What Makes a Startup Great: Facebook, Lyft, Oculus VR

People gravitate towards principles and ways of thinking that can be used in nearly any situation. Ideals like “always be good” and “patience over rashness” are simple, yet they produce positive results in every situation they’re used. The more ubiquitous a principle is, the more people find it to be true.

I look for these kinds of ubiquitous principles in my every day life. When I see something work well, I dig deep to find the underlying idea behind its success. I am fortunate to have the opportunity to observe a multitude of different types of successes in my daily life, so I feel a responsibility to record what makes them successful.

Let’s start with something whose successes are known to over one billion people: Facebook. The success of Facebook is extremely difficult to characterize and define. There are so many different factors that go into making a web service successful. Multiply that by the number of individual experiences people have had on the website makes it nearly impossible.

That kind of thinking is a distraction. The goal of this exercise is to figure out what commonality exists among the experiences that makes it a success. Certain principles should start to stand out when the experiences are placed under a microscope. Focusing experiences into a single sentence has the same effect as a mission statement: it narrows the scope so the most important pieces shine.

When I boil down my own experiences with Facebook to a single sentence, it’s that Facebook provides an easy way for me to communicate with friends and family. Now that I’m older, I realize how difficult it is to keep in touch with everyone I care about. Having something like Facebook provide that difficult service helps improve my life.

The whole realm of web startups is the next natural topic to dissect. This is even more difficult on the surface than Facebook because there are no two business models exactly the same. Startups are one of the most diverse crowds in business.

This, again, is a counter-productive way of getting to our goal. Rather than focusing on the business model itself, step back and look at the kinds of ideas behind a successful startup. This too is difficult because Lyft and Oculus VR are in completely different ball parks.

This is where the sentence distillation helps to bring out common principles. Lyft exists to provide a car ride, an essential part of the modern workday, to those in need. Oculus VR (now Facebook) wants to shape the face of communication, something that happens every second of every day, by connecting people face to face.

Like GPS, a third point is needed to make sure any conclusions drawn come from a sufficiently diverse set. Let’s look at something that literally happened to me while writing this blog: I heard a critter roaming around the attic of my house.

As a new home owner, the thought of sharing my home with anything other than a human or a dog is extremely painful. Critter control companies have that as a central tenant of their business model. They make money by quickly solving a painful problem that many people have, can’t or don’t want to fix themselves, and are willing to pay a premium for.

That is the common thread that binds all these discrete entities together. The principle behind their success is a function of how painful the problem is along with how frequent the problem is. To put it in Computer Science terms:

Success of Business (problem business solves P)  = Pain of P * Frequency of P

If there is a problem that occurs sporadically, it needs to be one that causes a lot of pain for it to be worthwhile for a business to be centered around. If the problem causes little pain, it needs to happen often for an investor to write a check.

This model is intentionally simplistic. It does not take into account which language Facebook chose to use, or the UI/UX tradeoffs of Lyft’s website. These are details specific to the implementation of the formula. The principle behind this remains the same, independent of the implementation.

There are more things that go into a successful startup than just finding a painful problem that a lot of people have. Passion, creativity, and luck all play a part. But success comes much easier when it is centered around a solid foundation. By making sure that the problem the company seeks to solve fits in the formula, the road to success is very clear.

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