Startups are a complex multivariable equation

September 20, 2020

Launching a startup and building it into a successful business requires a multidisciplinary skillset. Because startups are a complex multivariable equation.

You have moving target, which is somewhat in sight but not really. You’re wearing glasses but objects at a great distance are blurry. 

The multivariable equation looks something like this

  • understanding the market and finding a gap
  • coming up with a product thesis to solve the customer’s needs
  • finding the right distribution channels that are profitable
  • discovering pockets of places to find the initial set of customers
  • positioning the solution with the right messaging
  • creating the right business model and pricing structure
  • building competitive differentiation to fight off competition
  • having a founding team that has the right skillset for all the problems listed above and the million others that aren’t
Photo by John Barkiple

There’s a million reasons a startup might fail. And you cannot control those million factors of chaos.

But you can piece together parts of this equation (via discovery) and solve them one by one. Solving a piece of the equation reduces your chances of crash and burn, i.e. increases your chances of success.

The factors I’ve listed above are some of the more well understood parts of this equation, and ones that you can actually control and influence.

However, it doesn’t matter if you get only solve a few parts of the equation, because one or two wrong answers such as distribution channels or business model might be enough to kill your business. That’s what runway (frugality, burn rate, funding, customer revenue) is for.

Even if you get all the above factors right, it takes a lot of time and effort for your business to take off, to build up momentum and achieve escape velocity.

It boils down to - Can you solve your startup's multivariable equation before you run out of runway?

Photo by Jordi Moncasi

This is why a lot of successful businesses don’t do something entirely new and from the ground up. They take something existing and working and improve parts of the equation.

Zoom took WebEx and made the product delightfully easy to use.

And similarly, a lot of businesses are copycats. They copy something existing and improve upon it slightly and meaningfully. One can argue that copying ideas is highly underrated.

Instagram Stories is basically Snapchat’s innovation, but they won because the distribution piece of the equation was far ahead.

Zoom and Instagram simply picked a multivariable equation where some of the unknowns were already solved for.

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