Why I won’t launch a startup in 2016.
Launching a startup has become trendy. Everyone wants to be an entrepreneur, it is fashionable, it is cool and for a lot of wannabe entrepreneurs it is a new path halfway between consulting and banking. Following the consensus is not a good sign.
The startup craze is real.
Startups are trendy. According to a survey by OpinionWay, 1 out of 2 young French people want to launch a startup and 13% of them — 1.2 million of the young — want to do it within 2 years. Given the French mindset about private companies and individual initiatives, you understand that this trend is widespread. It is the case not only in France, but also in the whole world.
This trend hides a harsh reality. 9 startups out of 10 fail within 2 years. Startups are not easy. According to Cbinsights, 42% of startups fail because there is no market need.
My guess is that wannabe entrepreneurs don’t focus on a specific market opportunity. They neither have ambition nor vision, they just want to be a part of the startup craze because it is fashionable and it sometimes works. Press sells them an overnight success such as the one of Snapchat — by the way, the story is false.
Wannabe entrepreneurs are often there for the wrong reasons. Launching a startup for money, fame or coolness is a mistake. They will neither get rich, nor famous or cool but they are fascinated by instantaneous success, astonishing valuations and valley gossiping. It is a star system. Launching a startup is super hard but surprisingly I found my friends completely mask these realities.
A good friend of mine once told me :
“I don’t care about the market or making money; I just want to create what I have in mind and I will then sell my startup or my entrepreneurial experience to a big consulting firm.”
Hum… here is the mindset. It’s fine, I understand.
Fuck banking, fuck consulting, fuck startups.
I don’t understand the startup craze. I don’t want to create “the new viral app”, I don’t understand this trend. I don’t want to play into the startup game and then come back subjected to establishment.
To me, entrepreneurship is not a temporary occupation, it is a life in itself. It is not a fashionable attitude, it is a mindset. I don’t picture it as a simple occupation, I truly think it will be the next structure of the labor market. Entrepreneurial individuals with personal skills, ready to learn anything and to adapt to new situations will be the norm in a fast moving labor market. Reid Hoffman, co-founder of LinkedIn, highlights this future in his book: The Startup of you
Apart from becoming an artist or a philosopher — which is unlikely to happen — I don’t know what can I do except being an entrepreneur. I don’t fit in the traditionnel hierarchical structure. I will never work for a slow and rigid structure for consensual people.
This being said, success is not guaranteed even on the long term. Living in San Francisco for 5 months, I realized that playing the tech startup game is too risky and the outcomes too unpredictable especially when you are young. What a good entrepreneur does is to escape competition and find another path.
No startup, I will launch a business.
I will think about the market and the way of making money starting from day one. I will choose a specific market position that drastically reduces the risk of failing because of the market. Breaking into a lucrative and non-digitalized market is better than trying to create a new market.
Here is the framework I use to identify a market opportunity:
- Identify a really painful problem.
- The problem is already solved by existing solutions.
- People (B2C) are already paying a lot for solutions.
- The solutions offered are crappy.
- There are no big barriers to enter the market.
- The market is growing and then the problem gets bigger.
I won’t play the startup game and work hard to create a new market with an uncertain solution. I will make a 10 times better solution than an existing and lucrative solution. I will look for a scalable and profitable solution. That is what Uber, Square, Save and many more did.
Many lucrative markets haven’t embraced the digital revolution yet. They use bad software, the level of automation — and so the productivity — is low and they rely on old hierarchical management structure. This is particularly true in traditional businesses such as retail or in regulated markets. These are good opportunities.
I want to seize this kind of market — especially B2C service. If you want to create the next viral-snapchat-like-killer-app, I am out. If you want to revolutionize education with a next-gen’-social-community, I am out. If you want to create the new-facebook-for-pets, I am out. If you want to create a neuro-tech-hardware or the next AI, I am temporarily out.
Successful entrepreneurs recommend to start on a niche and then grow bigger. I think it can also be applied to the entrepreneurial path. Your first venture doesn’t have to be a breakthrough innovation especially when you are young. It doesn’t mean that I have no ambition for this venture —it is quite the opposite in fact.
I am no longer in startups, I am in business. Being a sheep leads nowhere.
Hint: If you have found a way to break into a regulated market, to hack a monopoly or an oligopoly; I’ll be very very interested. Please drop me a line.
I have secrets on Twitter : @nico_bst