Looking at startup news publications such as TechCrunch or Mashable, a new entrepreneur might think that every startup raises capital and walks away with MILLIONS in their pockets after a quick and easy overnight success followed by an acquisition by Google or Facebook. These sensationalized stories are actually very misleading and do not represent the daily grind of startup life.
Here are some of the common startup myths debunked:
Being technical is pretty important if you’re planning on starting an internet startup. So if you’re not technical, it is a good idea to learn at least some technical skills. Dennis Crowley, founder of Foursquare, was non-technical before he founded his first startup, Dodgeball, later sold to Google for millions. Here’s what he says about the experience on Quora:
“Pre-Dodgeball I went thru 3-4 years thinking I was going to meet some magical engineer who would build all the stuff I was thinking about. But I never met that person, so I taught myself ASP and MS Access (yikes! eventually PHP an MySQL) out of a book and got to work just hacking stuff together. I’m still a really shitty programmer (ask Harry Heymann) but I know enough to hack a prototype together (which is what you need to get other people / investors on board).”
Similarly, the non-technical founder of Wedding Lovely also learned to code to get her idea off the ground. As a result, she was able to get into 500 Startups, generate revenue, and find a technical co-founder, all within a year.
While TechCrunch and other tech media tend to sensationalize startups that raise venture capital or angel funding, there are a lot of startups out there that have succeeded through bootstrapping their product, including GitHub, 37Signals, Campaign Monitor, and many more.
Many founders fear that as soon as other people hear about their “brilliant” idea, they will immediately recognize how insanely genius it is and copy it themselves.
That is why it is so appealing to have others sign an NDA before they hear about your big idea. Well, believe it or not, you will actually get a lot more value out of revealing your idea to others (which is probably not original anyway), as Daniel Howard of OnStartups points out:
“One of the biggest problems startups face is that they invest time/energy/money into an idea under the false premise that they will be the first/only company in that market within a given window of time. In most cases, this is simply not true. By talking to people (that you trust at some level) and discussing your idea, you’ll get a better sense of who is out there doing similar things. Some of these could be competitors – but some could also be partners, customers, acquirers, etc.”
Having an exit strategy has become a standard part of a pitch deck. However, as successful entrepreneur Joseph Ansanelli points out, when you’re focused on the exit strategy, you’re focused on a very short-term goal of having a company like Google or Facebook just buy you.
Instead, it is better to focus on building a high quality product and a successful business that brings value to your customers and scales. When focused on this long term success, your company will continue to grow, and maybe along the way you will have to make the hard choice of “exiting.”
There are plenty of founders who’ve failed multiple times before they succeed. Max Levchin failed at 4 startups before he founded PayPal. OMGPOP, just acquired by Zynga for around $210 million, didn’t have much success for YEARS, until their game DrawSomething became an instant hit, attracting over 35 million users.
Venture capitalist Brad Feld, also co-founder of popular startup accelerator TechStars, says he likes to invest in entrepreneurs who’ve had at least one success and at least one failure:
“While it is a cliche, failure teaches the big lessons. Most importantly, entrepreneurs that have some failure under their belt have humility and perspective that I think is deeply useful in the creation of the company,” he writes on Ask the VC.
Many founders think that if they only build it, customers will flock to their product. And when that doesn’t happen, they continue building and adding features. While the “build it and they will come” theory has worked in a few cases (such as Facebook or Instagram), most of the time you need to spend a substantial amount of time marketing, selling your product, and building relationships with customers. As Joseph Barisonzi writes on OnStartups:
“The path to greatness is rarely having the best technology. It is far more often having the better relationship with the customer. It is a marketing game — not a technology game.”
Startup founders are expected to work non-stop. Some engineers even sleep at work. But is it actually possible to work for 80 PRODUCTIVE hours? Chances are, if you’re working that much, you’re not doing very productive work most of the time. “The marginal value of the last hour put into a business idea is usually much less than the first,” points out David Heinemeier Hansson of 37Signals.
What other unhelpful myths do new entrepreneurs believe?
Dan Martell is the Founder and former CEO Clarity, Angel Investor, and Speaker. Dan Martell is an award-winning Canadian entrepreneur who previously co-founded Flowtown, which was eventually acquired by Demandforce in 2011. In 2012 he was named Canada's top angel investor having completed over 33 investments with companies like Udemy, Intercom and Unbounce. He believes "you can only keep what you give away" and is heavily involved in many charitable organizations & community events.