[Full disclosure: A startup profiled in this story, SignupSumo, was built on my company’s platform, Assembly.]
In 1945, at age 21, my grandmother started a photography company.
She’d just graduated from Northwestern University, and in order to pursue this dream she had to put off getting a job. She invested everything – both financial and social capital – in this endeavor.
Over time, she was making enough money to rent a storefront in Evanston, IL. Later, she was able to hire a staff. Eventually, she purchased a historic firehouse that became the headquarters of Stuart Rodgers Photography. Seventy years later, that company is the only job she’s ever had, and she’s still at it.
She had to go out on so many limbs, so many times. At every stage, she reinvested back into the business and risked her credit and credibility to keep moving forward.
This photography business is quite different from a digital product, but not long ago it took a similar process to get an Internet business off the ground.
Building a startup in the ’90s, you might need to find a friend with a garage for your first office. You might need to forego employment and sell your car to afford servers. You might jeopardize relationships with the people closest to you.
You’d definitely need to build everything from scratch, and it would take a lot of time and money.
All this might continue to pay off in 70 years, like my grandmother’s photography business.
Or, you might take all these risks just to answer the question of whether people want what you’re making, only to learn that they don’t.
Beginning in the early 2000s, instead of selling your car to afford hardware, you could sell a coffee table and afford it. Over the past 15 years, many costs associated with building products – servers, databases, all the once-homerolled things that are now available as cheap SaaS products – dropped immensely.
This ushered in an era where startups were lean and could do with $250,000 what a startup in the ’90s could do with $2,500,000. It led to 10 times more products launching, 10 times as fast. It’s been a prosperous and successful era for the Internet. Only a few costs remained high: labor, office space, accounting, legal, marketing, etc.
A few weeks ago, I saw a group of strangers come together on the Internet and launch a business. They were designers, developers, copywriters, and marketers.
The team started from scratch and set out to launch within a week. They worked collaboratively, sharing ownership based on what they’d each put in.
Watching this, it dawned on me that we’re now entering a new era, and all those remaining costs – labor, office space, accounting, legal, marketing, etc. – are dropping to the floor. Just like last time around, it’s going to mean that we see 10 times more products launching, 10 times as fast. It means we can do with $250 what a startup five years ago could do with $250,000.
The product I watched being built was SignupSumo – it’s a simple tool that sends you an alert if someone influential signs up for your service. To make my argument for this new era, I’ll walk through three scenarios:
1998: If you wanted to build SignupSumo in 1998, you’d first need servers. Then you’d need to build a custom mailer to send notifications out. Then you’d need to build an algorithm that determines people’s influence.
Then you’d need to build an API for your customers to send their signups’ contact information to you. You’d need to incorporate the company and hire an accountant. Then, finally, you would spend a fortune getting your product in front of potential customers. And throughout all this, you’d need to pay hefty salaries for a multi-talented team of engineers and designers.
2010: If you wanted to build SignupSumo in 2010, you’d first need computers. Then you’d integrate Heroku. And Sendgrid. You’d bring together a small team, write code, and get a product out the door. You would still need to incorporate and hire an accountant.
Then you’d use Facebook ads and an expensive PR firm with connections with the tech press to get your product to market, where you’d finally start learning if people wanted it. You’d have hefty salary costs, but you’d have gotten to market way faster and cheaper than that 1998 version.
2015: (This is exactly what I saw happen with SignupSumo)
A few developers, designers, and marketers come together. They fire up Heroku, etc. They integrate an API that checks user influence. They design a slick landing page.
They don’t need accounting, because there’s no money. They don’t need to incorporate, because they built it as a community-owned business. They don’t need a cap table, because they’re tracking ownership in the product by leveraging colored coins on the Bitcoin Blockchain, where that data is immutable and permanent.
A week later, they launch. They don’t need a PR firm, because the communities on Hacker News and ProductHunt love the idea and start sharing it to thousands of people across the web. They land their first paying customers.
Spending less than $100, this small team just took an idea, built it, and got it to market. Now they know people want it, so they are continuing to focus on performance and feature improvements to satisfy a growing customer base.
If things keep working, they may be able to quit their jobs and grow this into a multimillion dollar business, but nobody’s mortgage is riding on it.
Like my grandmother in 1945, they had a hunch that people wanted SignupSumo, so they created it. Unlike my grandmother, they hardly had to risk anything to start interacting with the market.
(You can see my live-tweet of the seven day building of SignupSumo here.)
What has actually changed?
In the past 10 years, some billion dollar businesses businesses have gotten there with little or no venture capital, but in this new era they won’t be the exception.
Going from the ’90s to the modern web, the dropping costs (servers, etc) are clear and visible. The recent changes I’m highlighting are less obvious but equally impactful.
Version control and collaborative coding have long existed, but GitHub makes them seamless.
Working on nights and weekends has always been an option, but before there was an API and SDK for every need you might have, it would take years to get a product off the ground without working on it full time.
Launching a product without a PR team has always been possible, but things like ProductHunt are letting the best products reach the masses without a marketing spend.
Sharing ownership with early contributors to a product has always been possible, but today you can use the Blockchain to track it trustlessly and without lawyers.
People around the world are launching businesses collaboratively. They’re leverage existing tools and communities to build the big businesses of tomorrow in a brand new way.
Austin Smith is the platform evangelist at Assembly, a community that builds software products collaboratively and shares ownership and profits equitably. Previously, he was an early hire at Singly and before that a journalist.