

The Startup Racket - DanielBMarkham
http://www.whattofix.com/blog/archives/2010/04/the-startup-rac.php

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edw519
Nice little rant, Daniel. Certainly struck a nerve here.

Sometimes I think I'm living in two worlds, the customer world, where everyone
is scrambling to get stuff done, and the startup world, where everyone is
talking about what the customer world should be like.

Don't misunderstand me, though. I love the startup world. There is an
underlying current of optimism that I rarely see in the customer world, where
people are just too busy to see the possibilities if they hit them in the
nose. Sometimes I have to grab my customers and yell, "Let's slow down for 5
minutes and think about a better way to do this!"

In the startup world, it's often too easy to lose sight of the definition of
success. Success is not starting a business, getting into an incubator, or
securing funding. Success is satisfying paying customers over and over again.

In the past 6 months, I've had 5 different customers ask me for the same
thing. I described my approach to satisfying them to a startup investor
acquaintance. He told me that no one would ever pay for it. Now I know I'm on
to something.

I like living in 2 worlds. It helps me maintain perspective. Sounds like it
works that way for you too.

~~~
jasonlotito
"Success is satisfying paying customers over and over again."

Providing value.

I'll be honest. I never understand why people get so excited when a company
announces it's looking for funding. To me, if you are looking for funding
after a product has launched, it just seems backwards. After all, if your
product was good, it wouldn't need funding after it launched.

I guess the idea with this is you need to spend a lot to bring it to a point
where it's profitable. Google is an example where profit really couldn't exist
until it grew large enough, and it couldn't really grow large enough without
money, etc. Facebook is the same way. Twitter, too (Okay, does Twitter
actually make money? Is it in the black?). But all these things focus on
making money via advertising.

Anyways, enough of my useless questions. It was a good read.

~~~
holdenk
The idea that once you launch your product you shouldn't need funding doesn't
seem intuitive to me. Sure writing code is hard, but there is a lot that goes
on after your initial launch, and a lot of these things cost money (like
sales, marketing, etc.).

~~~
jasonlotito
I'm sorry if I wasn't clear. I'm not against funding. It just seems like
getting fund to start up, and then additional funding after you've launched
seems odd. Sales, marketing, etc, should be covered with the initial
investment. Needing more money just sounds like poor planning or foresight.

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nroach
Many of the things Daniel said resonated with me. Certainly, the online
community around startups can have a low signal to noise ratio. But, there's a
much bigger world outside Twitter, HN, and similar outlets.

I'm an attorney and most of my practice is IP and business litigation. But
only a handful of my clients play to the broad consumer market. If you filter
out the Mom-n-Pop shops and the VC-backed tech companies, there's a huge
population of companies in the middle that started with Angel or F&F funding
and have found really interesting business models entirely on their own.

There's a lot to learn from the mistakes of others, and the various startup
"movements" can be a wonderful source of community. But at the end of the day,
the founders I work with who have built successful enterprises generally have
done it on their own.

At the end of the day, if you want to build a brick wall, you just have to
start laying bricks.

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hcho
See what patio11 writes on his blog. If you manage to bring your interesting
stuff to half of the level his Bingo Cards business is, you'll have your
traction, proven bussiness or whatever you feel you don't have.

~~~
patio11
Thanks, that means a lot to me.

On the subject of the article: Somebody please give me a sharp rap with a
wooden spoon if I ever sound like being a pundit is my job and writing and
selling software that solves problems for people is my quirky hobby. It should
be the other way around.

~~~
plinkplonk
"Somebody please give me a sharp rap with a wooden spoon if I ever sound like
being a pundit is my job and writing and selling software that solves problems
for people is my quirky hobby."

Unfortunately, this is exactly what has happened to some people who are
pushing the "lean startup" meme as consultantware. You (patio11) are an
inspiration and role model. Thanks for your candour, humility and wisdom. I
doubt we'll ever need that wooden spoon!

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devinfoley
Great post. Thank you.

There are a lot of people in the business of selling information to would-be
entrepreneurs. Their rallying cry is "never give up!" Sometimes I wonder if
they are only saying "never give up!" because giving up means losing
customers. Not everyone is capable of being an entrepreneur, and some should
give up.

There are some great resources out there on startups, but most of the
information out there reminds me of late night infomercials about how to make
money from home.

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philk
Good stuff. It seems that every field of endeavor that's difficult to make
headway in and has no clear pathway to success has this kind of industry grow
up around it.

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pwntifex
As a self-funded startup looking to raise a small angel round without much
traction yet, I am fairly sympathetic to this article. However, I still
wouldn't go as far as calling investments in startups with traction, cash-
flow, and coming from a good personal recommendation "low risk". Most of these
startups will still fail.

I also don't think it's unreasonable for VCs and Angels to use these markers
in determining whether or not to invest. There are still lots of deals
available to VCs and Angels and these are some of the better filters to find
the best ones. If there weren't enough deals available where startups could
provide these metrics, the market would correct itself.

Lastly, while I do agree that the "pay" industry around how to run a startup
doesn't provide much value, I don't see it as too much of a problem. There is
a plethora of really valuable information available for free from successful
entrepreneurs who give back to the community through their blog posts and
talks. You'd have to be a fool to pay to learn how to run a startup when you
can learn all the best advice (from people who have succeeded at it) for free.

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dpnewman
I like the article.

I think a dominant pattern is to try and put forth gospels from the
experiences of successful startups. All worthwhile to explore, however,
sometimes it starts to feel a bit mechanical. Each context is so unique. I
tend to think that there are so many potential paths, and agility is in part
being creative with carving your own.

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F_J_H
Good post. I have had similar thoughts lately, but have never taken the time
to articulate them. The analogy to the writing industry is a very good one.

I once heard that the people who did best during the gold rushes of previous
centuries were those who sold picks, shovels and gold pans to all those with
the big dreams of striking it rich…

~~~
rmc
Yeah I love the annecdote. When there's a gold rush, don't be the guy digging
for gold, be the guy selling shovels.

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avk
You choose how much you want to consume from the community. I think that in a
startup, there's a learner's schedule in addition to a maker's and manager's
schedule. It would encompass going to meetups, reading blogs, attending
conferences, listening to podcasts, following Twitter, etc. It can easily take
over your whole day if you let it but it's ultimately up to you how much time
you want to invest and on what schedule.

