Don’t drink the startup Kool-Aid – just find a problem and try to solve it

I believe the overuse of the word startup comes from a certain kind of pretentiousness, a want to associate one's own small-business, small-market, technically trivial, mom-and-pop online business with world leaders like Facebook and Google. Making the linguistic link is good for the founder's ego, and even better for convincing naïve investors to fund barely viable visions.

If you're one of the many non-technical teams who cannot build products yourselves and have an idea with dubious money-making prospects then you can have a great adventure on half a million euro of dumb money, and believe me many founders in Berlin are.

I've lived in Berlin since January and during that time I witnessed a rising hipster startup culture. Unskilled and unexperienced college graduates with big egos raise dumb money, hire programmers to build code they don't understand, then spend their days 'networking' at trendy hotels in down-town, throwing minimal techno parties and going on trips across Europe for 'business and pleasure'. It's a great lifestyle, and I've nothing against people enjoying themselves - it's certainly my priority now. But I find this sort of carry on repugnant when an investor's money is at stake.

Viaweb was founded by PHD students at MIT, one who invented the worm and the other who wrote timeless Common Lisp textbooks. The modern waterfall of self-professed 'startups' are run by guys and girls who watched 'How to Build a Blog in 15 minutes using Rails' then decided they were the next Steve Jobs. Let's get realistic here - building a web app or an Iphone app these days is no more high-tech than a mechanic fixing your broken car.

Drop the ego, drop the pretense - the majority of business now labelled as startups are small online businesses and there's nothing wrong with that.

We are making it hard on ourselves to be successful because of the ideas and types of businesses we are drawn to create.

We jump into crazy ideas with no provable business model or customer when we could experiment and apply customer validation to our potential product. Jumping in like a crazy person is glorified in our community because we love watching others do wild things and hope it will help us be more wild.

I want this to change. More people should be running successful businesses, though they might not be instagrams. I want to see your unique touch on so many tired products and ideas.

Now I skip past them like I skip tabloid and gossip "articles".

Only time I ever felt like giving up on my latest venture[1] was when I started trying to view it as a "startup" and thereby compared it to other "startups". I got really depressed for a week or so trying to be a "startup guy", which thankfully I didn't become. It was like the goals of the business (provide a killer service in order to fund my continuing education and frugal lifestyle) got replaced by the "be the coolest thing ever" startup vibe, which sucked.

This article reminds me again that it's not a startup... it's a site that makes a little money by solving a common problem for developers like me, better than other people, and will hopefully make a little more money, once I've done some good marketing and solved that problem even better!

[1] https://openexchangerates.org

Anyone who tracks startups knows these two conflicting facts:

1. Ideas are not everything – execution is key 2. It is extremely important to solve a problem that people would find value in, and therefore pay for.

Summary: It is of course important to execute well and solve the problem, but the starting point is to know if the problem is worth getting solved.

Now look at our education system through this new prism the flaw comes out very, very clearly the system today teaches problem solving, applying theory to practice etc but there is little to no emphasis on identifying problems. Think about your own school / college days for a second in how many instances were you given a situation, and were asked to identify problems to solve?

The problem to be solved was always STATED nobody ever asked us to come up with a set of difficult problems to solve.

Over time, this lack of practice in identifying problems translates into difficulties in spotting profitable opportunities. Even if we do, there is a lack of conviction and we end up pivoting multiple times.

Our education system cultivates employees, not employers – to be one, you need to be trained not to solve a problem, but to identify one.

For some reason HN would not allow me to submit the link for the above, it kept killing the post and any related query. Am trying to be reborn as a new guy on HN now.

cheap to scale > scale per se > scale potential

You're either patio11[1], a "nobody" building a "lifestyle business" or you're making the next Instagram.

Consequently we have a cargo cult mentality that has evolved. Lets compare these two:

Location:

"Obviously you need to be in Silicon Valley. This is where all the wannabe startup hipsters move to!"

I mean, you can't go to a coffeeshop without hearing a harvard MBA who think's he's a programmer because he made an excel macro work once, talking about how he's going to disrupt multiple paradigms with his massive SoLoMo app they're building. "This is where it's all happening, man!"[5]

"Japan? There's no startup scene in Japan. Hell, that's a 12 hour flight. You think VCs are going to fly 12 hours for a board meeting?"

Business model:

"Dude, if you charge money, like %90 of the people aren't going to use your product! But if you're free, and you've gamified your appointment calendar, people will share it! If you can get your virality factor to 2, you'll have a billion customers in 5 months!"

"Oh, there will be a way to make money later, somehow, just look at google, twitter and Facebook!" [2]

Funding:

"If you're going to be scalable, you need bank, man! The VCS are in silicon valley, the VCs are critical to having a business. They'll give you great advice, connect you up with the other movers and shakers so you can have Cock-Tails Man!" (Yeah, I can't make myself sound like a startup hipster, I know.)

"Without money, how are you going to build anything? How could you ever scale it? You have to start with money!"

Company culture:

"IF you see the CEO writing code, you've failed. You gotta delegate. I mean, never invest in a company run by a programmer, they'll spend all their time delighting in some technical solution that's super elegant but nobody at any cocktail party is going to give a damn about! I mean, what do customers care about how good you did something? They company has to be run by a people person-- so at the cocktail parties he[3] can network with other people! People's what drives business, and this is what gets business done!"

Do they even have cocktail parties in Japan? Isn't liqueur outlawed or something there?[4]

Advice:

"You see with VCs, its not the money that's valuable, its the advice! They're going to be able to tell you the right moves and you'll be able to grow so much faster!"

I can't contrast this with patio, because I don't know where he gets advice. But in my experience, VCs [can be] beyond clueless[6]. I've seen them force companies to shut down profitable businesses and focus on long shots (which had the nice side effect of making the company more desperate for the investment, and by drawing it all out the VC was able to get much better terms and take the whole thing when the company later sold, shutting out the founders and employees who got nothing.) I've seen VCs force product direction based on fads, and force the use of inappropriate technologies (provided by a company they had a relationship with, naturally) which caused product delay and ultimately a significant reduction in the value of the company on exit.

Much of the investment process seems to be spending time getting investors up to speed so that they even understand what it is you're doing-- which maybe is one of the reasons they'd rather fund instagram than patio11. I mean, they don't know anything about the hair salon industry (his only clients as far as they can tell) but everyone likes to take instamatic pictures!

And if you don't have a business model, you don't have to worry about the business model!

[1] All respect to patio11. I think he's on the right track here, and he seemed to be the best example to use. Nothing derogatory said here about him or his business is meant that way, merely to characterize the people who would see him in a derogatory light. [2] Here's a bonus: Why is google's monetezation strategy significantly better than twitter an facebooks? It might turn out not to be if the latter two find a way to make it work, but right now, it works much better. [3] Always. No such thing as a She CEO, I mean, women just don't have the ruthlessness needed, amirite? [4] I don't think people are this naive about Japan in particular, but I hear them say the strangest stuff. [5] Somehow startup hipsters in the bay area speak with a style that's a cross between "Brah" and San Fran hippy from the 1970s. In my head. [6] This is why YC has had so much success, in part, as PG is not clueless and his vetting and blessing lets VCs outsource dealflow. I think angels are probably a lot less clueless, though I have less experience with them. Looking at Gabriel Weinbergs recent summary of his angel experience you see a very different approach than the mentality I'm laying out here.