived.

How many things that were like Medium were there that only succeeded because Ev Williams?

Just put down the social thing, B2B startup you will get validation because people will give you money.

Edith: Can you walk through why you think B2C is so bad?

Paul: I don't necessarily think B2C is bad, but I think a big idea that relies on users and that thing, that is-- It's not even bad, it's just hard.

It's a lottery ticket, and there's so many startups that are so much easier to do.

Edith: Yeah. I can walk through the math because I was at a B2C startup.

Say you have a moderate success and you have like 20 million users, and you're like "Woohoo, I have 20 million users."

What's the math then? If you're ad-supported, are you're getting $10 per 1,000 impressions?

Which, by the way, is extremely good. Now you're looking at, "OK. I'm making $4 million dollars a year?"

That's not a big success. And then it's like, "OK. I can monetize and charge everybody $50 bucks--"

Paul: Don't worry. We'll figure out the monetization later.

Edith: If you just walk through the math it just doesn't add up.

Paul: Also you'll have to go through such incredible dilution as you sell more and more of your company, because your company doesn't make any money, and then you're going to get fired at series B anyway because you're not going to have control of your company.

Have you read Hatching Twitter?

Edith: I haven't.

Paul: It's very good. Loads of people got fired, and then someone else-- Or, Jack got fired and then Ev got fired, and then Jack got brought back in, and, who knows?

Edith: I can't read anything within about ten years of Silicon Valley. It's just too--

Paul: It's too real.

Edith: It's too real, and everything that's happened.

There is a good book that came out about the beginnings of Silicon Valley from the 60s and 70s, it was a bunch of people that came over to work for a chip manufacturer and then broke off and started their own chip.

Paul: Yeah. The Intel story, the Shockley.

Edith: The trader is Shockley 8, and those are relevant because you can feel them.

Paul: That's another type of company that's hard, a hardware company.

Edith: Hard.

Paul: Don't do a hardware company.

Edith: Yeah, no. I felt that. I did a hardware company and it is incredibly hard.

Paul: I think one of the things that confuses people is that there's so much money available today, and often they're confused about why can't they have the money when all these stupid companies are getting money?

Edith: I think there's a lot of money, and there's not at the same time.

Paul: Yeah, no. I completely agree. There's money for people who have some proof, and unfortunately some proof is often "I worked at Uber for two years."

Money is being given to people where there's not necessarily any real things, whereas money is not being given to people who are traditionally marginalized from Silicon Valley.

Edith: Yeah. I had this rude shock when I was a product manager in 2007-2008 at a really small company under eight people, and I had this idea that VCs were seeking out these crazy-- No, you're laughing, but--

Paul: No, I completely agree.

Edith:

I had this starry-eyed view of "VCs are looking for the moonshots, the crazy ideas, the outliers." No, they're not. They're not at all.

Paul: They're looking to invest in a thing that has a predictable return where they can see it.

Edith: And I don't even blame the VCs anymore.

Now that I'm more in the ecosystem for better or for worse, I had a former employee who is starting his own company.

I think the world of this guy. I'll call him--

Paul: John?

Edith: No, that's too close. I'll call her Stephanie, for lack of a better word.

And I'm personally investing in her company because I'm like, "Stephanie's great. I know that she's going to succeed."

And Angel VC is like, "What do you think about Stephanie?" I'm like, "Amazing. Great. Very early passion employee."

They're like, "What do you think of her idea?" And I'm like, "I think she's going to pivot around, but you should invest."

And the VC said, "I have to justify this to my Nordic pension fund and I cannot justify--"

Paul: This is a seed investment?

Edith: Yeah.

Paul: Oh, Jesus.

Edith: And they meant it very sincerely.

They're like, "I have to do my own weekly update calls with my Nordic pension fund."

Paul: Oh, God.

Edith: And I cannot just say--

Paul: If you're a seed fund, it's like, "Yeah. I like the way they talked about the idea. It seems like they'll probably do something."

That's the level of-- Like, do you remember when--?

Edith: That's what I was trying to say. I was like, "I worked with Stephanie. She's amazing. I know she's going to do great."

And they're like, "Nordic Pension Fund is not going to buy that in my memo."

Paul: You raised money from the wrong people, or you have the wrong people as your LPs.

Edith: That's so that it goes-- It was their first time fund, so they are a new seed investor and they don't have any track record.

Paul: I remember talking to a bunch of Angels when we were raising money for Dark, and they were like, "Dark isn't going to be at the stage that we need it to be for the time that we are raising the next round, and having proven our metrics from the previous round."

And it's like, "All right." You respect that because everyone has their own thing, but at the same time it's like, "Whatever happened--?"

When the Angels were just throwing their own money around it was a lot better in a lot of ways.

Edith: In completely full disclosure, I personally invested in Dark.

Paul: Yes, Edie personally invested in dark and was one of our most useful investors during the early days.

Edith: You don't have to say that just to flatter me.

Paul: During the early days, Edie was 100 % our most useful Angel. Less so recently, Edie. What's happened?

Edith: Busy. Own company.

Paul: That's terrible.

Edith: That's awesome. But we talked in an early episode about how you and Ellen have pivoted a couple times-- I don't know if "Pivot" is the right word.

Paul: Woah, I don't-- I wouldn't describe-- .

Edith: No, "Pivot" is too strong. You've narrowed your focus a couple times.

Paul: We have experimented with various ideas that solve our mission, and I think is the second time we found one.

Edith: My thinking was like, "Ellen and Paul are going to do something awesome."

And I think that's a lot of people's feelings about VCs and they're really not like that at all.

Paul: No, that's really how Angels think.

I remember being in a conversation with Paul Buchheit and he was talking about Justin TV.

Justin TV originally was he strapped a camera to his head and documented his life.

Edith: And this is pre-GoPro.

Paul: Yeah, this is Pre-GoPro. It became a social cam and Twitch, the modern Justin TV, so three different companies came out of presumably this one investment that had meaningful exits or current valuations.

His logic was "This guy just said he's going to strap a camera on his head 24 hours a day, so I gave him $25,000."

Edith: I have thoughts about this one. I think there are 2-3x founders that get a huge benefit of the doubt.

Paul: Yeah. If you've sold a company for-- Like, Stewart Butterfield, Slack just went public recently, but he sold Flickr in a time where $25 million was a lot for an exit, and he was the dude.

So when he went to raise money the second time, they were absolutely giving him the money.

Edith: Yeah. People have this perception that there's a lot of money floating around to go back, and it's like "No, there's a lot of money floating around if people have at least something defensible to invest in you."

Paul: People who have proof can raise money very easily.

Unfortunately, that proof is often "These three white men went to Stanford," or coming out of Y-Combinator or something along those lines, or are personal friends of the VC.

It's very easy to get money if you have one of those things, or if you have actual traction, and often people are raising seed rounds with million dollars in revenue because that is often what it takes to have that traction.

People who don't have the same access or the same traction see these two cases and think "This is very unfair," which it certainly is. But it is also, unfortunately, the way the world is right now.

Edith: I would say my co-founder and I in hindsight had very good pedigrees. I had multiple patents and deployment, he had a PhD from Berkeley.

We'd both been at companies that sold for hundreds of millions of dollars, but we were creating a new category and we really struggled in the early days. Like, absolutely struggled.

We got 30+ "No's" in our seed round, and I think that was really healthy for us in hindsight.

Paul: I agree with that.

Edith: This totally sounds like, "Drink your cod liver and like it." Because at the time I was absolutely miserable about this.

Paul: I talked to a founder recently and they're like, "I mailed 10 investors and I got one "No" and nine silences."

I was like, "Yeah. So?" When I raised from Circle CI we had probably around 30 "No's" as well.

I think we talked to 60 investors and twelve invested, and in Dark in the end we had 50 investors, but we talked to 160.

At that stage we had a much larger network, but there's a lot of investors out there and most of them say "No" most of the time.

Most of them turned down Facebook, or I don't know specifically Facebook, but they turned down Snapchat, they turned down Twitter, they turned down Slack.

Edith: Yeah, it's funny. At the time, I was obviously miserable and I literally remember "Oh, my God. How are we ever going to survive this?"

But it made us be very focused on actually making money.

I've had other friends who came out of the gate and they were some hotshot out of Twitter and raised a $4 million dollar seed round just by blinking.

They never had to focus, and they've actually said to me "Maybe that wasn't the best thing for the long term of our company."

Paul: Especially people who-- You see this lot. I know you've written blog posts about this before, but people who staff up their company before their product market fit.

Edith: It 's like, "I raised $4 million, so the next $4 million will be easy."

Paul: Yeah, I know. The seed round, if it is easy, it is easy. The A is absolutely not, because at the A you have a completely different story.

Edith: Or even when they get to the B.

Paul: It catches up with you no matter what.

Edith: It catches up at some stage.

Paul:

If you struggle to raise money in Silicon Valley, you will eventually be able to raise with metrics. There is no company that cannot raise if they have metrics.

Often it's harder based on systemic inequality is one example, but also just not being connected and being from a different place.

But I don't think there's any company that couldn't eventually get the metrics to be funded purely on that basis.

Edith: I think people get hung up on Silicon Valley funding being the only route to success.

Paul: Yeah, that's absolutely true.

Edith: People are looking for a 10x return on their money.

I have had a lot of friends who are like, "I have this really good company and we're making 15-20% year over year. Why won't Silicon Valley fund me?"

Paul: It's like, "You don't want Silicon Valley funding. That's a bad thing for you to have."

Edith: Yeah. Silicon Valley wants 2-3-4x return, and if you're making 20% year over year, go be happy.

Paul: You see this a lot in people complaining about--

That tried complaint of "Uber is just like buses," or that kind of thing.

People who look at what's happening in Silicon Valley and they're like, "I can't believe they're funding this when they could be funding something valuable, maybe paying for water in Flint or something actually valuable in the world."

Or, this reliable business that we know for sure is going to be a success.

It's not the model, and if you're trying to turn your model into someone else's model, then they just don't fit. Round peg, square hole.

Edith: Yeah, and that's absolutely fine.

I remember we did an episode with HockeyApp at Microsoft Build, and they were talking about how they had this great living and they'd taken very little money. They were like, "This is great for us."

Paul: So, going back to the original question. What's your advice for people who are just starting out now?

Edith: I have my advice that I give everybody, "Make sure you really like the field."

Paul: Founder/market fit?

Edith: Yeah. If you don't like it, there's going to be a day when you're like, "I'm not getting paid anything."

Paul: Yeah, "This is miserable. Why am I doing this?"

Edith: Yeah, "I'm not getting paid anything." All this stuff I took for granted when I was at a company. Just the basics.

Paul: Like a salary.

Edith: Like Maslow's hierarchy of needs, you're at the very bottom. You're like, "A salary, a place to go, toilet paper in the bathroom."

Paul: At some point you're going to be responsible for that in your company.

Edith: Yeah. If you don't like the core market, and also if you don't like your co-workers. And the third--

Paul: Co-founder break ups are the number one killer of startups.

I would say that if you and your co-founder don't get on from the start or aren't friends, you can work on it and you must work on it, because otherwise it will come get you.

Edith: Yeah. If you're day in and day out and you're like, "I don't like spending time with you."

Paul: If you're looking over at them and you just want to murder them, then you need a therapist yesterday.

In fact, that would be my number one suggestion. A co-founder therapist.

Often it'll be someone who has the title "Executive coach."

If you're in San Francisco, Inner Space is really good. Then they will help you not murder each other, which is very valuable as your company grows.

Edith: Because I was about to say, even if you like your space and you like your co-founder, there's going to be a day when you're like--

Paul: Startups are hard. There's going to be a time where you're just going to be like, "Fuck this."

Edith: Yeah. My third thing which I've added over time, and this goes back to the VC thing, you got to figure it out.

I think you have about a two year timeline to figure this out, or there is something the market values.

Paul: Why a 2 year timeline?

Edith: Because that's about the amount of time when you've burnt through your own savings, and it's like "Why am I still doing this?"

A fallacy I hear a lot is "VCs should pay me to do this because it's neat."

Paul: The thing about your savings there, there's something very helpful about having money that will run out, especially if it's your own rather than a VCs.

If you have a four year runway or if you live like so incredibly cheaply that you could just do this forever on unlimited stuff, that's what you're going to be doing.

But having two years of money, therefore we need to start raising in a year and a half or be profitable, therefore we need to have found product market fit in a year, therefore we have six months to come up with the thing that we are doing.

In order to build it to product market fit, in order to build something that we can raise with, in order to actually raise the money.

That's scary math, but it is math that's actually essential for getting your shit together, and it's so easy to just not have your shit together and fail by default.

Edith: Product market fit, I don't think it's a hard cliff.

Paul: No, it's not. No.

Edith: It's more like, "Will anybody anywhere use this?"

Paul: Yeah. "Can I get someone to give me money for this thing?".

Edith: Anybody, anywhere. And then, "Could I get another? Can I get in there?".

Paul: My major advice is product market fit is your goal.

Edith: It's a stage.

Paul: It's a little bit of my philosophy, and I copy this from Jesse Robbins, your primary stage of startups is that you are trying to get to product market fit.

This often corresponds with seed or pre-seed, depending on your stage and ability to raise money, and then as soon as you get product market fit your company is entirely changed with figuring out your go to market.

Which often coincides with series A, or the old series A, so it might be what is called "Seed" today.

But if you do those activities in the early stage or if you're trying to growth hack before you have product market fit, and people spend a lot of time doing this, then you're not getting anywhere.

If you are hiring a ton of salespeople based on the idea that you have some repeatable thing and you're in pre-product market fit, then you're going to fail.

I know companies who faked it by accident, so they went to South by Southwest and they got a huge amount of traction as a result of it.

They thought it was product market fit, but it was just a lot of people from South by Southwest and they never actually got product market fit.

They had a lot of users, they raised a lot of money, they eventually died.

Edith: I got to go back to advice for founders, I really agree with you that if you have an idea you're really passionate about you don't have to wait for product market fit to do it.

Just go in with some timeline, of like "Here are my own internal milestones."

Like, "If I can't get any customer by six months to even talk to me, this is a bad sign."

Paul: There's a similar thing to that where people don't have an idea of what they actually want.

This comes up when I tell people how to think about getting a co-founder.

You want someone who wants the same thing as you.

There isn't the right answer for what your company is going to be, perhaps your company is going to be this like incredibly mercenary thing that is just going to make a lot of money.

And maybe that's fine, or maybe it's this thing in the world that needs to exist.

Maybe you're building a huge company, maybe you're trying to build a bootstrap company, and if you're building the wrong thing then you're not going to be happy.

Edith: That goes back to rule number one, "Do something that you're passionate about."

Paul: Yes, and it's more than just the idea.

It's the product that you build is going to have a market that is associated with it, and the market that you're associated with dictates a certain amount about how your company is going to be, perhaps how much money you want to raise, etc.

If you're trying to do Facebook, as an example, you are going to spend a long time on the VC train and you are constantly going to be growing the company.

If you don't grow the company, your company is going to fall over.

Edith: It's like a shark.

Paul: Wait, what?

Edith: There's the old thing about a shark, it has to keep swimming or it will die.

Paul: OK, yes. Facebook, shark, excellent analogy.

Edith: You never saw any 70s movies?

Paul: No, I wasn't alive then. Your product has all this downstream impacts on what kind of company you're going to have, and so you need to design that from the start.

If you want to have a bootstrap company, you need to be building a product which is bootstrappable.

Edith: I completely agree. That's where there is this mismatch of people, like people think of VCs as a foundation.

Like, "I'm really passion about this. The VC should give me $4 million." And it's like, "They ultimately have to --"

I'm picking on that hypothetical Nordic pension fund.

Nordic pension fund is like, "I got 3,000 teachers retiring this year in Stockholm. Where's the money to pay them their pension?"

Paul: I think what you're saying is that your company may have the goals, but the VCs have their goals.

Fortunately, their goals are extremely predictable. You just need to figure out whether you're a match for them.

Edith: Yeah. Like I said, this is personal to me because my grandfather worked at Bell Labs and he had a pension.

My grandmother was a substitute teacher, and the idea that VCs want to return money to people that are retiring is very real to me.

Paul: I've always thought of VCs as being in it for the altruistic outcome.

Edith: I don't think it's altruistic, it's just they have people who, like my grandmother, was retiring and she wanted to get her pension.

Paul: It's important.

Edith: My grandfather had worked at AT&T for 40 years.

Paul: I'm making fun of VCs and I feel that you're ruining it for me.

Edith: That makes me feel happy. No, I think VCs can be held up as very mercenary.

It's like, "No. They're trying to make money for people that need a predictable return."

If my grandfather is like, "I want to retire,""But all the money went into this crazy project and we don't have any money for your pension."

Paul: I would say the number one goal is you need to figure out what you want, and then what you do needs to be related to what you want.

It seems extremely simple, but I would say 90 % of people are following some formula that is unrelated to "What do I actually want in life and what do I want my life and my career and my company to be?"

Edith: Also people are like, "I want to do a startup because I don't want to have a boss."

Paul: Would you say that you have 800 bosses, or 800 plus the number of people on your board, plus the number of employees you have?

Edith: How would you answer that question?

Paul: Yes.

Edith: Like as a startup founder, how do you still have a boss?

Paul: Ellen is my boss, which is the thing I deliberately constructed that way in fact.

When I was at Circle I was the boss and I did not necessarily enjoy that.

But at Circle, my boss were my employees and my board and my customers, and that's a lot of bosses with a lot of conflicting desires and a lot of incomplete information and stats.

It's very hard. Not fun. Now I have one boss.

Edith: Ted, our podcast producer.

Paul: OK, I have two bosses. The other one is Ellen.

Edith: I hope in conclusion that we weren't too dire. I still really encourage people to do startups.

Paul: Startups are great. You just got to have a plan for how startups solve the thing that you're trying to do.

Edith: I think, to go back to you, you don't have to have too much of a plan.

Paul: No, you just got to understand how your life overlaps with the startup that you're trying to build.

Edith: Yeah.

No plan survives contact with the real world.

Paul: I remember, I was trying to start up a startup with a friend a while back and we had an idea that we agreed on.

We sat down and tried to work out the values of our company, and we immediately discovered that we were both trying to build completely different companies.

As a result, it was like "Let's just not do this together." "OK, great."

Edith: That's really quick. What were some of--?

Paul: It took a day to figure that out.

Edith: What were some of the divergent values?

Paul: It was the type of company that we wanted to build.

I was a work/life inclusionist, and she was not. That was the major one. We had different expectations for what it meant to work and to have a company.

Edith: She wanted to work all the time, or she didn't want--?

Paul: No, I wanted to work all the time and she wanted a business that supported her.

Edith: I think there's this trap of-- I blame Tim Ferris.

Paul: Yeah, Tim Ferris is a problem in the world.

Edith: I'll deliberately name him because he had that book The Four-Hour Work Week.

You get some people who are like, "I want to do a startup."

Paul: There is so much digital nomadery. Like, "We're going to dropship things to people instead of hard work."

Edith: Don't get me wrong, I think that is definitely a lifestyle, but I think it's different than being like "I'm going to be on the ground working with customers all the time."

Paul: And neither has a higher intrinsic value to the world.

Do what makes you happy, but try to make it that what you do is the thing that makes you happy and not a formula that you write about on Hacker News.

Edith: Yeah, I still remember, the book came out seven or eight years ago. Maybe longer?

Paul: Much more than that.

Edith: I remember he had a chapter then of-- He had hacked all this stuff. And I say "Hack" in like--

Paul: The "Life hack"sense.

Edith: Yeah. Like, "I'm going to win this judo competition because there's an obscure loophole."

Paul: Because of a rule, yeah, I remember that.

Edith: And he's like, "One of the things I'm going to hack is running a 50K."

Paul: OK.

Edith: So a 50K is a 31 mile race, and at the time I was a big trail racer, and I was like "I don't know how to hack a 50K."

Paul: You just haven't thought about it in the way that Tim Farris thought about it.

Edith: So he's like, "My hack is going to come after this book is published. I'm going to put a hyperlink in here and you could go read about it after the book comes out."

Paul: Nice. So that was the hack, there was actually no hack, but the hack was the sales hack.

Edith: To the best my knowledge, she still hasn't run a 50K.

Paul: Really? There's the hack. Promise to do it and don't actually do it.

Edith: Because it's funny, I swear this is the last Heavybit story.

I used to sit right outside here and I sat next to Orion from Heroku, and Max, and I was training at the time for 100 mile race.

I would run 5K on Friday, 50K on Saturday, 50K on Sunday. I would come out on Monday and I would just be like staggering up the steps.

I'm like, "I'm so happy to be here and just sit in my chair and work." Orion would be like, "What did you do over the weekend?" I'm like, "I ran 64 miles."

And they're like, "Why?" And I'm like, "Because I'm training for a 100 mile race." They're like, "Do you like that?"

And I'm like "At this moment, no." I'm like, "I'm really happy to be working on the startup again instead of out there sweating out at Livermore."

Orion is like, "Is there a hack?" And I'm like, "You run a lot."

Paul: No hack.

Edith: What I said is, "I honestly feel like you could hack a 50K," and I'll tell you the secret some other time.

Paul: After you publish your book you'll include a hyperlink to the secret.

Edith: You can hack a 50K, but for 100 miles I think a startup is the same.

Paul: If you want something that's successful, you've got to put the work in.

Edith: You got to go see the customers, you got to build up the team. You got to care about your product, you've got to care about your co-founder.

You got to care about the culture you're building. I don't see shortcuts, and more, I don't want there to be shortcuts to that.

Paul: The area where people want the shortcut, they want to build the thing and then the thing works.

Everyone loves it, it spreads by word of mouth, it goes viral, etc. I think that's the one that people are most misinformed about.

What you actually need to do is you need to build something and you put in front of someone and you discover that it's shit in a way that you didn't imagine, and then you repeat it, and then you repeat it, and then you repeat it.

After like 50 times you've got something that's good.

Edith: That's really fun because you get to see the customer's reaction change.

Paul: Right.

Edith: You get to go from the customers who are like, "I don't care" to customers that were like, "Yes." I went to Australia and they applauded. That felt so good.

Paul: There's a particular variation of this problem where people pay someone to build their prototype.

Edith: That was my job in the 90s.

Paul: If you need 50 iterations, then you need someone who's with you on 50 iterations.

There's this reason that young engineers are able to build startups, because they're able to afford to do 50 iterations because they're doing it themselves and they have no outgoings. But if you're not in that situation then you need to figure out how you're going to get in that situation, because you can't pay some outsource company to do 50 iterations and put them in front of customers for you.

Edith: The mistake that I saw in the 90s is I was that outsource company. I wasn't the company, I was a lowly engineer, and they would do one or maybe two iterations.

Paul: Two is significantly better than one. Almost exponential returns at that level.

Edith: Actually, if you go by gambler's ruin it might be worse. Do you know "Gambler's ruin?"

Paul: No.

Edith: You shake a pair of dice, and it's going to turn--

Paul: OK, I do know that.

Edith: It's either going to be favorable or unfavorable, so if the first one is unfavorable the second one might be even more unfavorable.

So I didn't like being a consultant back then. I felt like we were not getting it right and we were just walking away.

I think to your point, I'll paraphrase you, being a startup is just being willing to put another foot in front of the other another time.

Paul: Maybe 50 times.

Edith: Maybe for 100 miles.