Joyent

Seven Lessons I've Learned About Startups from Drag Racing

I haven’t actually been drag racing myself. Rather, I’ve been a casual watcher of so-called “nitro-class” drag racing since it is one of the sports offered regularly on ESPNHD on many lazy Sunday afternoons. Watching nitro-class drag racing on television allows one to only gloss the depths of this sport. One must actually go to a race in person to understand the lessons nitro-class drag racing offers entrepreneurs in the software business.

1. A startup is like nothing else. Be prepared for the shock (and awe).

When I heard on one televised race broadcast that the NHRA (National Hot Rod Association) would be coming to Infineon Raceway, the race track in the county (Sonoma) just north of me, I bought a ticket. I drove up on a Sunday, eliminations day. The crowd was a NASCAR crowd and vast. I’d bought a seat that was 40-50 yards away from the starting line. The opening ceremonies included what we call in the software world “booth babes” and all the racers came to the stage to be interviewed. Then the stage sort of parted in two and two “top fuel” cars pushed forward and did a burn out. I’ve linked to representative video:

My head and chest cavity nearly exploded from the noise and vibrations. As I looked around I noticed nearly everyone had some sort of ear protection, the kind worn on the tarmac around commercial jets. The top fuel cars rolled back to the start line, went through a liturgy of staging, second staging, foot just off the accelerator, brake down, clutch about to be engaged, the racers’ eyes on a pole of light that finally goes green and: oh my God.

The best technology demo I’ve seen ever. These people had created something so powerful, so magical. My senses were excited and thrilled while at the same time being destroyed by the power of the cars themselves. This must be what Dante described when the purified souls ascend from the mountain of purgatory through a curtain of fire into paradise. And if you think I’m being over the top, I literally was covered in tiny black specks of burnt rubber that had been thrown into the air. I went through that fire.

The lesson? You’ll never do anything as direct and meaningful (professionally) as to experience and persevere in a startup. Your hands are on the controls. You get to create, shape, mold, direct. The people I’ve known to be unsuccessful in startups are those that wait for someone to tell them what to do. No, release the clutch, press down hard on the accelerator, explode off the line. When you’ve done the quarter mile you can huddle with the team to see what needs to be adjusted.

2. When you race, you move forward by winning. But you just have to win. You don’t have to kill.

I have only been a fan of the sport for less than a year, but it seems most races end with either one car exploding (blown cylinders, some catastrophic mechanical failure, lost of control and into the wall, etc.) or the race is down to the nose. We’ll deal with the first result in lesson three.

The down-to-the-wire result is what interests me. I think the same holds true for most startups. They either blow up (sometimes spectacularly) or they find themselves in long competitive slogs of back and forth down to the wire. The temptation in these kinds of races is to watch the competition, but that is a mistake. To many things are happening at a startup (or should be) for you to pay any attention to anything else but your result. If the machine is working (and it doesn’t always), the element that will win is your performance. But don’t push too hard or you might push your machine to the breaking point. This is the toughest skill to attain in a startup. I sometimes like to talk about it as “knowing the fire that’s going to kill you” versus “the fire that’s far away on the hill”.

3. Do everything you can to do one simple thing well.

There are two key components to top fuel drag racing. One is the performance of the driver, which is predicated on the other key component: the performance of the machine. In drag racing the one thing that the team does well, if at all, is to get the machine down the quarter mile track as quickly as possible without blowing up. When it works, it’s an amazing demonstration of technology. But it doesn’t always work. There are almost always some problems and the race quickly comes to its three second close. Things begin to fail. But that’s OK, you did one thing well and got the machine down the track.

How does a three second race have relevance for a startup which, haven’t we always heard, is not a spring but a marathon? Well, a startup is like a marathon in as much as you won’t get to an exit quickly. We’ll talk about this is lesson seven. But a startup is a series of sprints. Over and over and over. You have to be willing to recognize and respond to the many different opportunities that will come in the door. The is called execution. Do it quickly, increase your turnover.

4. It’s the hidden work that will make you successful. What’s going on in the pits?

It’s OK to experience explosions, too. I have noticed in top fuel drag racing even the winners sometimes limp to the finish line pieces of metal flying every which way from their machines. Now the hidden, but ultimately critical, phase of the competition begins. They have to push or tow that exploded machine off the track back to the pits where, according to the rules of the NHRA, they have 75 minutes to put it all back together for the next race. I don’t think I’ve ever got free from a 20 minute oil change place in under 75 minutes let along rebuilding the engine. This is something I clued into late in my visit to Infineon Raceway. About 55 minutes after the last race, the broken machines begin to roar, or more like throwing thunder bolts, off in the distance, off in the pits. It’s exciting: an explosive petrochemical call to the fans that they are going to see that machine fly down the track at over 300 miles per hour once again.

Startups have there pits and they are equally critical to a startup’s success. First, invest in customer support. The temptation is too skimp because it is not sexy (product development) or it is, on the other hand, painful and something to be avoided. I know I’ll get comments criticizing Joyent’s customer support. And that would be fair. We’ve had some spectacular explosions! But we’ve continued to invest in better and broader support. Customers will recognize this and repay you. Second, invest in metrics. Measure everything you can. This is how you know what to rebuild in the engine. Make measurement the operating mantra of the organization. Each person in your startup should have a small list of metrics for which she is responsible. And these metrics should roll up into one or two measurements the whole company can follow.

5. You don’t need VCs. You need sponsors. Sponsors are your customers/advertisers.

There’s been lots of conversation recently about whether to raise money from venture capital funds. It is important to make a distinction between VCs and investors. Venture capital is a type of model of investment you’ll rarely, if ever want to involve your business with. I think the drag racers have it right. For the most part they have sponsors, and when a racer wins they pimp there sponsors. That’s the ad-supported model. But is a customer supported model, not a VC Warbucks model.

What do you need VC money for? Equipment? Software licenses? Big salaries? You should be able to get a product done for sale within six months. So raise $100,000 to do that. And if the product doesn’t sell, well, that’s a catastrophic explosion. Try again.

Joyent operates many more than 2000 CPUs in our cloud and we’ve never raised VC. We scrapped. We used credit cards. Jason sweet-talked lenders. We got footholds and we exploited them. Yes, we have some initial investors, but they’re not VCs. We’ve talked to VCs. But it always turns out they want to push us this way or that. Besides, they don’t understand our passion: we build something called an Accelerator for paying customers, and we improve that when we experience explosions.

6. Join a team of racers. Partner with companies to expand your reach.

Before getting to the end, I want mention that most top fuel drag racers are part of bigger teams. This allows drivers to share resources, finds sponsors, cross-sponsor. For example, John Force Racing is a boot-strapped, very successful racing team.

For startups, the lesson is to partner. Not just with other startups, but also with bigger companies. This activity can be difficult, but must be the principle focus of a senior person at your startup. Fortunately, bigger partners are easier to get to than ever. They are watching blogs, conferences, and many other channels. Speak to them as you speak about your passion.

7. If you think drag racing is a lifestyle, you’re wrong. Startups are about a good exit (winning).

While I agree with David that startups should avoid VC, I don’t agree with the end-game of building a lifestyle business. Think like a drag racer. Win the race. Win the trophy. That’s an exit. Joyent has investors, and they want an exit. 37signals has investors. I’m sure Mr. Bezos wants an exit. Target your exit and achieve it.

The lifestyle? That’s being a drag racer. Hold the clutch just right, foot above the accelerator, breathe, watching the pole of lights, yellow, green. Go. At 300 miles per hour. Push the machine back to the pits to get ready to do it again. Next week onto another track, another startup. It’s got to be great.