So you’ve decided to start a start-up. You have an idea, perhaps you’ve even built an MVP. If you’re lucky, you’ve found a co-founder or two to start the journey with. You begin to seek out advice for the journey ahead. What to do, what to avoid? Should you try to raise capital? Should you bootstrap? How should you build a product? Either way, there will be no shortage of voices, available both in-person and online, to dish out advice for you on your start-up journey.
The Problem with Most Start-Up Advice
Start-up advice, however, is not all created equal. In fact, most advice you will receive should likely NOT be acted upon. What’s worse, some advice you receive from people you perceive to be more experienced and competent than you may even end up killing your start-up altogether. Are the people providing the advice not genuine? Are they trying to steer you in the wrong direction? Of course not. They simply suffer from a more fundamental problem, which causes them to provide you with incorrect advice.
The fundamental problem with most start-up advice you will receive is the lack of context. What does that mean in practice, you ask yourself? What it means is that most of the start-up advice you will receive will not be inherently wrong as such. It will be simply incorrectly timed. Meant for a company in an entirely different phase of their journey. Or based on incorrect underlying assumptions. I’ve seen this time and time again. And quite honestly, I’m likely guilty of providing some incorrectly timed start-up advice myself along the way as well.
The fault is not with the advice-giver. It’s the entrepreneur’s job to interpret which advice to act on and to understand the context from which the advice is given relative to your own context. You can’t ask your advisors to do that for you. If you’ve been steered in the wrong direction by advice, look in the mirror for the culprit.
When Start-Up Advice Turns Deadly
Start-up advice provided from incorrect context can lead you to do the polar opposite of what you should be doing. As an example, if you do not have product/market fit, changing your go-to-market model from outbound to inbound sales won’t help. At that stage you don’t have a sales problem, you have a product/market fit problem. Only finding product/market fit will fix that.
There are, however, also pieces of advice that are nothing short of deadly. They are deadly pieces of advice since their very foundation is vastly different than what it seems on the surface. And the vast majority of people act on what is visible on the surface. You may hear the following piece of advice, for example: Your customers don’t know how to tell you what they want. Just envision a future you’d like for them and build it. Even Henry Ford said, “If I would have asked people what they wanted, they would have said faster horses.”
This advice is deadly. But recognizing the fact that it’s deadly is tough. It’s tough since this advice is also true at the same time as it’s deadly. It’s true that your customers often do not know how to tell you exactly what they want. It’s true – Henry Ford did actually say that. But it’s also true that the underlying assumptions of this advice are entirely faulty, which makes the advice itself deadly.
Henry Ford’s customers would have said they wanted faster horses, not a car, that’s true. But the real question you should be asking is WHY would they have wanted faster horses? The answer is simple. They would have wanted faster horses since they wanted a faster, more efficient way to travel from point A to point B.
Now isn’t that something? Eureka! They highlighted an underlying problem they were facing. Henry Ford simply envisioned and built a solution to that problem. A car. Not a faster horse.
This context is entirely lost in that piece of advice. The piece of advice itself would have you think that you can simply create your own view of the world X years from now and build for it. I hate to be the bearer of bad news, but sorry. You can’t. The reason a start-up, any start-up, works out is that it solves a problem for someone. Contrary to the advice above, whilst your customers cannot articulate a solution (a car), they can surely articulate a problem (the need for faster transport). And actually, it should always be up to you as the founder anyway to figure out the solution.
But one thing remains true. Without uncovering the problem in the first place, you have no hope of dreaming up a solution. You will be dreaming in a vacuum. As out of touch for context as that piece of advice. And when you do, you will miss your opportunity to find your own version of the Ford Model T. That would suck.
The Big-Market Fallacy
Another common piece of start-up advice I’ve heard given to founders in the earliest stages of their company’s development is: You need to aim for a really big market. Otherwise, you can’t raise venture capital.
Let’s unpack this, since this particular piece of start-up advice is flawed on multiple levels. But again. It’s true and factual as such. To build a very large company and reach a coveted IPO (which for starters, only a very, very, very small portion of all companies ever get to do), you need to have a large market. Large companies simply cannot exist in small markets.
The part about the ability to raise venture capital is also based on facts. The way venture capital math works, as described here, makes it impossible or downright stupid for most VCs to participate in funding anything that doesn’t have a large-enough market to even theoretically sustain a significant business capable of generating 50–100x returns.
Nevertheless, although both parts of this advice are true individually, this advice as a whole is deadly. Having a big market eventually does not mean aiming for a big market out of the gate. Anything that ever became big, started really small. Just watch this Mark Zuckerberg interview from 2005. Even Mark Zuckerberg, 1.5 years after starting Facebook, still did not have a grand plan of world domination. Nor did he think Facebook would ever necessarily open up to the public.
Think about that for a second. One of the largest, most successful technology companies of the last decade, which has produced billionaire after billionaire both as founders and investors, had no desire or aspiration to even open to the public even 1.5 years after its founding. They did not aim for “a really big market.” Yet, here we are today.
Airbnb provides another perfect example. Airbnb started by renting air mattresses in San Francisco during a specific, individual large design conference. That was their initial market. One city, one conference, air beds on living room floors. No thought or aspiration of dominating global travel accommodation. Yet, here we are today.
Oh, and for those of you who remember eBay’s origin, that provides yet one more compelling example of the power of not “aiming for a big market.” Remember how eBay started? That’s right. The publicly listed online marketplace has its origins in … wait for it … Pez dispensers. Selling Pez dispensers online. Despite how much you may love that Austrian candy delight, Pez, selling Pez dispensers online doesn’t really scream “big market,” does it?
Ok, you may think Facebook, Airbnb, and eBay are just isolated examples of starting small and growing into very, very large markets. So, let’s think of a counterexample. A company that attempted to go big without starting small.
How about WeWork? If you haven’t been living under a rock, you’ve likely heard of the disastrous IPO withdrawal, the drama, and the departure of CEO Adam Neumann. What you may have missed is that in the middle of all this, WeWork wanted to be even bigger than what they were. In fact, they were aiming for the biggest market anyone has ever seen. Their aim was to change the very fabric of human existence. That’s right. Contrary to popular belief, WeWork was never in the office space rental market. Nor even in the real estate technology market. They are (or at least were) in the market for elevating the world’s consciousness. That’s as big a market as there ever was one. And I don’t think we need to mention Quibi.
They both started big, dreamt big and, well … crashed big.
You need to aim for a really big market. Otherwise, you can’t raise venture capital. The second part of this advice is equally deadly. Whilst VCs need a big market for their math to work, the advice implies that you are building your company in order to raise venture capital. Are you really? If you’re building your company to raise venture capital, stop today. Build a company because you’ve discovered a genuine problem worth solving and you’re passionate about solving that problem. Not because you think you can raise VC.
The Takeaways
When receiving start-up advice, remember:
