Keith Rabois argues startups should tackle their hardest problems first, not easy wins. Stripe delayed building its risk function because other priorities mattered more, but eventually created world-class expertise there. Focusing on hard challenges early forces breakthrough solutions that define lasting companies.
Chapters
One other counterintuitive philosophy of building a startup is to take on the most challenging problems first, not the easiest. A lot of people focus on the things that they know how to solve and they do them and then they defer solving the really intricate, the really difficult technology, the really difficult unit economics problems, the really difficult customer acquisition problems until later. Our philosophy, both at Coastal Ventures and Founders Fund, is to take on the most important challenges first. Get comfortable that you have a solution to those, and you can eventually solve the easier ones just by execution. But if you don't innovate and you don't really come up with interesting breakthroughs, your company isn't going to be one of the companies that people remember forever. One illustration of this approach was Stripe deferred solving and innovating on the risk function for a very long time. At first, that was counterintuitive because risk is one of the kinds of issues that almost killed PayPal back in 2000, 2001, 2002. But what Patrick and John understood early was that because there was a path forward that PayPal and others, Square included, had already proven could be done, that wasn't the top one or two risks for Stripe in the beginning, and that could be safely deferred until later. Now, Stripe is extremely expert and excellent at it. But for several years, they deferred the investment in pioneering risk innovation because they knew it could be solved and there were more important things.
