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John Collison: Startups Have Path Dependence. You Can't Skip Steps.

By John Collison · Startup Growth · 1 min read

Microsoft couldn't have started as an enterprise company — no one would have bought from two random college kids. They had to start with hobbyist compilers, then move upstream. Each stage enabled the next.

Key Points

Vision = the things you're not willing to compromise on. Everything else — listen to the market.
Startups have path dependence — you need the intermediate stages to get to the final form
Microsoft had to start with compilers. Uber had to start with limos. You can't skip steps.

You're not just trying to arrive at the final form for your product. You're trying to get all the intermediate forms in the chemical reaction that gets you there.

Vision vs. Iteration Is Not a Trade-Off

Collison: There tends to be a lot of debate — lean startup iteration versus vision-driven product. To me, that's not really a trade-off at all.

You need some small set of things — the vision — that you're not willing to compromise on. With the remainder, if the market is telling you you're wrong, you really need to listen. In Stripe's case, we were focused on instant onboarding and building a developer-friendly tool. That was stuff we were not willing to compromise on.

You need a vision you won't compromise on. With the remainder — if the market says you're wrong, listen.

Path Dependence

Collison: Startups end up having a really powerful path dependence. It's not just a question of arriving at the final answer — if you'd found it earlier, you could have gotten there quicker. You're not just trying to arrive at the final form for your product. You're trying to get all the intermediate forms in the chemical reaction that gets you there.

You're trying to get all the intermediate forms in the chemical reaction that gets you to the final product.

Microsoft and Uber Couldn't Skip Steps

Collison: Microsoft started in the hobbyist market building BASIC compilers. They couldn't have stayed there. But they also couldn't have started as an enterprise company — no one would have bought from two random college kids. They had to become each stage to jump to the next level.

Uber is the same — if they had just started with UberX ridesharing, they probably would have been shut down quickly. They needed to start with the limo business, get to scale as a well-known service, and then they could start ridesharing.

Microsoft couldn't have started as an enterprise company. Two random college kids. They had to become each stage first.