The coffeeshop fallacy
thestartuptoolkit.com
thestartuptoolkit.com
The lifestyle I wanted: pretty much as close to zero required work as possible, the ability to do said negligible work from anywhere I feel like parking myself (preferably with good rock climbing), enough money to live comfortably there.
Absolutely achievable, with a couple years of effort (and achieved, by the way.) Try doing that in any other high-paid, high-prestige profession (Doctor, Lawyer, Banker, whatever). Can't do it. Too much doctoring, lawyering, etc. taking up all your time. Sure, you can set up your own practice, staff up, and eventually get the thing running on autopilot. But certainly not in your spare time after work, and definitely not for a few hundred dollars, all in.
So yeah, set your goals right and you'll find you've chosen the one industry where you really can own that coffeeshop.
also, i don't think software is viewed as a "high-prestige" profession.
It really depends on where in the world you are.
i lived many years in sf and mountain view. even there, being a "product manager" is higher status than "software developer" or "engineer".
You thought about this, so how do you describe your profession?
Back when I was doing software development every day, the answer was something closer to "You know X university? I make sure their entrance exams run smoothly."
For a generic software developer, "I make my employer absolute piles of money by being clever in the general vicinity of a computer."
I think the best approach is a middle ground, rather than say what you are, or what the ultimate result is, just say what you _do_. "I build websites" or "I build iphone applications" or "I run servers and networks" is something accessible that people can comfortably take wherever they want, e.g. "what language?" or "oh, i just downloaded this cool app that ..."
You need to internalize something about marketing. When Patrick says, "I helped 2 million kids learn how to read", he has framed the conversation in terms of the value proposition he wants to talk about.
Statistically speaking, "nobody" cares about websites and iPhone applications. Moreover, virtually nobody --- even practitioners --- can tell the difference between someone who is good at building a website and someone who is working from a copy of "learn PHP in 3 hours". Saying what you "do" is a remarkably bad strategy.
If the thought of explaining the broad value you choose to provide to people produces cold sweats, my recommendation is "practice more".
I guess I was thinking more in line with the last person who asked me this a few days ago: the 52 year old no-nonsense guy carrying a 10 year old nokia who just painted my bedroom. "I helped 2 million kids learn how to read" would have gotten me an eyeroll and a handful more drips left behind. "I build websites" got us on a conversation on how he wants to start a youtube show with his hunting exploits.
Framing the conversation is important, but knowing your audience is just as much so :)
There are two ways to make people value you: 1) create value, or 2) create the perception of value.
Going around saying "I help 2 million kids to read" sounds like the latter. If you really did help 2 million children to read, and I'm not talking about putting a few words in front of them, but actually having a material impact on literacy levels of 2 million children, then I think your achievements would speak for themselves.
And software developers that make millions for a company in a weekend? Please. Not impossible, but I doubt that people who actually do this need to say it.
patio11-type answers -- Cathedral Thinking answers -- otoh, open the doorway to conversation. They are the statement equivalent of open-ended questions.
I tend to tell people that I "help small businesses kick ass," which is def an accurate Cathedral Thinking answer, but lacks verve. Still looking for my perfect response.
It's amazing what people will do for "prestige".
So there's an interesting idea... Lots of startups start up in coffee shops, at least occasionally overstaying their welcome (from the coffee shop owners point of view). It probably wouldn't be _too_ much of a stretch for a talented developer/consultant to back a $200k investment in return for "office space" for him and his cofounders/employees...
(In much the same philosophy as Starbucks "3rd place" style of business)
I believe they avoid the health inspections by simply giving away the coffee and pastries, employing a Keurig machine, or locating in a hip area near good coffee shops, which is often the case. If you provide an ergonomic desk and chair in a quiet room with great internet, then coffee and pastries are less important.
People don't open coffee shops to drink coffee all day any more than someone would open a bar because they want to drink all day.
My brother is a wine maker. He is insanely passionate about wine (Pinot to be precise). When he's not working he's talking about and sharing wine. But at the end of the day, he's just a farmer. He tends his vines, picks the fruit, puts in vats, waits a while and then pours it out into bottles. It's horrible, torturous, back-breaking labour for him. But he does it because he wants to put the best damned Pinot on your table.
That's why you open a coffee shop.
That's why game developers build games.
Anyone passionate about wine knows what it means to make wine, and anyone passionate about coffee knows what it takes to make coffee. The coffeeshop fallacy assumes our coffee drinker knows no shit-all about coffee.
I think you missed the point. It doesn't matter how much you know about coffee. It matters how much you know about other things, mostly unrelated, accounting, cleaning, hiring, cleaning, customer service, etc.
You can learn "accounting, cleaning, hiring, cleaning, customer service". You can't learn passion about coffee.
I speak here as someone who owns a coffee shop's less profitable cousin, the independent film company.
There are basically two types of people who will start a "cool" company - those who like hanging out in coffee shops, and those who would be making coffee for people whether they were getting paid or not. Those people, in fact, whose happiness is in large part directly related to the percentage of the day they've spent with their hand on the lever of a manual expresso machine. Yes, they exist. No, they're not kidding themselves - that really is what makes them happy.
Discouraging the former from starting a coffee shop is an excellent plan. Speaking as one of the latter (film-making, not coffee), trying to discourage them from starting a coffee shop (or indie film company) is a) probably pointless and b) not a great idea if you actually care about them as a person.
Their passion may wane. They may decide to start other businesses to help their passion business grow (as I've done).
But at the end of the day, people like toast76's brother, me, and a wide variety of other people are GOING to open the damn coffee shop, and if it works, it will make them happier than anything else they could do.
In those cases, you will be better STFUing about how awful an idea it is to open a coffee shop, and instead starting to talk location, accounting, and sales skills...
My wife is someone who would happily spend all her waking hours on the back of a horse. She's trying to make her horse training/riding lesson business work while I wonder if it's ever going to be possible to make a living at something that's essentially become a luxury but which people aren't willing to pay luxurious prices for. Talking her out of it would be pointless, so the only thing I can do is try to help her find ways to make it even slightly even more profitable.
Even has an HN component: I just mentioned patio11's Appointment Reminder as she was sitting around with four horses tacked up and ready to go, pissed off at the people who made an appointment and didn't show (eventually got here about an hour late).
At least hay's cheaper per ton than coffee :-)
I wrote an essay a while ago, very similar to this one, only I cited people who actually fell prey to what I called The Cute Little Café Syndrome:
He was telling me about his startup ambitions and about one particular business that he said sounded like a ton of fun (it was an alcoholic beverage business) - he loved the lifestyle potential of being "that guy".
I told him a story about how I wanted to be an EMS worker when I was 12 years old. Why? For a single, simple reason -- I thought it was _extremely_ cool to be able to drive around with lights and sirens blaring, blasting through traffic. That was it.
Then a family friend who actually was an EMS worker told me one day what the job was actually like - sure, for about 10 minutes you were driving like a madman through traffic, but the rest of the time you had to, you know, actually BE an EMS worker :)
And the same goes for startup life -- you have to actually BE a startup founder for 99% of the time. Don't get caught up by the lights and sirens.
You have to look at the bad parts of any job when considering a career or starting a business, and it seems to be something that people are bad at doing.
On the other hand, dull-looking jobs probably have great parts that outsiders never know about.
That being said, if you know about the lights and sirens and still choose that path, maybe that's the path for you after all. i.e. - you can't build a business without doing the boring stuff as well as the fun stuff.
And even if you get to go to a house fire, there's only a tiny window when you can enter the building, because modern homes are filled with plastic, which burns very quickly. And if you do enter a burning building, you'll smell like burnt plastic for the rest of the day (despite all your protective gear).
"The 1980's was the ideal time when everybody wanted to own an inn, thanks to Bob Newhart," she said. referring to the popular television show that featured Mr. Newhart as a Vermont innkeeper. "
http://www.nytimes.com/2005/08/19/realestate/19bandb.html?pa...
Something you like doing everyday and something you like doing occasionally are two different things. As well as something you have to do as opposed to something you can decide to do (like writing comments on HN - imagine if it was your job to do it 8 hours a day 5 days a week or more..)
He says that he had no idea how much harder than working on Wall Street it would be. He's got to know everything about the domain, he's got to know accounting, sales, marketing, and just about every other aspect of running a business and it is exhausting for such small potential gains.
"Lots of people think they want to start a coffeeshop. They likely don't. That's like buying a minimum wage job for two hundred grand."
This is very similar to what I said about buying a home in Silicon Valley. In the nice areas like Palo Alto, the homes around > $1.5MM. If you don't buy a house in a good school district, you need to spend $1000-2000/month on private school, which is I suppose how the price of the homes in PA got inflated.
Anyway, I told my wife, "If we were to buy a $1.5MM home in PA, first off we need a downpayment, which is roughly 500k. Then, after the triumph of saving half a million, we are rewarded for all our hard work by exchanging this for a 1MM mortgage."
In the same way as the coffee shop example, the economics really need to make sense, otherwise it's a terrible investment. As long as we are living in the Bay Area, we will rent.
Second, and most important, a personal connection helps to get you through the dark days at the start. It's very emotionally draining to work on something that has no traction, no supporters, and just a bunch of naysayers. If you love the product, though, it can offset this emotional drain quite a bit.
In my case, I built a tabletop gaming (ie. DnD) CMS. In the beginning, nobody used it except me, and it was tough to go upstairs and hack away every night and weekend. However, I used it and that was enough to keep me moving. Now, we've got thousands of users and paying customers, and the motivation is much easier to find. But, I never would have made it this far if I didn't care so much about the domain.
Unfortunately for me, I think there's probably a lot more money to be made in "boring" areas. If you can keep motivated to work on a CRM or medical billing system, you'll probably end up making way more than my DnD website. But, it will definitely be harder to keep the momentum in the beginning.
My [intended but perhaps poorly articulated] point was that playing DnD doesn't feel the same as making tools for DnD.
However, if you accept that premise and are willing to endure potentially dull work, then caring about DnD will allow you to make much better DnD tools.
[1] (updated to remove irrelevant personal information)
That's absolutely true, and I'd take it a step further. Playing DnD doesn't feel the same as making tools for and running a business around DnD.
http://www.slate.com/articles/news_and_politics/recycled/200...
This is why most everything that we use is shit.
Also see: http://thetudu.wordpress.com/2011/10/12/the-real-reason-well...
"Thinking that 'Hey, I like playing games, so maybe I'd like making them' is sort of like saying, 'Hey, I really like taking baths, maybe I'd like to be a plumber." -- Jesse Schell
To be a successful game developer, you not only have to love games, you really have to love MAKING games, too.
It's obvious that they were so excited about what they were making at PayPal. The PalmPilot thing? All that encryption stuff they did early on? They were just in love with what they were making, and it worked out very well for them.
On the other hand, Slide, a basically dispassionate attempt to build a company he thought would be successful, while still a success, didn't work out quite as well.
The most startling thing was the Levchin quote: "You you can't be in love with a particular idea or business. You have to be in love with the idea of running a business."
It's presented as an either/or dichotomy. I'm pretty sure Steve Jobs, Larry Page, Mark Zuckerberg, etc. didn't succeed because they were focused solely on resource management. Lack of passion in one's product is certainly just as important (some would say more so.)
My own experience working in restaurants teaches that one should never go work at a restaurant you love - it might ruin their food and ambiance for you permanently.
People seem to always underestimate the effort and over estimate themselves.
Isn't that the opposite of the coffeeshop fallacy? i.e. that you enjoy producing it, not consuming it; the coffeeshop fallacy is that you enjoy consuming, not producing.
I had to hold my tongue or I would have replied that it must be great to work at a pizza place and eat pizza all day.
Does this study apply to newly founded coffee shops, or just the failure of existing ones? The analogy in the article is more toward newly founded businesses. Citation?
Nobody tells this to people who are beginners, I wish someone told me. All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work. Put yourself on a deadline so that every week you will finish one story. It is only by going through a volume of work that you will close that gap, and your work will be as good as your ambitions. And I took longer to figure out how to do this than anyone I’ve ever met. It’s gonna take awhile. It’s normal to take awhile. You’ve just gotta fight your way through.
You don't have taste in something you're not passionate about, and you likely won't keep it for long after that passion wanes. You won't know that you've made a good cafe unless you care about coffee. You might not like accounting or mopping but you'll tolerate the grind only to the extent you care about what you're doing.
Steve Jobs might have disagreed with that particular point.
Example: McDonalds. Brilliant business model. Awful product.
However I have to agree that others do it better. Hardees has the best fast-food burger around. Also the best ads :)
And just to make it clear, I am not trying to criticizes capitalism per se. I'm only basically stating the same thing the article is stating; that there is an inherent paradox in capitalism that makes it more complex to deal with than is directly apparent. Everyone that goes into business or deals with business indirectly through policy-making should be as aware as possible of this paradox, simply because it will prevent us from collectively ending up in a world with great processes but awful products or with great products but awful processes. Neither of which are very tempting scenarios.
The author used a low margin, low sucess business example to make a point about what mindset someone should be in to successfully run a business. You took from that the message that anything enjoyable is not sustainable.
"Focus on creating something inherently good --> it will not be sustainable"
You also less directly imply that focusing on profit will necessitate producing an inferior product, again using a specific example to provide a generality.
You have to employ people to make coffee manually, and quickly. You have to buy a machine to aid them in this, and keep it in good maintenance.
Additionally, you have to supply perishables like milk to go in the coffee.
You have to keep them in your shop buying coffee, or incite them to buy coffee here when they're hungry instead of going to go to dunkin dounuts.
You can do this with nice decor, or by placing yourself in an already attractive location, or taking a margin loss on selling bake goods in order to bring in coffee customers.
In any case, your high margins for coffee product have rapidly vanished.
Rather, the distinction I was aiming at was between "process" and "product". But I suppose that wasn't very clear. My intention was not to start a flame war on capitalism.
In my opinion a process can be sustainable (and thus very likely profitable), but a product can not. In this case a business model is a process and the thing you put in your mouth (the hamburger) is the product. For the hamburger to be perfect we would need an ever escalating process. Constantly adding more complexity or work to refine the product we can create thus creating an unsustainable process.
If you want to create a hamburger in a sustainable and profitable way. The McDonalds process is most likely one of the best ways to do that. But it will NEVER create a perfect hamburger. The same is of course true with the opposite. A tiny connoisseur coffee shop can conceivably create a perfect cup of coffee and push the boundaries of the state of the art. But it will NEVER be a sustainable process. You need to make compromises in order to achieve that.
A relevant example of this is organizations who are CMM Level 5 certified.
I am not stating anything extremely controversial, simply the same thing the article is stating, but with a slightly different wording.
Don't down vote me because you disagree with me or because you think I am bashing capitalism (I am not, I love capitalism). If you think my argument is weak or lacking, please tell me so in a comment instead.
The article is just saying that running an X business means you spend a lot more of your time on the "running a business" part than the X part, for any value of X. It doesn't mean you can't do a good job at X — just that you get to enjoy X more as a consumer than a producer.
But to be honest I thought I was being very careful in my wording about something that should be self evident, e.g.
"...will most likely not be as inherently good as it could be."
Running a business implies a trade-off. The trade-off is that if you want to be successful (i.e. sustainable) you need to focus on the business and not the product. Which is exactly what the article is stating.
Maybe a better example to support my claim is Apple. They make great products. But the way they do that is by focusing on the process of creating great products. Jonathan Ive specifically talks about this in the Objectified documentary. He says that most of their time is spent on designing the manufacturing process and the tools needed to mass-produce the products, only a very small part of the time is spent on the actual design of the phone or computer and that design is almost always a direct implication of the manufacturing process rather than something they magically dream up in some creative haze.
Although I suppose I'm on the verge of becoming somewhat of a troll right now.
Pointing out that your argument is a straw-man is not a disagreement. It's saying that you are misrepresenting the article's position, and that's an objectively bad post.
Also, I'm not sure if downvoting when disagreeing is discouraged. Spam should be marked by flagging, not downvoting.