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July 2014
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2014-07-11 »

The ex-entrepreneur decision making process: an anecdote

    If you are so smart why are twiddling around bits [...] for breadcrumbs when you could have started your own company or gotten into academia? -- Someone on the Internet
    in response to my post about smart people

That's an excellent question, actually. Okay, it could maybe have been phrased more politely, and I won't even begin to answer the question about academia, and in fact the breadcrumbs are prepared by professional chefs and are quite delicious. (I'm not even kidding.) But that question about starting my own company, that's a good question, because I've done that a few times before and this time I didn't.

The answer is that I had a conversation like this:

Me: I want to make wifi routers. I think they're all terrible, and they're all commoditized, and all competing on price. Someone needs to do to wifi routers what the iPhone did to phones.

Friend: That sounds fun. You should start a startup.

Me: Right, I was going to do that.

Friend: And then recruit me to it.

Me: Er, yeah, I will definitely get back to --

Friend: Or we could start it together! You should come to New York and convince me.

Me: Um. Well, you see, the first rule of starting a startup is you don't waste money on unnecessary --

Friend: I have an idea!

Me: Oh good.

Friend: I work at a big company. You should come interview here.

Me: I don't see how that will help at all.

Friend: It's simple. They pay for the flight, and you come for an interview, then stay for a few days and you convince me to work with you.

Me: That sounds a bit unethical.

Friend: Nonsense! It's totally fine as long as you promise to hear them out. That's all any job interview is, for either side. No commitments. You just need to come with an open mind.

Me: Hmm.

Friend: Plus if you get hired, I could get a bonus just for referring you!

Me: Oh, okay then.

So off I went to New York. tl;dr he got a referral bonus and I learned to never, ever go into any situation with an open mind.

Just kidding.

Okay, partly kidding.

But the real reason I decided not to start this startup was as follows: I couldn't figure out a business model for selling the world's most ultimate consumer wifi router. I knew how to build one, but not how to sell one. The problem was the ecosystem wasn't really there. A now-small subset of customers go to the store and buy a router based on brand name and price; they don't recognize most brand names and don't know what price is best, so they pick one randomly. Generally they will start by buying a terrible router for $30, and find out that it's terrible, and if they can afford it, they'll switch to a possibly-less-terrible one for $100+. But sucks to be them, because if they buy a really expensive one for, say, $200+, it's often even worse because it's bleeding edge experimental.

And anyway, that whole segment is not the one you want to be in, because nowadays ISPs all provide a wifi router along with every account, and most people take what they're given and don't bother to ever replace it. So if you want to change the world of wifi routers, you have to have a partnership with an ISP. But ISPs don't want to buy the best wifi router; they want to buy the cheapest wifi router that meets specifications. Sure, they'd probably pay a bit extra for a router with fewer bugs that causes fewer tech support calls... that's just good economics. But how will your tiny startup prove that your router causes fewer tech support calls? There's no chance.

And so the cycle continues: ISPs buy cheap-o routers and give them to you, and they crash and you fix them by turning them off and on again, and there's bufferbloat everywhere, and the Internet is a flakey place, and so on, forever.

I couldn't figure out how to fix that so I took a job doing something else.

I'm CEO at Tailscale, where we make network problems disappear.

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