Ignore the Noise
Or why distractions, excuses, and haters don’t matter
Uninvent is a series of essays by Gladly co-founder and Point Nine Capital Advisor Michael Wolfe.
Uninvent helps startup founders with the most important factor in their success: their team. We help founders manage their own motivation, productivity, health, and relationships with co-founders. We’ll discuss hiring and managing great people, building a strong culture, and keeping people aligned and working on the right things. You can follow the full series at www.uninvent.co.
In this chapter, we’ll talk about all of the distractions that can keep a founder from starting a startup or can slow them down once they do. We’ll discuss how you can stay focused on what matters, stay aware of the cycles that drive the tech industry, and shut out the noise.
“Don’t debate people in the media when you can debate them in the marketplace.”
— Naval Ravikant
“Stop buzzing in my fucking ear!”
— Logan Roy, Succession
“Sorry, dude, it’s the circle of life. Hakuna Matata, motherfucker.”
— My friend Scott
The trough of disillusionment
You and your co-founder have worked 80-hour weeks for six months, and all you have to show for it is $15K in credit card debt. You have a decision to make — stay the course and try to make enough progress to raise money from angel investors, or cut your losses, quit, and get a “real” job to pay off your loans.
One Friday night, after a particularly frustrating week of no one returning your calls or clicking on your links, you find yourself doom-scrolling.
You read an article about how the economy is likely entering a recession, and corporations like the ones you are targeting will likely slow down spending on new solutions.
Another article says that venture capitalists are slowing their investment pace. Fewer startups are getting funded, and the ones that do raise money are receiving lower valuations than last year.
A podcast tells you that the bad news from the tech industry is causing new college grads and MBAs to lose interest in starting or joining startups, breaking a five-year trend of increasing interest in entrepreneurship.
You read about a startup CEO going to jail after defrauding investors. You read about another whose board fired him for dating subordinates. Another was fired after raising $50 million and spending $15 million of it hiring Beyonce to play at their user conference.
No más! Your doom-scrolling is eroding your mental health by the minute. As you shut down your apps, a text from your college roommate pops up. She asks if you are freaked out about a newly-launched startup whose product sounds like yours. You weren’t before, but well, now you are. Thanks, Janice.
A call arrives from your dad. You swipe it straight to voicemail. You know it’s the weekly interrogation where he asks if your startup has found any customers yet. Every week, you respond, “No,” and he follows with, “Are you sure the whole startup thing is a good idea?”
You reflect — yes, you know a startup is challenging no matter when you start it, but you wonder if your timing is off. Should you pause a few years until the economy rebounds, venture funding recovers, and anti-startup sentiment subsides? Or should you power through and ignore the noise?
The circle of life, and all that
A few decades ago, startups were an obscure phenomenon, hidden in the suburban garages and office parks of Silicon Valley. Today they’re downright mainstream and are a global phenomenon, as the international composition of the Point Nine portfolio attests.
The media follows the tech industry closely, often mocking startups who burn piles of cash pursuing “dumb” ideas. Politician yell at whichever tech CEO is genuflecting in front of their legislative body. Netflix has launched several tell-all series about larger-than-life misbehaving startup founders. The venture capital industry flips between “overheated” and “licking their wounds,” never seeming to settle into a just-right Goldilocks middle ground.
Startup founders can extract some signal from this noise. It’s helpful to know the state of the funding market, what recruits are looking for, and what economic challenges your customers face.
The noise can do more harm than good, though. It can add distraction and stress to what is already a difficult pursuit. It can cause you to lose historical perspective and give a false sense of how bad or good your timing is. The noise can give founders an excuse to quit, where they may have persisted had they put their heads down and stayed focused.
Much of the noise comes from the cycles that whipsaw the tech industry:
The technology cycle
The technology waves we discussed in previous essays drive most startup opportunities. A wave of startups was launched in the late 20th century downstream from the development of mainframes, mini-computers, PCs, biotech, client/server software, and the Internet. Since 2000, one wave after another has hit, including software as a service, cloud computing, mobile devices, app stores, CRISPR, blockchain, and now artificial intelligence. These waves unleashed thousands of successful startups and trillions of dollars of new market capitalization. Each wave also bred thousands of failed startups that burned billions in capital and returned almost nothing.
A new technology usually follows a predictable “hype cycle.” [1] Interest builds until the technology is overhyped, attracting too much investment into too many startups chasing too few opportunities. A crash ensues, followed by a gradual stabilization, where the technology finds its most productive applications and becomes a mainstream part of the economy. [2]
The funding cycle
Funding from angel investors, venture capitalists like Point Nine, and private equity varies widely from year to year. These fluctuations are driven partially by the general financial markets since private company valuations track the public equity market and interest rates. The technology hype cycle drives them even more, where investors look for an edge by rushing into “the next big thing” until it’s so overfunded that it crashes until it’s no longer the next big thing. The result is a sharp boom and bust cycle, where capital is plentiful one year and scarce the next, even when the quality of the startups that need the capital hasn’t changed much.
The economic cycle
No matter how new and innovative a startup’s products are, its customers are still good old-fashioned consumers and businesses impacted by the general economy. Recessions cause consumers to spend conservatively. Companies focus on efficiency and saving money and have less appetite for risk. This impacts the startup economy (although, as we’ll discuss, less than it might seem).
The talent cycle
When I graduated from college in 1990, only a few hardcore techie classmates started or joined startups. After the 1995 Netscape IPO made many people millionaires overnight, new grads poured into the industry, and staffers at established companies like HP and Microsoft quit their “safe” jobs to jump on board “dot-com” companies. After the crash of 2000, talent receded from early-stage startups. It returned until the 2008 crash, ebbed, then came back, seemingly for good, until the 2022 crash drove many people away.
The talent cycle is downstream from the other cycles. When jobs, funding, and opportunities pile up, talent buzzes around it like bees to honey.
The sentiment cycle
Pre-Internet, the technology industry was a bit of a snoozer if you weren’t inside of it. No one headed to TechCrunch for their morning news or opened People Magazine expecting to see an exposè of a “bad boy” startup founder.
Today, the industry overflows with money, quirky personalities, and products that impact mainstream culture. Stories about them get clicks, so media coverage follows. The coverage focuses on the most sensational stories, often the founders of B2C startups involved in the latest scandal.
This coverage gives the impression that something untoward must be happening, as if no one could be getting this rich unless they were involved in shady shenanigans.
Riding the cycles
These cycles aren’t going away, so how should a startup founder navigate the noise and distraction they generate? They mostly shouldn’t.
These reminders might not even be necessary since the best founders don’t need anyone to tell them to ignore the noise. They do it naturally. When they find the idea they want to pursue and team up with the right co-founders, they don’t stop to ask for permission or approval. If anything, they are so obsessed and focused that they can’t be talked out of it.
That being said, every time I’ve taught a class or spoken at a conference, the questions from would-be founders are the same. “Is now a good time to start a company?” “My professor thinks this is a bad idea. Is he right?” “What’s hot right now?” “How do you feel about <latest scandal>?” Clearly, the noise can knock people off track who might otherwise succeed, so let’s talk about how to tune it out. You can try the following:
Zoom out for perspective
If you are early in your career, your window into the cycles is narrow. For example, if you started working on your startup in 2022 and are trying to raise seed funding in 2024, you experienced the funding cycle as a disastrous crash:
You might feel like you started a company at the wrong time and may as well shut it down since you missed the window. Or you might be tempted to “wait until the market recovers” and assume a bounce back to 2024 levels is around the corner.
But if you zoom out a bit, 2024, while much slower than 2022, is not all that bad by historical standards, which we experience every day at Point Nine.
This perspective doesn’t necessarily make it easy to raise money, but it might help you recognize that now is probably as good a time as any to try to make your startup work, even if 50x revenue multiples never happen again in your lifetime.
Take the long view
A question like, “Is now a good time to start a startup?” is immaterial when you take the perspective that it will take a decade or more to build a large company. In that time, we’ll go through at least one boom and bust cycle, one or two recessions, a few Presidential elections, five Olympic Games, and a few Taylor Swift albums.
The more successful your startup is, the more cycles you’ll live through:
When Bill Gates started Microsoft in 1975, the economy was a disaster, but he bet that the software market would grow by thousands of times over the following decades. He wasn’t going to give up because the overall economy was growing at 1% instead of 2%.
It might seem easier to start a startup during boom cycles when investors throw money around. Getting started is probably easier, but your goal isn’t to start a startup — it’s to start a successful startup.
Startups founded during low points in the cycles (think Google, Facebook, PayPal) probably succeed at a higher rate. They have less competition since investors don’t fund twenty competitors pursuing every plausible idea. They can concentrate a great stable of talent since it’s not spread out thinly across other startups. [3] They can grow at a fast but sustainable pace since they aren’t racing against a pack of competitors who assume that whoever raises and spends the most money wins the market.
Every upside has a corresponding downside, and the downsides of starting a company during a boom cancel out the upsides.
Pay attention to your personal cycle
These cycles are external to you, so they are out of your control. You can’t influence them or reliably predict them. But what’s happening in the outside world is less important than what’s happening in your own life.
Have you found an idea you’re passionate about pursuing? Do you know the founding team you want to work with, and are they available and excited to join up? Are you in a place in your life where you can devote several years of focus and hard work with minimal pay?
If the answer to these questions is “yes,” the right time to start this company is probably right now, regardless of what’s happening in the outside world. If you wait a bit longer, hoping for perfect timing, you may never start your startup since you’d miss the perfect timing for you. Point Nine loves backing founders who hit the right timing.
And if the answer to these questions is “no,” then you are probably not ready to start anything yet, no matter how “hot” the market is.
Focus on *your* market, not the *tech* market
A common question from would-be founders is, “What is hot right now?” They assume a hot market is a tailwind for a startup, making it easier to raise money and ride the hype cycle to success.
It’s not a completely useless question. For example, if artificial intelligence is “hot” right now, it’s probably true that you’ll have an easier time raising money and that some founders will build successful startups using AI. Of course, it’s also true that too many companies will get funded, making it harder for any one of them to break out.
But “artificial intelligence” is not a market. It’s a technology you can use to solve a specific problem for a specific buyer. You should care about the “hotness” of the market you are selling into. If you are selling AI-powered solutions to farmers to improve crop yields, you’ll succeed if that specific market takes off and if you are a leader in it.
Jane the Farmer doesn’t care about whether AI is “hot.” She cares if you can increase crop yields. You either can or can’t. If you can, that’s pretty hot.
Beware detractors coming from inside the house
Founders like to tell inspirational stories about ignoring the haters and naysayers when they started their company. Maybe someone told them their idea was dumb and would never work. Someone else told them to play it safe and stay at their cush big company job. The best of these stories end with the founders proving the haters wrong and living happily ever after on a big pile of “I told you so” money. (If this weren’t a family blog, I’d call it “f — k you money.”)
But if you dig deeper into these stories, these detractors were often the people closest to our founders and presumably had their best interests in mind. They were classmates who urged them to play it safe and get a big company job like they did, teachers who didn’t want them to “waste” their education, partners who feared the impact on their relationships, and uncles who urged them to go into reinsurance, or plastics.
Parents, in particular, are a notoriously poor source of career advice. Their mental model for how the economy works is usually a generation out of date, coming from a time when the only thing you demanded from a job was not losing it. In 1998, those parents were discouraging their kids from turning down jobs at solid companies like HP and IBM to join tiny startups with funny names, like Google. Today, the next generation of parents asks their kids why they are turning down jobs at solid companies like Google to join the next tiny, weirdly-named startup.
Yes, sometimes friends and family ask hard questions that help you reflect if you are starting a company for the right reasons, but you can’t expect to get their unanimous support, and you should expect the day will come when you need to move forward without it.
Ignoring the noise doesn’t mean ignoring the surplus of great advice about starting a startup, but putting that advice to work requires you to do what we’ll discuss in the next topic: Embrace Contradiction. (coming soon)
[1] The Gartner Hype Cycle describes how a new technology becomes overhyped, crashes, and then stabilizes. The Hype Cycle is the origin of the phrase, “Trough of Disillusionment,” which is fun to deploy in your personal life as well. “My blind date on Saturday night was my weekend’s Trough of Disillusionment.”
[2] Carlotta Perez describes the technology adoption cycle from a more historical perspective in “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages.“
[3] Members of the “PayPal Mafia” will often say they were able to concentrate such an extraordinary collection of talent in one place in part because almost no one else was hiring in 2000–2002. Much of Google’s early success can be attributed to the fact they were one of the only companies hiring in the early 2000s.
