The Physics of Startups

Or: how to stop falling for fairy tales

An apple falls from a tree. The crowd gasps. Why did this happen?

“The apple had pain points and problems in the tree!” explains one.

“No, you fool, the ground offered compelling ROI!” says another.

“Idiots! The apple WANTED the ground!” Says one Mr. Y. Compinater.

Someone in the crowd grumbles that CHINESE apples fell weeks ago because they work harder, and don’t get me started on those lazy European apples… another person shouts about their 72-step methodology that’s guaranteed to make your apples fall with AI (you won’t BELIEVE step 3!)

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There is physics, and there are fairy tales. Startups are governed by physics - a set of causal forces.

We are taught about startups as if this is not the case. As if startups work due to some random, unknowable mixture of hype, luck, and grind. As a result, we fall for fairy tales and LARP around without realizing it.

The physics of startups, in six points:

#1: Demand is what causes buyers to buy things. As Bob Moesta says, purchases are always caused - they are not random! Something in a buyer’s world causes them to prioritize a project on their mental to-do list. When they have a project on their mental to-do list, they choose the supply option that best helps them complete their project. Their supply options include things like DIY, hiring someone, or buying our fancy tool. If a potential customer isn’t prioritizing the project on their mental to-do list, they’re not doing or buying anything, no matter how fancy our product seems.

This explains why so many startups struggle with sales and growth: We are so focused on pushing our product that we don’t see that customers are in motion in their particular direction. Their direction is what makes our product relevant (or not). We tend to push something that makes logical sense, but fights against physics!

#2: PULL - a specific permutation of demand - causes a buyer to buy OUR thing. The buyer is weird NOT to buy our startup’s product if they have an unavoidable project with unworkable alternatives, that our supply uniquely fits. Customer PULL causes our product or service to work, or not.

#3: Our business simply serves demand. Everything we do only works if it fits buyers’ demand; demand causes the activities we do to work, or not.

#4: Fast-growing startups can only grow fast BECAUSE many buyers have PULL. Hustle, branding, hype, etc. only work if there’s a lot of PULL out there.

#5: The goal is to figure out the specific physics of our business. Based on what we know about our customers’ demand and options, what exactly is the right “shape” of our business (product, pricing, etc.) that buyers pull, and what is the set of activities we should do (GTM, support model, etc.) to channel and serve that pull?

For example, we might need to offer a money-back guarantee and slick PLG-style onboarding; for someone else’s business, this might offend their potential customers.

#6: Physics helps us focus confidently. Without some causal theory in our minds, we flop about in the wind, following the latest hip idea. We can waste away forever in this awful state - I’ve wasted years there. Growing up, I a recurring nightmare that I was sprinting as fast as I could, and going nowhere. That’s the startup world sans physics.

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As I write this, I can finally articulate why I’ve written ~a million words over the past decade: I’m trying to figure out the physics of startups, in a world of fairy tales.