The Startup Myth(sixmonthmba.com)
sixmonthmba.com
The Startup Myth
http://www.sixmonthmba.com/2009/03/the-startup-myth.html
21 comments
i feel like it would be a great article if it weren't playing totally on semantics to write a sensationalist article.
he's basically labeling startups and startup culture as the "bad business" subset of entrepreneurs. it is not the case that all startups are bad businesses, nor is it the case that all entrepreneurs are running good businesses.
he could totally skip all of that labeling and write an article on running good business.
he's basically labeling startups and startup culture as the "bad business" subset of entrepreneurs. it is not the case that all startups are bad businesses, nor is it the case that all entrepreneurs are running good businesses.
he could totally skip all of that labeling and write an article on running good business.
Too close to the bone? Seemed more like too close to trivial to me.
I took an eighteen month detour from my own business to go work for another startup. I was broke from trying to get my company to break-even, and they were boomer-aged Microsoft millionaires who told great stories about their product and the funding that was right around the corner. That was in 2006, and they're still telling the same story today. The difference now is that they no longer have any employees, and the CEO is essentially living out of his car.
They obviously didn't eat Ramen (although it's possible they might now), and they weren't 60 days late on the power bill, but they were just as absorbed with the idea of the startup. For them it was about telling the story of their imminent success, and more importantly, getting other people to believe it.
You obviously have to believe in what you're doing, and of course the startup atmosphere can be incredibly thrilling, but the author's note that "we need more people wanting to build companies, not startups" rings particularly true for me. I don't think he's saying that every startup should plan to become a staid, monolithic corporate giant. I think he's saying that you should have a credible plan for organic growth. Even if your end goal is to get funded so you can get out, this will be a thousand times more likely if you can demonstrate multiple consecutive quarters of growth. Then even if you don't get funded, you've at least created a viable business.
They obviously didn't eat Ramen (although it's possible they might now), and they weren't 60 days late on the power bill, but they were just as absorbed with the idea of the startup. For them it was about telling the story of their imminent success, and more importantly, getting other people to believe it.
You obviously have to believe in what you're doing, and of course the startup atmosphere can be incredibly thrilling, but the author's note that "we need more people wanting to build companies, not startups" rings particularly true for me. I don't think he's saying that every startup should plan to become a staid, monolithic corporate giant. I think he's saying that you should have a credible plan for organic growth. Even if your end goal is to get funded so you can get out, this will be a thousand times more likely if you can demonstrate multiple consecutive quarters of growth. Then even if you don't get funded, you've at least created a viable business.
Is there really a huge faction in our community who isn't in business to make money? When I left my middle class desk jockey job to work for trailbehind.com the chance (however small) to create and own a valuable business was the main motivator.
I think that the author has a fundamental misconception about what a "badge of honor" is. Soldiers don't spend months or years in the trenches with the purpose of earning "badges of honor" they go into the trenches because they have to. The badges are awarded after the fact to recognize the accomplishment of putting everything on the line for some greater purpose.
While we are not soldiers, we do risk big chunks of our life because we believe in our products and businesses. We eat Ramen Noodles and scrimp by because the pursuit of our goals require us to, not because we like it.
I also think that the author has misconstrued the "badges of honor" concept. People get badges of honor as a reward for being in the trenches, they don't go down into the trenches with the main intent of earning a badge of honor. You are in the trenches because you have to be. While
I think that the author has a fundamental misconception about what a "badge of honor" is. Soldiers don't spend months or years in the trenches with the purpose of earning "badges of honor" they go into the trenches because they have to. The badges are awarded after the fact to recognize the accomplishment of putting everything on the line for some greater purpose.
While we are not soldiers, we do risk big chunks of our life because we believe in our products and businesses. We eat Ramen Noodles and scrimp by because the pursuit of our goals require us to, not because we like it.
I also think that the author has misconstrued the "badges of honor" concept. People get badges of honor as a reward for being in the trenches, they don't go down into the trenches with the main intent of earning a badge of honor. You are in the trenches because you have to be. While
There is a difference between being in it to make money and having no plan to make that money. Those that have a plan find it very easy, even in todays climate to make money. Those who don't won't. The future is clear, make money or perish.
I often have to point out to entrepreneurs the difference between an idea, project and a business, regardless of how many "eyeballs" they have.
I often have to point out to entrepreneurs the difference between an idea, project and a business, regardless of how many "eyeballs" they have.
Entrepreneurship is about turning every dollar of resources spent into something worth more than a dollar.
Including your time. Even if you can live on $100 per week, your time is still worth $100 per hour, so that's how much value you need to create with every hour.
But it doesn't need to be $100 cash, but of value. Warren Buffett doesn't evaluate companies by their current price, but by their likely future worth. A key factor in evaluating worth is their economic moat - their enduring advantage over competing companies. Therefore, creating more than $100 of economic moat in an hour is a good use of your time.
Of course, Buffett doesn't invest in startups or even tech companies like IBM. Tech is too unpredictable: a product that is good + a market that actually wants it. Your success or failure is not predictable from data points - it pretty much is the first data point.
Including your time. Even if you can live on $100 per week, your time is still worth $100 per hour, so that's how much value you need to create with every hour.
But it doesn't need to be $100 cash, but of value. Warren Buffett doesn't evaluate companies by their current price, but by their likely future worth. A key factor in evaluating worth is their economic moat - their enduring advantage over competing companies. Therefore, creating more than $100 of economic moat in an hour is a good use of your time.
Of course, Buffett doesn't invest in startups or even tech companies like IBM. Tech is too unpredictable: a product that is good + a market that actually wants it. Your success or failure is not predictable from data points - it pretty much is the first data point.
Umm, considering the hard attitude the article presents, the actual content is really rather fluffy.
I can think of a word in response to this article: straw-man.
I can think of a word in response to this article: straw-man.
He's applying labels which is never good. Startups have a huge range and aren't necessarily just people who are living on ramen hoping to strike it big. I think this is a huge misconception in fact. While there are people out there who are experimenting with new trends, there are also many people (from what I've noticed) who have found a target market and are able to pull in some money. I would be interested to see some statistics on sv startups vs. general entrepreneurs across the US.
i think it might be hasty generalization or slippery slope instead of straw man.
there are plenty of people who do live the life as described. however, there are plenty more who don't. he's attacking a fraction like its the whole.
there are plenty of people who do live the life as described. however, there are plenty more who don't. he's attacking a fraction like its the whole.
What I find deeply offensive about this article is that he doesn't acknowledge that many, maybe most people who fail at creating "real" companies, fail not because they set out to create "just startups" or because they incompetent or because they lack the secret source, but because they face serious competition.
A minor league play or second string player can look bad compared to the very top of the professional leagues. But they aren't really bad, just not as good. Lots of people who only get to startup level are great, just not great enough to get all the way to successful company level.
And, again like sports, the pressure-cooker, the competition, is what makes the ultimately successful companies so good.
This guy is like the most offensive kind of little-league coach, the one who says "I don't want to hear any excuses for you coming in second" - someone who doesn't credit effort, who doesn't see that not everyone can win and who doesn't see that game itself is worthwhile.
A minor league play or second string player can look bad compared to the very top of the professional leagues. But they aren't really bad, just not as good. Lots of people who only get to startup level are great, just not great enough to get all the way to successful company level.
And, again like sports, the pressure-cooker, the competition, is what makes the ultimately successful companies so good.
This guy is like the most offensive kind of little-league coach, the one who says "I don't want to hear any excuses for you coming in second" - someone who doesn't credit effort, who doesn't see that not everyone can win and who doesn't see that game itself is worthwhile.
... get a billion or die trying!
I don't buy the "create big companies to create many jobs" mantra. A one man company creates one job, and leaves one more job available in the market for someone else. That's a contribution in my book.
I don't buy the "create big companies to create many jobs" mantra. A one man company creates one job, and leaves one more job available in the market for someone else. That's a contribution in my book.
The job market is hardly a zero-sum game, though. By growing from a startup to a major player in an industry you helped found, you can do a lot more economic good than you would by creating one job and leaving one available in the existing market.
A one man company can easily create jobs if it hits the right niche and unlocks a sub-market of related goods and services. So no, you definitely don't have to get big.
>"The world would be a much better place if less people tried to build startups."
fewer people
I really don't want to be a grammar nazi, but starting off with an error in the very first sentence made me less interested in reading the rest of the article.
Yes, I realize that English grammar is changing, that countable/uncountable distinctions are less important than they used to be, and that "less + a countable noun" doesn't sound bad to everyone anymore. But to some of us, it looks like it was written by a struggling high school student. There are so, so many things to read on the internet that readers can be driven off by minor blemishes at the beginning of a piece.
fewer people
I really don't want to be a grammar nazi, but starting off with an error in the very first sentence made me less interested in reading the rest of the article.
Yes, I realize that English grammar is changing, that countable/uncountable distinctions are less important than they used to be, and that "less + a countable noun" doesn't sound bad to everyone anymore. But to some of us, it looks like it was written by a struggling high school student. There are so, so many things to read on the internet that readers can be driven off by minor blemishes at the beginning of a piece.
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Well done. I love what I do... I hope that is what it means to run a start-up.
The author is basically telling people not to create bubble startups. If you want to create a business, create one that has value. Don't just create a startup for some romanticized ideal.
It is sound advice, even if it cuts a little too close to the bone for some.