Analogies v.4 — Aquariums and Startups- creating new worlds

Part 1.

Years ago when I lived in Arizona, I proudly showed off my 250l saltwater aquarium to a guest — after a brief inspection he commented — “have you noticed how its lawyers and doctors that have the biggest aquariums — must be related to their need to play god…” I definitely wasn't expecting that — but there was something to what he said.

Starting a fish tank is like a real life SIMS game — constructing your own world where you pick every single living and non-living piece, put them together, and watch it grow into a fully functional ecosystem (sometimes not). This has always been fascinating for me about aquariums. I have now kept saltwater reef tanks on-and-off for about 20 years.

Scrubbing the glass I have found myself noticing lessons learned in keeping tanks being also applicable to some startup situations. Aquarium world building has a good bit in common with building a startup.

1. As always, start by Googling

14.7 million American households own a pet fish, there are now even several TV reality shows about aquarium projects. So you figure — how hard can it be … but as always, you should start by Googling.

People who don’t do the basic research will pack up their new tanks in 3 months and write off the investment, and unfortunately the lives of marine creatures and fish with it. Most could have kept the €1,500 in the pocket and put the time and effort into something more suitable.

Simple seeming exercise of setting up a fish tank quickly becomes a real challenge if you want the cool stuff (shrimp, anemones, bright tropical fish, crabs etc.). Saltwater aquariums offer a beautiful array of colors and amazing creatures, while freshwater aquariums are mostly … what you see in the shallows of your local lake.

2. Research the challenges — is this really for you?

Based on looks — saltwater seems like a no brainer — everyone really loves the color and wonder of a saltwater tank with shrimp, crabs anemones and bright blue and yellow fish. However, to successfully keep a reef-tank like that you have to become more than a casual acquaintance with the hobby. You have to become a real fan — because a saltwater tank takes a lot more time and effort than a sudoku or jigsaw puzzle hobby.

While freshwater tanks will survive fine on an office desk in a cubicle, saltwater tanks require an enthusiast willing to make more space and a bigger investment in the hobby. It’s also like going from checkers to chess in complexity — turns out trying maintaining a full marine ecosystem at your house in the Arizona desert is quite challenging.

With freshwater tanks you can refill your tank from any water outlet in your house. With saltwater you actually have to “create” every liter of water you will ever add to that tank. You will have to regularly make saltwater by mixing synthetic ocean salts, crushed calcium and other minerals. Also, saltwater tank temperature, unlike freshwater, has to be always kept at a tropical 25 to 28 degrees 24/7/365 regardless of how warm you keep your house.

3. If still interested, make a plan — it will fail, but you will learn

Aquarium god status comes with responsibilities, including providing for your living things (fish, shrimp, corals, crabs and algae)— space, light, heat, food and clean water — with 99% precision.

Space- solved, many options with acrylic and glass tanks for any space, online ordering and design with delivery. (You will probably buy a tank that is the wrong size/shape for your space. If you have had a tank before, you already know and buy twice as big)

Lights — solved with a modern high efficiency LED platform that can provide nature perfect lighting 24/7 with automatic sunrises/sets, tropical moon cycles. You will shocked at the cost of a good LED reef system, but you will have Light solved — like a Boss! (Third time around you will probably double the lighting budget)

Food — solved, ordering pellets is cheaper than cat food from Amazon. Automatic feeder can automatically do time released feeding cycles for two weeks. After some experiments and trial and you will see what feed/system works for you — Food solved — like a Boss!

Heat — solved, compact water heater from Amazon with an automatic on/off heating regulator with a temperature sensor. Easy Peasy. (Second time around you will buy two water heaters, inevitably the first will fail on the coldest day of the year when your car is snowed in)

Water —…. never fully solved; in the aquarium your pets poop can't just be out-sourced into your neighbor's yard with precision lawn mowing. It all collects in the tank until filtered by something living or by you through filters, skimmers and reactors.

All new water has to made from ROI filtered water mixed with quality reef salts, minerals and chemicals. To remove toxins from water and replenish the water that is evaporating all the time, you have to make weekly top-ups and water changes (10–30 liters), adjusting the sality, calcium, magnesium and other elements necessary for the corals, plants, snails, crabs etc. These parameters can vary dramatically with amount of lighting, temperature, growth of corals, addition of fish, seasons and more. Water will also require filtration and aeration just like in the real ocean. This could mean the addition of skimmer and wavemakers, or even more sophisticated technology, to go on top and under your tank.

Even expert enthusiasts struggle with water quality, you just have to learn through iterations and work out a routine that works for the ecosystem you created in your tank. You also have to accept that there will be spikes and canyons in key chemicals, and still +30% the time you will have no idea exactly why. Overall though, previous experience in tank keeping probably doubles your chances of success with a new tank.

With startups, investors also naturally prefer serial entrepreneurs because they have built worlds before. The initial enthusiasm of first time founders will only take them so far, to push forward they will have to become dedicated enthusiasts/evangelists of what they do, and likely have to incorporate significant lifestyle changes if they aim to persevere.

Smart repeat founders have learned a lot of lessons, and can pre-empt various issues in their new ventures, they have already developed the necessary heuristics to be successful. Successful ones have demonstrated they can communicate a convincing vision of what they want to create, and rally the resources to build a business towards that goal.

Serial entrepreneurs have gone through the process of recruiting a diverse team, building a solution, providing customer value and raising financing to make it all happen. There is really no effective way to shortcut this process.

The same can also said of the startup’s initial hires. Good developers and marketing people that have worked in a high growth investor funded startup before will make very valuable team members. If they already understand the expectations for execution, dedication to measurable progress, and the commitment to growth your job as founder will be a lot easier. First time founders, and green early employees, even the very best, by definition will always make more “rookie mistakes.”

On the other hand, experience does not translate directly to success — corporate hires could really struggle in the pre-Series A startup environment, as they have learned mostly inapplicable lessons in hierarchical corporate environments and political structures.

4. Everything takes longer and costs more

In your aquarium dreams you will budget a week and €1,000 for your tank, naively thinking you have included reserves in there. The reality is that usually you will spend another €1,000 to keep all the stuff you have just bought and put in the tank alive and working over the next year.

For many early enthusiasts, this extra €1K spending is pure sunk costs fallacy, and within 6 months they will write-off the whole €2,500, plus often another €1,000+ cost of fixing water damage to their carpet/parquet floors. The survivors will learn to set up a workable system to make their life easier, and reef-keeping more enjoyable. These few survivors will go on to have beautiful and easy maintenance tanks with an amazing ecosystem to enjoy.

5. Initial success creates new challenges

If you persist, in about a year, you will notice that your corals are expanding, fish thriving, the reef rocks are starting to be covered with beautiful coraline algae in purple, orange and yellow, and you can see how organisms have formed various virtuous symbiotic cycles. Much of the new lushness is fresh new growth from you having built a great ecosystem for all these sea creatures.

What this means though on the operations end, is that to keep this going, you will now have to start measuring and adding to the water mix all the new necessary additives (calcium, magnesium, strontium etc) that corals and invertebrates are using up for growth. You will probably also have to start feeding specialized coral and invertebrate nutrients to support the coral growth.

This extra work requires a new level of dedication from the fan. They have to understand and control the new water chemistry parameters. This also often requires next level equipment — the pro level reef-tank lighting, dosing, sensors, reactors, additives are very expensive (used motorcycle price). Even some experienced tank keepers will pack-up their tanks at this stage, realizing that the continuing additional cost and commitment is beyond their dedication level.

Founders that have gone from having an idea how to solve something, talking to potential customers, to building something useful and raising the first investment to create the first version of the solution have already made a tremendous leap forward. Startup success and initial customers are a great signs that you may be onto something interesting, but growth will bring on a host of new challenges and expectations from your initial customers.

At this stage founders realize that their beta/pilot version of the platform is great for initial users, but will not work with an order of magnitude growth in tasks. Often the platform has to be re-written, frequently from scratch, to accommodate the services and value promised to the customers. Furthermore, with new markets — the entire business model and marketing campaign have to be redrawn based on the lessons learned from the first customers.

Early customers are great reference, but growing out a successful business model will require significant scaling in team, performance and technology. Success in large foreign markets will often require moving your HQ (and your family) to y0ur target, which could be on another continent. Between Seed and Series A stages your team could easily go from 20 people to 120 , and to 300+ in Series B and later. Entirely different set of skills and dedication is needed to run a 30 person team versus 300.

Some founders will decide that they would rather go on to the next project, or take a back seat in their project when faced with the big challenges ahead of them. Some founders are not interested in making these changes. some are not capable in making the changes, and some just can't make the change due to their life situations. Most also realize that this whole exercise will have to be repeated again for probably at least two-three more rounds of financing and growth.

Since the pre & post product-market fit CEO/CTO/CMO roles are dramatically different — there is no shame in founders making a realistic personal assessment at this stage on how they want to proceed. Investors prefer founders have the drive to go all they way from founding to IPO. Nevertheless, we know that every founder is different and it makes best sense to periodically re-evaluate with the founders the aims, ambitions and abilities.

Every founder should also periodically ask if they really are still the best possible person for the job.

If — yes — awesome! keep going.

If — maybe or no — it might be time to bring in a pro and shift to a position where you can add the best value to the startup.

to be continued soon…