What do people get wrong about startups these days?
First, I want to introduce you to Buddy. Not my buddy, but Buddy Valastro. If you don’t know him already, he is a celebrity baker, entrepreneur, and a reality TV personality (whatever that means). Yes, now you know right, his TV show, “Cake Boss” is amazing.
He is what I call the real Slash — someone with multiple concurrent (and successful) careers. You see, I hate cakes. I don’t even like anything sweet. I don’t even drink soda. But I admire Buddy. Perhaps it’s my miserable addiction of always having one of those discovery channels on 24–7. So naturally, I watch a lot of Buddy (and his family). As far as I can tell from the show (and a quick fact-check on Wikipedia), he started with a good humble bakery shop but is now having amazing success (17 shops in all).
Yet if we take Buddy out of the equation (money that he makes personally off TV, etc.), his actual business — those bakery shops — is still a small business. Technically, a small and medium enterprise (SME). That’s precisely the problem with the term SME. It makes people think they are small but in fact, they are far from small. This SME of Buddy’s provides a great living for his family and all the Italians in Brooklyn (yes, I believe everything they say on reality TV). Talk about the American dream, this IS the ultimate American dream.
Then we have this dude, Evan Spiegel. You probably know him or maybe you’re even a fan of his (whether because of his pretty face, IPO, girlfriend or “all of the above”). He is the co-founder of SnapChat. The Snap Inc. that went for a huge IPO (while losing over 500 million dollars the previous year) and of course making Evan a billionaire in the process.
What Do These Mean To Startups?
When people begin their journey as a startup these days, they all want to be Evan. Because it’s cool to be Evan. Because what Evan did, disrupts the world. Most entrepreneurs and startups want the chance of becoming the next unicorn, and being admired by fellow tech entrepreneurs. It’s darn near impossible, or at least hard to ever argue that being a billionaire would be a bad thing.
But this is also the problem we have in the startup world. Most startups fail. Most of them — even if they make it — don’t really disrupt the world all that much (maybe a nice dent). There are very few unicorns in this world (both in startup and the real world). As you might have guessed, there are very few billionaires in the world, too.
Yet in this real world of ours, in the absence of unicorns, there are great horses and you know what? They are actually pretty cool as well just like Buddy. He is happy. He has a successful business. Oh, by the way, his wife is gorgeous too!
So Why Do Startups All Strive To Become The Next Evan?
Everyone strives to become the next Evan — because we are taught to think that way. The biggest secret in the startup world is that the entire ecosystem is built by the investors for the investors, not for startups. Ok, now that I have said it, let me try to back it up with a few thoughts I hope will be helpful.
So you are fresh to the startup scene. You’ve heard about all these cool things about startups. And you have decided to give it a try. What are the first things people think of these days? How about applying to an incubation program? Or perhaps better yet, to a super well-known accelerator program?
You know on a farm or in a hospital, you incubate eggs or premature babies — things don’t really grow themselves all that well. Sure, we all need a bit of help at the beginning. And, I am not here dissing every incubation programs in the world.
But when these incubation programs become larger than startups themselves (i.e. startups enjoying these programs more than building the actual business), then we have a problem. Startups should focus on their businesses, not incubation programs, nor accelerators.
… um, that’s more like…, if you like foie gras — accelerators would be the duck feeding. In another word, you are not growing quick enough. So let’s stuff you with some food on steroid through your throat (the ultimate growth hacking?) and get you to a certain size so we can sell you to the market quicker. Your health and well-being? Well, please talk to your mother.
How about rounds and rounds of endless funding? A life support system that keeps startups from operating long enough before passing onto the next round of investors. Again, funding is important and necessary for many tech startups. But if we all start to labelling startups by the round of funding that they are going through and the “valuation” that they have in the private market, then startups are just cards in a big poker game.
It is bad to exhibit startups as an investment product. (e.g. Series A funding with a 10 million dollar valuation).
This description has nothing to do with the actual startup. Yet, some startups are just happy going along with the ride — kind of like those wannabe models. Sure, some will hit the jackpot and end up getting a good share too but we know what usually happens to the rest of those models.
In the world of admiring success, we need to care more about the majority. The majority who don’t make it that big. We need an ecosystem that is built for the startups, not the investors.
That’s Why You Should Aim To Become The Next Buddy Instead…
It’s totally awesome to be Evan — but the world only needs so many Evan’s.
The world needs a lot of Buddy’s. The “Buddy” model makes the real businesses. Stuff that actually makes customers happy and the customers pay money in return — at a rate that Buddy et al makes money.
Something those crazy accountants called Profit. This word can completely blow away some startup’s mind these days. Who makes money these days anymore? Why would a business need to make money? If you have been brainwashed this badly, it’s time to wake up (no, not every startup is a SaaS).
Be smart enough to figure out you don’t want to be that duck on the farm — nor the farm doing that to their ducks. You don’t want to be that teenager who dreams to become the next super model.
Determine that you will go and build a real business like Buddy Valastro.
A real business is the only remedy against being advertised as a pure investment product.
Don’t worry, having this mindset does not STOP you from becoming the next Evan either. But working the “Buddy Model” can mean a life filled with great work that you care about and a way to provide a living for everyone that you care about that needs a job. You are making a difference to a whole way of life for many many people. What could be a greater contribution than that?
Buddy, didn’t need rounds and rounds of funding. Yes, he has financing needs just like every other real business does. But the business’ own existence is not about fundraising.
People recognize his bakery shop by his cakes, not because he is going through a Series B round.
Think for yourself. What’s the biggest headline for startups these days? Fundraising. Not profit, not the actual business, but fundraising.
Next time you hear people get really excited about fundraising, may I suggest you should go on a rant like Allen Iverson on practice? Fundraising? Not the actual business, but fundraising? Are you kidding me?
We All Need To Wake Up
We can all use this opportunity to wake up and start to understand what is going on with this startup craze that we are witnessing.
Yes, there is definitely a place for disruptive startups. Some incubators and accelerators are well intended. There are good investors. Some startups need gigantic funding similar to what Viagra needed.
But Not Every Startup Needs The Same Development Model.
Building the next bakery empire like what Buddy Valastro did is also remarkably successful — arguably it may even be considered more beneficial to our world, too.
Most importantly, be clear about what you want to do.
Don’t get manipulated.
Be The King Of Your Life, Not Just In A Deck Of Cards.
This piece originally appeared on Startup Grind, the global entrepreneurship community.