Startup culture (and the startup mantras it peddles) has never been hotter. I recently (and embarrassingly) watched back-to-back-to-back episodes of Shark Tank, West Texas Investors Club and the Profit – all on a single channel. You can thank (read: pay) me later, CNBC.
However, the reality is that entrepreneurship (in the United States) has been steadily declining since the Great Recession. For the first time since the 1970s, more business are dying each year than are being created. (Source: Kaufman Foundation).
We are not creating enough new businesses…or too many business are dying…or both. And these 5 startup mantras are (partially) to blame.
Startup Mantra #1: It’s All About the Tech
Of all the startup mantras currently misguiding entrepreneurs, the blind allegiance to technology has perhaps the most chilling and discouraging effect. If it’s all about the tech, then people like me (with a history and law degree) have no place in entrepreneurship. We are constantly told that we need to find a technical co-founder – a task so impossible I’m convinced it’s just a ploy to get us to give up. Fortunately for us, technology, to a large extent, has become ubiquitous and cheap to develop; relatively few new startups are entirely dependent on novel technology. Fall in love with ideas that are “tech enabled” and not “tech dependent.” Your first, and largest, hurdle will disappear.
Startup Mantra #2: Venture Capital is the Benchmark of a Successful Startup
We see it from founders who brag about being “backed by X, Y or Z.” We see it from service providers who refuse to work with companies that are not “venture backed.” When did venture capital become the benchmark of the success entrepreneur? If venture capital is a necessary condition of the successful entrepreneur, then what about 99.9% of the population who don’t feel connected to this high-brow source of capital? We must redefine the notion of “success” or risk discouraging aspiring entreprenerus who fear they might “fail” based on today’s misguided standards.
Startup Mantra #3: A Successful Startup Ends With an Exit
Just as venture capital defines a successful entrepreneurial start, a large exit has come to define a successful end. I’m guilty of it myself: When an entrepreneur asks for my consulting help, I find myself scanning their LinkedIn profile to see if they’ve had a successful exit in the past – as if a lack of liquidity events signals a “wantrepreneur” not worthy of my help. That’s just not true. Some business models don’t lend themselves to massive 9-figure exits. And some entrepreneurs are so passionate about their business they’d rather build a generational empire than cash out and move on. Don’t let the expectation of an exit keep you from chasing your idea. You don’t have to be great to get started, but you do have to get started to be great.
Startup Mantra #4: It’s Better to Fail Fast than to Succeed Slowly
Steve Blank’s The 4 Steps to the Epiphany, and the Lean Startup Methodology it spawned, have been teaching entrepreneurs to “get out of the building” and “fail fast.” If an idea isn’t immediately promising, pivot (read: give up) and move on to something else. While this approach may work for geeks like me who love the journey as much as the destination, it can also produce “zombie entrepreneurs” who lack passion for their current project and give up (read: pivot) at the first sign of resistance. I’m not suggesting that you ignore customer feedback and try to force a square peg into a round hole. But if you’re passionate about an idea, dive in (feet first, to be safe) and try to make it work. Otherwise, while you’re wait patiently for the “perfect” idea, dozens of “good” ideas will become billion dollar startups.
Startup Mantra #5: Focus on User Growth (the Rest Will Follow)
Your business doesn’t have to be profitable day one. But if you can’t finance your cost of customer acquisition with early revenue, you’ll inevitably need to rely on venture capital to finance your early growth…hence the proliferation of Startup Mantra #2 above. Don’t put yourself in this position. Develop a business model that generates early revenue sufficient to finance your own growth. Sure…organic growth is slow. Buts it’s also steady and can survive a funding crunch.
The popularity of startup culture and the resulting proliferation of the startup mantras above are hurting good ol’ fashioned entrepreneurship. They suggest that entrepreneurs must raise significant capital, manage exponential growth and seek nine-figure exits in order to be successful. This intimidating standard discourages would-be entrepreneurs from taking the plunge and steers those who do down a difficult path.