Don't Overcomplicate Startups

And why companies now need fewer employees

Hey y’all — here’s today at a glance:

Opportunity → Discord Apps

Framework → Growth Accounting

Tool → Attention

Trend → Companies Need Fewer Employees

Quote → Don’t Overcomplicate Startups

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🔗 Houck’s Picks

My favorite finds of the week.

  • Join 20k COO's and business operators who read The Bottleneck weekly, written by a former YC-backed COO of a $300M startup.*

  • Questions you’ll likely be asked in a VC interview (Link)

  • How this SaaS startup improved its free to paid conversion rate (Link)

  • The real truth about bootstrapping vs venture-backed startups (Link)

  • The #1 lesson this founder learned from YC (Link)

Become a member to see all my picks of the week:

  • The two types of mistakes companies can make

  • The biggest sign of competence in any role

  • The biggest risk during the development of a consumer product

💡 Opportunity: Discord Apps

It’s not often that a new platform with hundreds of millions of engaged users opens up to developers, but that happened last week.

Less than 2 months after Facebook did in May 2007 a venture fund launched that was entirely devoted to funding FB apps and Stanford launched a class devoted to building them in their fall semester.

It was a gold rush — with founders building massive companies like Zynga on top of the platform, and others like Spotify, Airbnb, and Tinder owing much of their early growth to it.

Last week Discord opened up their 200M users via a new API in the same way that FB did:

Even if you’re not an active Discord user yourself it’s worth spending some time on the platform if you’re in the idea maze to see if you notice any problems waiting to be solved (as a Discord user I can tell you there are quite a lot!).

🧠 Framework: Growth Accounting Framework

You might be growing faster than you think.

Just tracking your new users each week or month isn’t enough — you also need to track how many churn.

Of course, right?

But to get an accurate picture of your total net growth, you also need to look at users who churned in the past but now have come back to use your product again.

These are your “reactivated” users.

Combined that Net Monthly Active Users number with your existing, engaged users to get your true MAU. Andrew Chen elaborates here.

If you use Stripe for payment processing and charge users subscriptions, you can easily see your reactivated MRR each month in the Billing tab.

🛠 Tool: Attention

You’re probably doing a ton more monotonous sales admin work than you need to be. From updating your CRM to writing emails after your calls, Attention automates it all for you.

Their AI wizard even pulls in an extra $250k ARR per sales team member by guiding them (or you) with post-call coaching. Start automating sales today.*

📈 Trend: Companies Need Fewer Employees

The trend of needing fewer people to get a business off the ground due to no-code, AI, distribution, and productivity tools is more clear than ever — but did you know the same thing is happening at public companies?

I expect we’ll see this continue to decrease and eventually even get under 1.0 — if that sounds crazy, look at Gumroad. They have 0 FT employees and are doing millions in revenue per year.

The opportunities to capture this trend are incredibly varied — but companies, especially large ones with endless bloat, will have an unceasing appetite for tools that help them do this.

Wouldn’t you? Any tool that helps with this is a direct net increase to their bottom line.

💬 Quote: Don’t Overcomplicate Startups

One of the worst things you can do as a founder is bother getting good at “playing” founder.

Believe it or not, you can fall into this trap before you even begin building.

If you focus on finding an idea that will sound best to investors, and even if you go out and raise money for it and then use that money to hire some smart people, you can still find yourself in a stressful situation without any semblance of PMF.

My best guess as to why this happens is, ironically, that building a successful product is something that has been made out to be extremely mysterious but is actually simple.

Chris from Loops (the startup we use to send all of our emails for Megaphone) has it right:

This is also how I build. It’s not glamorous and it’s not some secret that only Silicon Valley insiders know.

How big your startup ends up being, if you do this, depends more on how large the market becomes and how early you were to it than any sort of secret building process.

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