Passion is over-rated.
‘What are you crazy!?’ I’m sure you’re probably thinking. This is against everything you’ve read about the ‘visionary, passionate founder‘ that makes it big and inspires massive checks from eager investors, right?
“I can’t find an idea that I’m really passionate about” say founders to me. I yawn and almost have a monologue I go on which starts with “Passion is over-rated, find an idea that makes sense instead, here’s why.”
In this blog, I’m going to explain why. I’ll save you my monologue.
“I’m super passionate about secure, online identity management!”
Do you believe that? No, neither do I. But, if I was the founder of Okta and my company was publicly valued at $3.92 BILLION, do you know what, I’d sure as hell be passionate about it then!
The secret is this: you can get passionate about anything if it’s working!
Doing house moving, cleaning, on-demand groceries whatever, and it’s making you a tonne of cash and growing, f*** I care, I’m making money bitchezz!
Startup is 80% all the same. You:
- Have a problem to solve
- A solution that solves that pain
- A large market of people willing to pay for that solution
- A business model which pulls in revenue
- A go to market strategy that is scalable so you get lots of awesome, but cheap customers
- Special sauce so you actually are defensible (like a network effect)
- And… a ‘great’ team to execute on all this ‘fun’
Next, startup is not all sunshine and roses. You deal with same crap whatever you do, your problems will just look a little different, but you are guaranteed annoying customers regardless.
“I’m sick of all these stupid people complaining on Facebook that they got a different face cream or shampoo than another in their box this month. They are just samples!” – Exec at a beauty box company
Now how do you run a startup? It’s almost all the same, but you may have extra departments and some more important than others:
- Customer care to deal with annoying people (Above)
- Marketing to find lots of these demanding people
- Operations so you keep the ship running (so these people don’t complain)
- Tech for your back and front end (These staff typically are spared the annoying customers, but…)
- Product to annoy the tech team and tell them what to focus on 😉
- Finance to ensure the team gets free pizza on Friday
- Then maybe supply chain management, buying, logistics, customer success etc depending on your business model
Yeah, that’s a lot to deal with, but it’s all the same, it’s just applied to some other problem. You still need a CRM, sales scripts, invoices, ads, bla bla bla.
Every business model is going to have stuff you really are not going to like, but if you are successful you have cash and the ability to not have to deal with certain things over time! If you’re not, then you’re stuck explaining you ‘try to customise the box to user profiles, I’m sorry you got one brand over another….” forever. FML.
Don’t like the restaurant owners for your food business? Well if you’re passionate maybe you put up with them for so long, but if you’re ‘crushing it’ you have cash, so hire account managers and salespeople so you don’t have to deal with them then, problem solved!
After a point in time, like Layer Cake (Watch the movie), you’re in the rarefied world of management with enough people that your job is just to manage and grow, and what you are doing could basically be for any company (At least in a sector).
You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you’re up in the rarefied atmosphere and you’ve forgotten what shit even looks like. Welcome to the layer cake son.
I’m passionate about STARTUP. I love building stuff, but honestly, I’ve done enough that I can find anything interesting so long as the idea is smart. I get passionate when things are working!
There’s simply no point in being passionate about building the world’s largest food delivery company when there are so many companies that have just achieved that. It’s just too competitive now so the idea is not smart. That’s wasted passion and misdirected energy.
So if the idea really matters to your success and startup is the same, then it comes down to ‘building a better mousetrap‘.
Startup is ONLY about building a better mousetrap.
There are only two numbers that really matter in business:
- CAC: How much you acquire people for?
- LTV: How much they pay you (and payback time to recycle investment to grow)?
If your LTV is a lot bigger than your CAC, you’re golden. If the payback period is less than 12 months, even better. You recycle your CAC to acquire more users and expand the volume of LTV.
Now, of course, market size and timing are super key, but let’s keep things simple.
Mousetrap is something that really got into my head recently. I was helping two super-successful founders with their pitch deck at. Between them, they had sold two companies for a combined $1.4bn and their cred didn’t even end there. Serious dudes.
When I write decks from scratch for founders it always starts with a full on business model analysis to understand everything to then make it seem simple when pitching. I was on a call really late at night with the CEO and asked him “why are you doing this?” He said something profound to me:
We had done this before and knew we could do it better, right? We spent three months figuring that out. So we just figured out how to make a better mouse trap I guess.
That’s the abridged version, but man it got in my head hearing it from really serious people (Note, he didn’t say “we are really passionate about x.“).
For context, I wasn’t doing a fundraising deck, it was for an acquisition offer… 16 months after founding… for a $# that would move the needle for really affluent people. They also have 50 very expensive staff funded from their own bank accounts and no VC raised at all!
He said it so casually but profoundly ‘we just figured out a better mousetrap.’ And yeah, what they do is super cool and mind-boggling complicated.
That’s all startup is. A better moustrap.
Your CAC is designed to be less than your LTV.
How to build a better mousetrap
Sure, passion helps you get in a position to know enough how to build a better mousetrap. But I don’t think passion is the right term. It’s intellectual interest or curiosity.
Passion is a hot, energetic thing. You use it when communicating to staff to get them to quit their safe, high-paying job and join you on a crazy crusade akin to the ‘Quest for the Holy Grail.’ Something else is needed when starting a company and identifying an idea, the business model and its strategy.
You need to be driven to learn. But learn what? How do you end up doing ecommerce instead of fintech?
Have you ever seen a massively successful company and thought ‘man, that’s a terrible idea and an awful business model!’ Yeah, no. Dollar Shave Club is sort of a dumb idea, but it’s a fricking good mousetrap, right? Whatever, they sold for a bill, yo.
Great mousetraps come from a meaningful behavioural or technical insight. For Google that was indexing, for Uber that was “it sure sucks to find a cab in SF…” They’re both very different, right?
But how do you get that insight, especially in esoteric fields?
Given the breaks you have (or hustled) in life, you go down certain alleys where you end up in a particular industry to see an insight (if you are looking).
It’s just highly unlikely that someone is going to build a massive startup solving problems for investment banks without having worked in one and knowing how to solve things. You aren’t going to be able to improve crop yield without a background in agriculture.
So you build mouse traps around what you have exposure to and really understand.
In the case of the founders I alluded to, they had built startups doing similar things and exited them. They really knew the business. The micro-knowledge enabled then to redesign the system to scale so rapidly and get an acquisition offer in 16 months.
If you have no clue about the industry, it’s probably going to take you 16 months just to understand the basics, let alone the advanced parts.
Sorry to disappoint, but I can’t really tell you how to build a better mousetrap. I could charge a lot if I had a sure method! What I can say is you have to get in the weeds of an industry, truly understand all the variables, in order to have mastery and know what the real key levers are. They are always going to be different. But, if you figure them out, that’s why you’ll be buying the drinks for me on your private island one day, right 😉
What passion is code for
Passion is what you justify post hoc to help you deal with the cognitive dissonance of wanting to be successful, but currently being broke. I’m poor, stressed and single because I’m ‘passionate about decentralised systems!’
I’m a bit jaded, but I feel this passion stuff is effused in public as:
- Lies founders tell to TechCrunch to seem cool and visionary
- Lies founders tell to VCs to get funded so they don’t give up
- Lies founders tell to founders and family to make being unemployed (in their eyes) OK
But, it’s so annoying! It compels all founder to feel they are meant to be somehow super passionate about ‘decentralised systems’ or some random BS too.
If you have a few drinks and talk to a founder with trust, you’ll get the honest answer. They are working on ‘decentralised systems’ because:
- They don’t want to work for the man
- They want to get rich
- They actually want to be an angel investor and write a Medium post so need to make money first
- Startup is, like, so cool right now
- They couldn’t get a real job so have to do startup…
Let’s get things straight:
- There is nothing wrong with doing startup to get rich
- There is nothing wrong with wanting to be famous
- There is nothing wrong with wanting to be a titan of industry
- There is nothing wrong with wanting to make ‘that dick Dan who used to bully me and said I would never be shit eat his words!’
You just need to get real about your motivation and channel it into the mousetrap… and executing it like a beast.
Furthermore, this isn’t said enough:
- There is nothing wrong with failing
- There is nothing wrong with the fact everything is not awesome
- There is nothing wrong with suffering from mental health issues from the stress (EVERYONE does, we just don’t share)
- There is nothing wrong with replying ‘everything isn’t awesome, I need some advice’
- There is nothing wrong with a crappy mousetrap IF you are open to fixing it
- There is nothing wrong with not being passionate about distributed systems
I’m not passionate about being broke.
I’m not passionate about being broke working on a worthy problem.
I’m passionate because I’m fricking happy I built a mousetrap that’s actually working this time and is going to finally pay off!
But sure, tell the press and your friends you’re passionate. Tell your potential investors you are passionate. Tell people that.
But you’re only credible because your mousetrap is working!
You’ll only exit if your mousetrap is smart.
The idea you execute matters. Passion comes from seeing it actually work.
Passion is over-rated.
Video on YouTube
If you want to watch the video version of ”How to build a better Mousetrap instead of your business model?” You can watch below:
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