[porter]

Do you think you had to go through those first few small wins in order to finally take a swing at a homerun? What changed when you did treehouse vs those other smaller businesses? Was it the fact that you didn't need to worry about money in the short-term anymore (because of those small exits), or something else?

[nikcub]

I've heard the following advice frequently amongst non-tech entrepreneurs: aim your first exit for a million, then 10 million, then aim for the home runs.

I'm not certain how valid it is as advice, it feels like something that might suit some entrepreneurs but not others.

In startup culture successful founders are portrayed and stereotyped as being in their early 20s, college dropouts, first time founders, etc. but when you dig deeper you find that this is far from true.

One age, the HBR recently analyzed data from Crunchbase and other sources and found that the average entrepreneur funding age is 31[0]. This means most have around 10 years of industry experience before getting funded, on average. YC would skew a lot younger (it probably shouldn't, but it does).

Second is the "first time" myth. If you look at successful entrepreneurs, even those who appear to be hits with their first company - you'll find that they all have at least some experience with delivering a product that people used before their big hit. It is a big leap to go from just having ideas and reading articles to actually building a product to completion, find even a hundred people to use it and then running through a few user feedback based iterations.

The same startup lore that mythologizes young first time founders usually also always mention a previous product from the founders that had some success (blue boxes, facesmash, altair basic, etc.)

The data shows that entrepreneurs have product or industry experience and aren't in their early 20s. You can fill that time in with your own products and aim to work on the basics such as getting a product built and launched, listening to users, etc. If you can't do it at a 100 user, $10k scale the chances of you being able to do it at a million/million scale are likely slim.

There is also no reason why the 100/$10k startup can't scale up to a million/million startup - you just need to put a price on the product or your time from day 1 (product scales better) and grow steadily. But it is also good to know when an idea has reached its limits and you should exit, investing your time in taking the next idea to x.

For some entrepreneurs they'll be comfortable spending that pre-time before the "big swing" idea in other startups (and perhaps failing) or small-scale products, or alternatively 4-5 years in industry.

[0] http://blogs.hbr.org/2014/04/how-old-are-silicon-valleys-top...

[ryancarson]

> I've heard the following advice frequently amongst non-tech entrepreneurs: aim your first exit for a million, then 10 million, then aim for the home runs.

This idea seems laughable to me. As if you can perfectly time and control those outcomes. Ha! :)

[nikcub]

It is more to do with scale than the actual figures. In using sums like "million dollar", "10 million dollar" and then terms like "home run", "swing" etc. you're actually trying to define different scales of startup ideas that don't have a better terminology - but probably should.

There is a completely different risk profile in small businesses, then paid apps, then freemium products, then ad supported products. They are distinct, we just don't have a good way of communicating the differences.

One school of startup advice advises against raising money while another says to raise as much as you can. Rather than being in conflict, it is clear that they don't actually contradict each other but rather apply in different situations.

The don't-raise-money school that DHH et al preach is suitable for paid products and services, while an ad supported idea like a search engine or social network, or an idea with heavy R&D requirement requires that money is raised.

One million / 10 million / home run is a very imperfect way of classifying this distinction. The differences are all in the cashflow model - atm we refer to a flat cashflow model, a linearly increasing cashflow model, an exponentially increasing cashflow model and cashflow models that go negative for 2-3 years and then go either linear or exponential all as 'startups'.

[ryancarson]

Fair point - revenue is just a way to speak about size. Amongst my CEO friends, yearly revenue is used as the blunt measurement of the size of business.

I would say there's some validity to the fact that each step can build on the previous. I almost laugh when I think about how little I knew back in 2004 about the mechanics, tactics and financing of startups. However, that knowledge wasn't the limiting factor. It was the idea.

[bjelkeman-again]

To me it is more about learning and doing better at each attempt. But yeah, "perfectly time and control" these things I doubt anyone actually seriously thinks they can do.

[ryancarson]

I'm lucky that I could refine my skills through those first three businesses. If Treehouse was my first big idea, I'd have no choice. I'd just have to do the best I could.

> What changed when you did treehouse vs those other smaller businesses? Was it the fact that you didn't need to worry about money in the short-term anymore (because of those small exits), or something else?

I didn't make quite enough from those exits to be financially independent, so I still need to make Treehouse work from a money perspective personally.

The simple thing that changed was the scope of the idea. It was world-changing scale - millions of potential lives affected.

[porter]

What advice do you have for founders working on non world-changing ideas, but rather ideas more like your first 3 small ideas?

[ryancarson]

Just keep doing the best you can. If you don't have what appears to be a world-changing idea right now, you still are providing value by creating jobs and offering value to your customers. I didn't know I was going to create Treehouse until it happened. Hindsight is always 20-20.

[porter]

I'm curious, have you ever thought about why building a startup with more revenues and more "impact" seems to matter more than building smaller companies? I know this is a bit philosophical, but I'd be interested in hearing how you think about this.

[ryancarson]

It seems like I have some sort of in-built desire to do something that 'matters'. The only way I have to measure this is 'number of lives changed'.