Top-down businessmen and Bottom-up hackers

About top-down and bottom-up, how technology evolves and how markets change

In late 2021 to early 2022, I observed a stark pattern in the VC stories and startup news. There were perhaps more stories than ever of companies that succeeded through market analysis and copying successful benchmarks. Their approach is “analyze the market, find a logical reason for the product to succeed, and play a strategic winning game, following the footsteps of an overseas success.”

It's a top-down, "business" approach. Very strategic and calculated, referencing numerous benchmark success cases to follow a known ‘playbook’, and only target big enough markets.

An example: "Our model is to localize an item from company X that has been funded up to Series D in the US. They have proven product-market fit and solved most of the uncertainty, proving as a stellar benchmark. The market size in Korea is X dollars, and considering market condition differences in Korea and the US, our strategy address them with strategy 1, 2, 3."

Or it goes something like this: "This sector is a 1 billion dollar market, but just now transitioning from offline to online, and there are no players who are already performing well, so if we enter and execute well with this product, we can target X percent of this market. Relevant startups are X in India and Y in Germany, both performing well in their sector. They have raised Z dollars in their series D."

On the opposite end of the spectrum is the success model of Facebook's founding story in the movie <The Social Network>. The story of how a college student coded a site in his room and it became Facebook, which took over the world by growing exponentially.

Tumblr was similarly created by a reclusive but genius hacker. Slack was also created as an internal messaging tool, but when it was released to the public, users loved it so much that it became the company's main product. 1Password was a password management tool created by people who ran a web development consulting company. They were trying to solve a personal pain point, but after it was released to the public, users flooded in and changed the main product.

This model of success starts with a small MVP and gradually grows the company based on unstoppable traction, and when you wake up, you're in the middle of a huge market. I would describe it as a bottom-up approach, a "hacker" approach.

I don't think there's a superiority between the two models. Success is success, and there are plenty of success cases to validate both models. Amazon came from the top down (Jeff Bezos saw the internet growing at an insane rate, spent a year thinking about what business could work in it, and didn't start Amazon until he was 30), and Apple came from the bottom up (two computer geeks building computers in a garage).

And I don't even think the two models are exclusive. The bottom-up approach doesn't mean you have to be completely clueless about market conditions, and in the end, you need to be good at both top-down market breakdown and bottom-up product building to succeed, so it's just a matter of whether the founder was more inclined to one or the other when choosing items in the first place.

When I looked at the trend of top-down success stories in early 2022, my impression was that this B2C mobile app era has matured. Since web 1.0 and web 2.0 have matured to a certain extent, this “business” approach seems to lead to more success. The more mature the market, the less uncertainty there is, and the more stable the big-picture, consultant-like people can thrive with their skillset.

On the other hand, in the early days of the Internet and the early days of smartphones, we didn't know what the best practices are, and we didn't know the exact size of the market, the expected behavior of people, or the limits of the technology. The more technical uncertainty there is to a market, the more likely the hacker approach is to win.

In the mid-to-late 2000s, talent with app development skills was very scarce, and no one had a clear idea of the potential of this market. In this market and technology instability, simple apps like Angry Birds and Doodle Jump were able to succeed, and the ability to hack away rather than draw a big blueprint became a differentiator.

Whereas in 2022, app developers have become very common, so the ability to implement development is no longer a differentiator. Instead, there are many references to gauge the size and impact of the mobile market and enough best practices for a mobile product to follow. So the more I hear about these VC-backed startups and top-down startups, the more I think that mobile technology has become a mature technology that is quite predictable.

If there is a conclusion to this article, it is that you should quickly determine what kind of character you are better suited for and go in that direction.

If you’re the type of person who has a fast learning curve in engineering and prefer to get your hands dirty and try out different projects, you should take the bottom-up approach, but you’ll have to pick your fight in an immature uncertain technology-driven market (like generative AI or web3).

If you're conservative in your risk management, like to analyze the game, and want to derive thoughtful strategy based on success cases, you should take a top-down approach, but pick your fight in a large and mature market that have become predictable (like websites or mobile apps).

Again, I think both top-down and bottom-up are valid approaches, and if you can prove with actual success, you deserve my respect regardless of the approach.

In 2023 the era of generative AI, the hacker approach is once again thriving in potential, as there is much value to be realized but with much technologic uncertainty. Hackers, who can build product that users love, would thrive in these market conditions.

I’ve had my career as a software engineer and as a product manager, so I can play both games. I can break down the numbers of a market like a consultant and pick out successful product strategies, while I can also whip up a functioning full-stack MVP product within days. I think this is one of my great strengths as a founder, making me adaptable to any scene.

In these days, I embrace and bathe the uncertainty and serendipity of generative AI. The technology really resonates with me, and possibilities seem endless. Taking the hacker approach, it is now my sole focus is to build something that users love.