Return of the startup factory?
This story was recently sent to me by a friend, and, operating Curious Office, I read it very closely. For the last few hours since reading it I’ve had mixed feelings about it. For my own sake I thought I’d try to obtain some clarity by forcing myself to write about it. So, what’s wrong with this article and this approach?
Some things I agree with. Others I don’t. I think the process of starting a company should be treated with more respect. Starting a side project that becomes successful is called ‘luck’. Doing as many side projects as you can find time for is a perfectly good thing to do. Sometimes this is called a ‘hobby’. Saying that you’re going to churn out 20 companies per year almost feels cheap to me. I DO agree with the suggestion by Evan Williams that you don’t necessarily know what is going to be successful. Very true! I promise you that the founders of YouTube, MySpace and Facebook never had an idea that these companies would be worth their current valuation. Sergey Brin once said that he always knew Google was going to be huge. You know what? I don’t really buy it on some levels! I don’t believe that he ‘knew’ that Google was going to be a $47 billion dollar company any more than I believe that Mark Zuckerberg knew Facebook would be worth billions when he co-founded it. But the theory presented in this article is that “if you can’t predict what’s going to be successful you should do as many projects as you can.”
I suggest things aren’t nearly that simple. This article says “engineers have 90 days to ship a product.” It further says “the product has to grow organically, without any marketing.” To me, this is not even fine if you’re working on a consumer project. It has ZERO bearing on development of an enterprise product. First, the amount of time and money to be spent on a project should hinge on the market your chasing, the size of the market, the competition in the space and the complexity of your unique offering. In other words, some thinking still applies. Secondly, NO company is successful without marketing. The issue is about the true definition of marketing. If Yelp enters an already crowded market defined as “a place to share the experiences they’ve had with local businesses and services” and suddenly has an Alexa ranking of 1,850 do you think it was done without marketing? Sure, there are no fancy Superbowl commercials. No sock puppet. But there IS a marketing strategy. A strategy about building affinity with your users. A strategy about optimizing for search engines. A strategy around unparalleled customer service. These things have development and human resource expense that are marketing related.
There’s another thing about this article I don’t like. It makes it sound like building a successful business is something that is a process of chance. The comparison is of a movie studio churning out one hit after another. My dispute? Great movies involve one or more of the following: great director, great story line, great cinematography, great producer, great big budget, great actor(s). Most successful movies involve big budgets with highly proven directors, actors or writers. Occasionally, but far less frequently, do you get a short film that makes big money. Napoleon Dynamite was inspiring because it was a rare example. But it doesn’t usually happen that way.
So, I guess my feeling is that finding good company opportunities is hard. This is why limited partners give venture capitalists money. It’s hard work. It takes evaluation and strategy. It takes smart people, good plans and some timing. It can’t always be forced. You can’t always know what will be successful anymore than a professional poker player knows what the river card will be. But, he’s still more likely to beat me at poker in the no-so-long run.
Michael Copeland at Business 2.0 gave me a nice mention once and I like him but in this case I’m going to give Ravikant a lot more credit here. I’d like to think there is some deeper strategy going on here than most readers will take away.
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