What's the Difference Between a Side Project and a Startup? / Obsession with Product vs. Obsession with Distribution

"What's the difference between a side project and a startup?" Jacky Zhao and I discussed in a call today.

I brought up a Justin Kan quote mentioned in an earlier conversation I had with Ivan Zhao:

First time founders are obsessed with product. Second time founders are obsessed with distribution.

When working on a side project, market and distribution are not primary concerns; the idea for the project is. Side projects are meant to be useful or experimental, not become a viable business. Startups, on the other hand, have being a viable, or ideally exponentially growing, business as their primary goal. Considerations for product are secondary to considerations for having a potentially fruitful problem and gaining customers.

It's natural that, moving over to a first startup, a founder would default to side project intuitions and focus on product, as Justin Kan said. When VCs evaluate early-stage startups, though, they're not looking at the product and the idea. Instead, they look at the market, founder, and team. Is there opportunity in the market that the problem targeted is in? Are the founder and team competent and ambitious? If you have a driven, competent founder working on a problem in a market ripe for disruption and capitalization, the specific product doesn't matter. Pivots can always be made. But the market needs to be there. This is what second-time founders realize, placing their own primary focus on distribution rather than product.

This outlines the fundamental difference between side projects and outlines. The primary objective of side projects are to build something cool, with monetization and distribution as a secondary consideration, if one at all. The primary objective of startups, necessarily, are to create a viable or high-potential business, with all product considerations ultimately supporting business goals.