The Physics of Startups
00:12:07 · Rob Snyder
[00:12:07] S1: Well, I so um I I the this I couldn't find a way in to the to the factory from from here. So this was the only way that could kind of make sense to me to find find a way in to describe just how difficult the problem is, right? Like these are a bunch of ways that all of us do by deep. These are these are it's not like uh you might be doing one thing. I can guarantee you you are doing all six of these things if you're if you're a startup. I would guarantee that you that the majority of your time is spent doing these six things. And that's that but I I want to set that up just to frame how difficult it is to do the opposite of those six things. You basically have to like minimize variation, you need to minimize waste, you need to eliminate unnecessary steps, you need to focus on just pull versus push, and you need to do you need to figure out what the constraint is and and and um and invest every ounce of effort in continuous improvement on whatever the constraint is as it moves. Now that is a that is really, really hard to do if you're just sitting there thinking about it. And and uh and that kind of frames how difficult it is to grow as fast as possible just by thinking about it without the these kind of like training wheels of this model that will tell you, okay, what actually is worth your time? Where where are you not doing the thing that's going to cause you to grow the fastest? Where where is their kind of waste? These things aren't necessarily visible to us unless we have some way to make them visible, make them intuitive to us.
00:14:03 · RC, Rob Snyder
[00:14:03] S0: Yeah. I kind of think about my website. It's like every single day I open my if I opened my website, I could find something to work on there because it was imperfect. And that but that would not uh that fixing my website continually and optimizing it neglects just like the reason that's the wrong thing to do is because it's not the constraint in the growth of my business. Um and you can apply that. [00:14:29] S1: That is a like whenever I find that it's almost a hundred percent the the case that when somebody thinks it's their website or their messaging, it is not like that is a signal that of something way deeper that you're not doing. Um, and uh, but but anyway, that's a that's a aside. [00:14:49] S0: Yeah. Okay. So um established there's a ton of things that you could be doing. Um the objective is find the one thing that is going to change uh that is going to accelerate your growth the fastest or the most. Um Rob, let's let's bring in the case study factory and the machines that are in it. Can you just like explain this thing to us?
00:15:16 · Rob Snyder
[00:15:16] S1: Yeah, so so okay, so the so the concept here is that those six things that are really easy to do to not grow as fast as possible, and they're in the inverted version, which is really hard to do, to minimize variation, minimize weights, compress everything, eliminate unnecessary steps, focus on what actually improves. All of those things are things that manufacturing thinking has focused on in extreme detail for the last hundred years. And so they just give us like they have gifted us all of this thinking. We should accept the gift. And so if you look at your startup as a factory, you can then apply manufacturing thinking to the factory. The important thing though is what the heck does this factory produce? And if you get that thing wrong, you're gonna be optimizing the entire factory for the wrong output. So, for example, common thing is everyone's talking about software factories. Software factory, on my business, I'm building a software factory, right? And it's like that's a subcomponent of the real factory that you're building. But everyone's asking them themselves the question like, how do I know the quality of the output of the factory? And it's like, yeah, you don't, because it's because it's a subsystem in a broader factory. And if you're thinking about lines of code or like the the production of a software factory has to refer to what customers care about. Is it delivering what customers are caring about? So that tells you it's a subsystem and a broader thing. If you just focus on revenue as the output of the factory, well, you can do a bunch of dumb things in pursuit of revenue that crush your growth in the end. And so we know it's not revenue. It and if we focus on revenue, right, we're not going to get that kind of continuous improvement that the the um minimizing waste that's not gonna happen by default. And so the structure of a factory here has to be what does a startup produce? It produces case studies, successful customers, and it produces case studies that are basically identical to one another. Yeah. Because we want to minimize variation. That's the whole point. We want to minimize variation, put a bunch of volume through the factory. As we are able to put more volume through the factory of nearly identical things that don't require us to like scramble around the factory, that's what increases our growth rate.
00:17:48 · Rob Snyder
It's the the output of the factory, the throughput of the factory is what matters. And so it produces case studies. And then there are steps of the factory that go from somebody not knowing who we are to being a case study customer. It's basically the entire customer journey are different steps in this factory. I think of three. First step is pipe one. How do we get people to talk to us or come to our website or whatever? Step two is sales. How do we turn potential customers into actual customers? Or how do they turn from potential customers into actual customers? Step three is delivery. How do we turn actual customers into customers who are successful, who renew, who don't churn, who tell other people about it, right? And that is, they become a case study at that point. And they should look just like our other customers. And those, and basically everything a startup does ladders up to that, that uh those three machines in that overall case study factory.
00:18:51 · RC
[00:18:51] S0: Let's let's take a couple pieces of this because it it took me time. I I think you introduced this concept to me two years ago, three years ago. Like I and it uh now I love it. I'm like medium addicted to it. It's how I think about my startup. Uh but uh at the same time, like it it took it took a while. So let's uh I want to hit those three machines, but first let's talk about a case study. Like my intuition about a case study was basically like came from consulting. It was like a slide that we we put in front of a new client to tell them that we had done this work before, so that hopefully they bought whatever it was that the partners were selling. Um you're referring to something specific with the case study. Um what what is it? And can you give us an example of uh an example or two of like what does a case study look like for a specific startup, or if you need to genericize it, you can?
00:19:49 · Rob Snyder, RC
[00:19:49] S1: Yeah, yeah. So a case study is um certain person at certain company was trying to do something right now for some reason. They considered their available options, and those options weren't good enough. So we offered them something that unblocked them, and as a result, they were able to do XYZ. That's the kind of rough structure of a case study. It's a story. Which people will recognize as pull. Like you've you've put pull into a package. Yes, yeah, yeah. It's it's basically pull, what we offer, so what? Um, and you just package that all together. That is a case study. It it just reads like a case study, it reads like a story. Um, and and yeah, and that is uh essentially the only piece of collateral you need. [00:20:41] S0: And it's uh the what you want from the case study is for a person to read case study or be told case study or see case study, whatever it is, and think that is me. I am the pre-part of the case study, and I want to get to the other end of the case study. And uh and they identify with the most important elements of pull, they understand the connection with supply that your product or solution, whatever it is that you're offering, and the outcome is the thing that they are trying to achieve. [00:21:12] S1: Yes. Yes. Yeah, okay. Yeah, so pull, how we help, and what's their unblocked life look like.