, Productivity tips, Startup Stories

The StartUp Myths

The world of startups is full of myths — untrue yet persistent narratives popularized by the news media, the entertainment industry, and politicians and often uncritically accepted by founders themselves.

In many cases, these false beliefs actually serve to hold entrepreneurs back from their true potential or, worse, lead them toward failure.

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Based on our experience of building GoodWorkLabs and helping countless clients, we want to analyze 3 of the most persistent startup myths circulating today. This is sure to help all the startups out there who are plagued by such myths and undermine their potential.

Myth #1: Success = Great Idea + Determination

A determined entrepreneur working on a solid idea with the intention of developing an effective product that solves a real market problem — these are definitely crucial to the success of a start-up.

However, a new company requires far more than mere commitment and smart ideas in order to generate revenue, become profitable, and scale.

There are countless stories of determined entrepreneurs pursuing seemingly bright ideas who nevertheless close up shot and abandon their start-ups.

In fact, 90% of all start-ups ultimately fail and if you examine the remaining 10% that succeed then you’ll notice that few of them actually begin with a “great” idea.

Some examples:

  • Evan Spiegel, the founder of the ultra popular app Snapchat, was reportedly laughed at back when he first proposed the program.
  • Similarly, the co-founders of Airbnb (i.e., Brian Chesky, Joe Gebbia and Nathan Blecharczyk) were supposedly told by their only investor at the time that he thought their innovative hospitality service was an incredibly stupid idea; nevertheless, he decided to invest because he liked the co-founders’ personalities.

What these — and many other hugely successful start-ups — had was not necessarily a game-changing idea but rather a) the existence of strong markets hungry for new solutions and b) well-executed products.

The same sort of reality check needs to be put forth concerning the determination part of this first myth.

  • Instagram started as a Foursquare knock-off called Burbn;
  • Pinterest was called Tote and began as an e-commerce startup;
  • YouTube started as a video dating site;
  • and Paypal pivoted five separate times before settling on its current online payment service.

If any of the founders of these mammoth companies had remained resolute in their determination to execute upon their original visions then they’d very likely have joined the dreaded 90% club long ago.

Nathan Furr and Paul Ahlstrom, authors of the popular text Nail It Then Scale It, have conducted research showing that entrepreneurs who rely primarily on their vision and determination are statistically more likely to fail in their ventures than those who concentrate on creating a solution that targets a specific problem in a welcoming market.

Clay Christensen, who has studied a variety of disruptive technologies over the last 100 years, similarly concluded: “Successful startups are the ones [that] have enough money left over to try their second idea”.

Against the “success = great idea + determination” myth, then, rather than needing a revolutionary idea you need to get started, to jump into the market, test out your minimum viable product, collect real feedback from real consumers, and tweak your product and operations as needed.

Myth #2: Successful StartUps Always Invent Something New

Connected to myth #1 is the related fairytale that insists that all successful companies reach profitability by inventing something that significantly disrupts/changes the market and consumer behavior.

Many people seem to believe that “innovation” is synonymous with “invention” or with creating “something new.” In reality, however, inventing something new is often the least important part of true innovation.

Wannabe entrepreneurs tend to think that their path to success lies in coming up with the next big idea, that special thing that nobody else has done before, and then slapping a patent on it and watching the earnings roll in.

 

Despite this popular fantasy, if you take a second to consider the most successful start-ups then you’ll recognize that few can accurately be classified as being rooted in genuine inventions.

As is noted:

“When companies like Google, Facebook, Apple, and Airbnb began as start-ups they were not overtly obsessed with creating something that the world had never seen before. Indeed, there were more than a dozen existing search engines before Google came along; there were PDAs before the iPhone emerged; couch-surfacing existed prior to Airbnb; and so on”.

The examples continue:

  • Myspace and Friendster were established, and had many active users, before Facebook;
  • there were a variety of group buying websites operating a decade before Groupon emerged;
  • and electric cars were available on American roads before Tesla rose to dominance.

Real innovation occupies the sweet spot between inventing something novel on the one hand and the needs and opportunities of an existing market on the other:

Many times there simply exists no viable market for a new invention.

So, even if you’re the first to create some new gadget or process with the serious potential to help consumers, if it’s going to take years or even decades for a market to emerge within which such an invention can be bought and sold then your invention is basically useless.

What companies like Google and Facebook did properly is enter existing markets with fantastic products that were superior to everything else available at the time.

Apple, of course, did the same thing with the launching of its iPads/iPhones, which convinced consumers to abandon their familiar PDAs for a superior product. Apple knew that the market was hungry for faster, more reliable, and more capable portable computing devices — and Apple delivered.

 

Myth #3: You Need to Build a Product with Mass Appeal

New founders often embrace the mistaken belief that startups must try and build a product suitable for virtually everybody in order for the business to be successful.

To this end, inexperienced entrepreneurs might continuously modify their product concepts and add additional features in the hopes that their products will find their ways into the hands of more and more consumers.

They try to build the next Facebook by creating something bigger and better than Facebook and attempting to launch it into a mass market, all the while forgetting that Mark Zuckerberg and his colleagues never actually targeted any kind of mass market in the first place.

Instead, Facebook sought to win over Ivy League students — a niche market.

Indeed, the best products are often those that begin by focusing on winning over the hearts of a small number of users and only then expanding into further domains.

Apple targeted tech geeks and “hispters” with its iPhone; Tesla went after high-net-worth tech enthusiasts, and Pinterest started so small that it held in-person meet-ups with most of its users in its early days.

Against the myth that successful start-ups always manage to crack the mainstream, the reality is that the mainstream market is typically a graveyard for start-ups.

The challenge with mainstream customers is that they don’t trust new technologies: they’re looking for safety, security, and brand reputation whereas most start-ups are buggy, unknown, and relatively unproven.

As a start-up founder, your focus should be on targeting the early market — not the mainstream market:

Starting around the middle of the 20thcentury, American communication theorist and sociologist, Everett Rogers, began conducting research demonstrating that disruptive technology products tend to be adopted in different ways by different kinds of people, i.e., innovators, early adopters, early majority, late majority, and laggards.

Asan entrepreneur, your focus should not be on either of the majority groups or the laggards; instead, you need to target the innovators and early adopters, i.e., those who are drawn to novelty, who take risks, who have financial lucidity, and who often interact with other innovators.

These two groups of customers are forgiving and eager to embrace new ideas and technologies, and thereby represent a great source of feedback for your product(s).

So, get rid of these myths and get going!

 

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