Rebel Founder: Simplicity as Our Winning Strategy

Hey there, fellow Rebel Founders,

Welcome to the first issue of The Rebel Founder newsletter! Here, I'll be sharing insights on how we, as rebellious founders, challenge the status quo and come out on top. 

I’ll share unconventional strategies that set us apart. Buckle up for a journey into the heart of what it means to be a Rebel Founder.

Overcoming the Complexity Trap: David's Shift from Goliath's Armor to Agility and Simplicity

Many of us are working to build businesses in markets with one or more huge players. I know how easy it is to be scared.

Take my company, DevStats, for example. We're a bootstrapped SaaS in a market dominated by competitors who've raised over $70 million. But here's the twist: I'm not intimidated. Why? Because history has shown time and again that talent always beats unlimited resources.

In the story of David and Goliath. David initially tried a conventional armor similar to the one Goliath had but soon realized he couldn’t win playing by Goliath's rules. Shifting tactics, he chose five stones and relied on agility and simplicity, ultimately triumphing over Goliath. The approach we take at DevStats is similar to David's.

We refuse to play by the Goliaths' rules. Too often, early-stage founders shoot themselves in the foot by imitating large corporations or big VC-funded startups. 

It can be fatal for small startups, particularly bootstrapped or pre-Series A companies, to follow the practices of large enterprises. Attempting to emulate these giants is a pathway to the valley of death. 

Rebel founders played by their own rules and put the odds in their favor.

Here are my rules for DevStats:

This isn’t a democracy

I’m not against having partners or even raising money from companies like TinySeed or Calm Fund, but my philosophy as a rebel founder is never to relinquish control. 

In his classic book, “The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup,” former Harvard Business School professor and startup researcher Noam Wasserman introduced the idea that most entrepreneurs have to make a choice between optimizing for financial returns (“Rich”) or optimizing for control of their company (“King”). 

The success of companies like Mailchimp, Gopro, Zoho, Basecamp, Github, and Craigslist proves that you don't have to renounce control in order to build a highly successful company.

I've experienced this on a smaller scale with DevSquad, my 90-person consulting firm. It's not just profitable; it affords me a fantastic lifestyle, which even includes owning and flying my own airplane:

This personal journey has proven to me that you can indeed be a 'rich king,' balancing substantial business success with an invaluable quality of life.

Even when a bootstrapped founder doesn't grow their business into a large-scale enterprise, the financial gains at exit can rival those of VC-backed founders. This is due to the significant equity dilution. Owning 100% of a smaller company can yield a financial outcome similar to, or even greater than, owning a smaller percentage of a much larger company. Plus, this way, you get to call the shots and stay free from external pressures. 

Additionally, bootstrapped founders generally have a higher likelihood of exiting their company, not necessarily seeking a 'home run' but rather a more balanced, sustainable growth, which often reduces the all-or-nothing risks of venture capital-funded startups. 

This approach can lead to more moderate but more frequent success stories.

Embrace the Monolith, Reject Microservices Complexity

In software development, two main structures are often discussed: monolithic architecture and microservices. To clarify, a monolithic architecture is like a toolbox where all the tools are stored together. Everything the application needs to operate is in one large, interconnected system. On the other hand, microservices architecture breaks down the application into smaller, separate services, each functioning independently like individual toolboxes for specific tasks.

While tech giants like Netflix have made microservices popular, it's never the best choice for smaller teams like ours. Microservices are great for handling issues that arise in large teams working on different parts of an application. However, managing multiple independent services can add unnecessary complexity for a small team.

Shopify is a solid example. They started with a monolithic architecture and rocked it for a good while. It was only when their growth and complexity demanded it – that they evolved into a modular monolithic setup. They avoided over-engineering early on, allowing them to move quicker without unnecessary complexities.

We're building a robust, reliable, and, most importantly, understandable and manageable product for our small team of 5 developers. It’s not just a technical decision; it’s a strategic one, ensuring we keep our development lean, mean, and on point.

Building a successful product is not about joining the latest tech trends but solving real problems and delivering value. 

Founder-Led Product

 Often, companies make the move to pull founders away from leading the product side of things, and it doesn't always go well. 

Take Apple, for example. When they shifted Steve Jobs away from product innovation, they almost tanked. Only when they were staring down the barrel of bankruptcy did they realize how much they needed Jobs' vision. Bringing him back wasn’t just a rescue mission; it turned Apple into the powerhouse we know today. It shows how much of a game-changer a founder's vision can be in taking a company to the next level.

Now, let's be honest about Product Managers (PMs): they are not mini-CEOs. They can't make the big bets like founders can. Their training, often focused on risk-averse strategies, leads to many "safe bets." PMs are not trained or inclined to place big bets like founders.

A PM excels at gathering user feedback, aligning the whole team, and advising on product bets. I am responsible for the decision-making at DevStats, for better or worse.

Users know their pains but not necessarily the solutions they need. If a PM at DevStats loses sight of who sets the vision, they're not the right fit here. 

Take Tesla and Elon Musk's approach: Musk's hands-on leadership is a major reason Tesla is so successful today. No doubt he made tough decisions at Twitter. Time will tell if he was right or wrong, but rebel founders always take charge. 

At DevStats, we’re sticking to a founder-led product strategy. It’s what sets apart the truly innovative companies from the rest.

Profitability and sustainability over aggressive growth

We prioritize long-term sustainability and profitability. 

This strategic choice is deeply rooted in the vision of creating a lasting and meaningful impact rather than being solely driven by the pursuit of growth metrics.

Simon Sinek's "The Infinite Game" makes the point that business is not a finite game with a clear endpoint; instead, it's an infinite game where the goal is to perpetuate the game itself. Sinek argues that businesses should focus on long-term objectives and adaptability. 

Success is not just about expanding our market presence but about consistently delivering value to our clients and making decisions that ensure our longevity in the market.

The recent trends in the tech industry, particularly the widespread layoffs in 2023, serve as a stark reminder of the risks associated with prioritizing rapid expansion over sustainable growth.

Companies that chased after high growth rates without a sustainable foundation found themselves overstaffed and unprepared for economic shifts, leading to significant job cuts and operational disruptions. 

Our commitment at DevStats to prioritize profitability and sustainability over mere growth aligns with the ethos of building something that lasts and thrives in the infinite game of business.

Create your own rules

These are my principles; you don't need to adhere to them. Let my rules inspire you to develop your own. However, avoid the pitfall of over-complicating things.

Looking forward to sharing more insights with you.

Let me know your thoughts on the first issue of Rebel Founder by replying to this email.

To Your Rebel Journey,

Phil Alves