Tag: Entrepreneurship

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Startups and Other Problems

I cringe a little bit when I hear the word “startup”. This word has several different meanings in modern newspeak. In Silicon Alley (this is what New York’s startup scene was called in 2000) it appears in several typical phrases such as: “well, we can’t afford that – we are a startup” and “we are a startup, but we are very well funded”. This word is basically used either as an excuse for wanting below-market labour or an excuse to flaunt investor-supplied riches. In the first phrase it means that the company has been burning dumb money for at least a few years, in the second – it’s just starting. One “startup” that I worked for (and have fond memories of) began in 1997 and gave up ghost in 2012. UGO was truly the Dick Clark of companies (except not as successful).

Recently I was researching an engineer who designed the Wright 2600 keypunch. An article about him on Tripod (another blast from the past) has a very interesting quote: “After retiring from US Gov., he volunteered for SCORE, the retired executives helping businesses with start up and other problems.” Startup is not a type of a business! It’s a problem that businesses have!

The term “serial entrepreneur” has also acquired a thick patina of sleaze. The thing is, entrepreneurs are not really like flying aces (I think I read somewhere that most military pilots are either aces who shoot down 5 or more planes or the ones who are shot down). No. You only need to take a look at Jerry Kaplan, who wrote “Startup: A Silicon Valley Adventure” and probably set some kind of a record in running companies that don’t make it. A large percentage of startup money is made through sales to larger, lumbering companies. Was broadcast.com a great deal? Nobody remembers it when watching its founder wearing relaxed fit shoes. There certainly a lot of money out there chasing some not very viable ideas. Unfortunately the startups of yesterday and today are either huge failures or huge successes. Or both (but not for everybody).

Luckily these days startup costs are at all time lows. To create a huge failure of a company you need a lot of money. On the other hand, to barely succeed all you need is some pocket change. Forget about Y Combinator. The Pinboard Investment Co-Prosperity Cloud will “barely invest” and try to help you to “barely succeed” – in other words to encourage you to build a business that realistically aims to be profitable. Forget “go big or go home”. Just try to honestly to build a business. Screw freemium. Forget about “incubators”. All you need is $37. And The Pinboard Investment Co-Prosperity Cloud will maybe give it to you. If you’ll get a rejection – dig deep.

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Entrepreneurship Heros I

To celebrate my 2 year anniversary of working for Fast Company and Inc magazines, I decided to write 2 posts about entrepreneurship. Here’s the first one.

The owner of super awesome HMS Beekeeper store recently complained that people told her that she should close “because it’s ‘buy nothing day'”. I’m pretty sure that these people would have enjoyed my childhood in the Soviet Union, where most days were ‘buy nothing day’. Soviet Union was the kind of place where reporting your father to the secret police could make you a national hero, while engaging in business activity was a crime.

I was brought up in an environment where 99% of non-governmental commercial activity was outright illegal, and the allowed kind was considered extremely unwholesome by association. Just about any item produced by the Soviet industry would be stamped with a price in order to discourage illegal arbitrage, like this condom, for example:

These days outside of California it’s hard to imagine a society that considers this much commercial activity evil, but when I was a kid, any schoolchild caught engaging in commercial activity of any sort could get in a lot of trouble. Personal entrepreneurship was literally a criminal activity. This kind of an environment tended to produce excellent jet fighters, but pretty crummy condoms.

In America entrepreneurs get a lot of respect (outside of government and hippie circles), and they tend to start early. You always read about the likes of Warren Buffet and Bill Gates having business ventures in high school and college.

My former co-worker told me a story about his daughter who got into trouble for her entrepreneurial activities in 2nd grade. She and her friend decided to cash in on the popularity of Webkinz. They went into the business of selling hand-drawn counterfeit Webkinz trading cards. Surprisingly they were able to sell a good deal of those. The trouble came when the teachers noticed that they were engaged in market segmentation and variable pricing (which is a topic of one of my favorite Joel on Software articles). You see, the girls were selling cards at a discount to the popular kids and at inflated prices to unpopular ones.

This episode only increases my dislike of schoolteachers. If I were in their place I would have praised the girls for entrepreneurship, and explained to them that it’s copyright infringement that is problematic, while market segmentation is perfectly kosher, even if a little sneaky. I’d teach them about premium vs generic branding and how some people happily pay a lot more for identical items in different packaging.