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How We Know Whether A Startup Is Easy Or Hard

A Simple Framework That Will Spare You A Lot Of Pain

What does a unicorn eat for breakfast?

Actually, I don’t know!

But what I do know is that trying to create a unicorn is hard! Frankly, starting any business is hard! Therefore, I would argue that we should stack the odds in our favor.

As much as possible!

Sure, we could go full Elon Musk and start at level 100. But he also didn’t do that! None of the crazy companies he currently runs was his first venture. He had his first success doing a fairly simple internet startup.

No hardware. No rockets. Just code!

On our first go, we should also try to make it as easy as possible. Building something hard is much easier once we get some reps in. Sure, fame, a strong network, and tons of money don’t hurt either!

But how do we know if our startup will be easy or hard?

Over the years of working in startups and taking swings myself, I got burned a few times.

During these painful lessons, I discovered a simple yet powerful framework to evaluate ideas. It is about finding what I call low-dimensional businesses.

In the following, we will see how we can apply this framework to find the easiest path for ourselves.

Let’s jump in!

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What are the simplest businesses?

This obviously depends a lot on our situation.

Our skills, connections, and access to capital can turn someone’s kryptonite into a cozy little house cat of a business. And if our business solves an actual problem, there is almost always a way to make it work.

However, if people think of “easy” businesses they usually refer to things like:

• Building a simple app

• E-Commerce or dropshipping

• Services such as becoming an independent recruiter

However, there is another aspect to this hidden in plain sight! And it can turn a seemingly easy business into a total nightmare.

To get to the bottom of this, let’s first look at a general way to categorize business.

The Five Dimensions of Every Business

Josh Kaufman wrote a book called The Personal MBA (I can highly recommend it!).

In it, he shared a simple breakdown of the five dimensions every business has.

These are:

1. Value Creation - Finding out what people want and creating it

2. Sales - Turning interested people into customers

3. Marketing - Attracting people and creating demand for what we’ve made

4. Value Delivery - Give customers our product or service and make sure they’re happy

5. Finance - Make profits or at least enough money to keep going

So far so easy.

You might even think: Duh, what else should a business consist of?

Well … you’re right. Somewhat…

This is quite abstract but I assure you, it will become very(!) actionable in a second.

Your Business - A Wolf in Sheep’s Closing?

So, let’s get to the framework!

Typical businesses have five dimensions. They stand on five legs - so to speak.

What if I told you that some businesses have many more hidden dimensions? If we drew a schematic of them they would look more like a spider. Others, however, have fewer dimensions. Drawn, they look more like a snail hopping around on a pogo stick.

Let’s look at recruiting for example.

We collect a juicy fee for matching job seekers with open positions. We don’t build rockets. In fact, we hardly use any technology at all - outside of email maybe. Our primary customers are the companies because they are the ones that pay us.

Let’s fill in the dimensions from above:

1. Value Creation - Scouting qualified talents

2. Sales - Convince new companies to use our services

3. Marketing - Make ourselves known as a great recruiter by creating lofty posts on social media, speaking at events, and placing ads

4. Value Delivery - This part is quite simple. If you place someone in a new role, they will mostly show up there by themselves. However, we need to follow up and make sure our client is happy. If she’s not, we’ll need to solve that.

5. Finance - Make sure our expenses (ads, office, travel) don’t exceed what we earn in fees.

So far so easy. But here comes the catch!

Three of the five dimensions actually appear a second time in the direction of the talents.

Top-notch talent will be picky about the jobs we offer them. So, we need to find jobs they like (value creation). To even consider working with us, they first need to perceive us as a reliable source of jobs (marketing). Once, we have their attention and interesting job opportunities to offer, we still need to convince them to work with us and not someone else (sales).

Each of these activities requires messaging, marketing materials, sales scripts, and so on.

You might think that recruiting is a two-sided matching platform and that this should be expected.

But hear me out! Let’s look at the other extreme!

There are tons of examples of businesses where one activity covers multiple dimensions.

The Simplest Business Has Two Dimensions

Probably the most krass example of this principle can be found everywhere on social media.

What I am talking about are influencers that teach us how to become popular on social media.

We all have seen them. They grow an audience on social media by teaching people how to become popular on the very platform they themselves are trying to get popular on. This circular business model has become a total meme but in a way, it is absolutely genius!

Let’s look at how this works:

1. Value Creation - Learn and share useful insights on how to get popular online. Then, the content gets bundled into an online course. Preferably in writing to save time.

2. Sales - Keep posting to convince people to buy from you because of your knowledge of how to grow online.

3. Marketing - You probably guessed it. Keep posting the same stuff on social media.

4. Value Delivery - Send people your email course and well … post.

5. Finance - Collect course payments, affiliate revenue, and sponsorship dollars via Stripe.

It’s hard to even write about this.

Every sentence contains the same words: post, post, and social media. However, I am not trying to throw shade at them here. The simplicity of what they are doing has a lot of beauty to it. Their business consists of a few concentric circles.

Every piece of content they create can be used in multiple ways simultaneously.

It creates value for the customer, functions as marketing material, and does sales. The value delivery is so trivial it is barely worth mentioning.

They simply send their content out.

Takeaway

I am obviously not recommending that we all become influencers.

In my opinion, most value is created by building stuff in the real world. However, even more sophisticated strategies can be broken down this way. Product-led growth for example essentially uses clever design to fold two dimensions into one.

Namely Value Creation and Sales.

I certainly have made the mistake of misjudging a business’s dimensionality a few times. Whether I look at a business now, I try to find ways in which the dimensionality can be reduced.

I hope this provides you with some food for thought. Maybe it can even come in handy sometimes and provide you with a mental knife to trim unnecessary fat off your strategy.

As always, I really enjoyed making this for you!

If this happened to you before, tell me by replying to this email!

You can also message me on LinkedIn or tweet at me on X.

Lots of love and see you next time!

P.s. I create content like this every week. If you are not subscribed and would like to get an email like this straight to your inbox, go ahead and subscribe here! ⭕️

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