Saturday, July 06, 2013

You can't mass-produce startups

The rise of the startup accelerators has given many the impression that you can mass-produce startups.  500 Startups has invested in 450 companies.  Y Combinator has graduated 567 startups.  Every demo day, the startups and their pitches get more polished.

But the problem with mass production is that it causes entrepreneurs to focus on the things that are most easily standardized (e.g. pitches) and not on the things that really count (e.g. customers).

My pal Brendan Baker wrote a great Quora post on the top 5 Demo Day cliches:

Brendan's post is both hilarious and depressing at the same time.  The startups at these demo days have been coached and polished to a fine sheen.  But here's the dirty little secret--all that polish only matters because the companies don't yet have traction.

If you can show a series of charts that illustrate how your startup is a) profitable and b) growing explosively, you don't need polish.

And generating traction is not something you can reduce to a formula or perfect with a couple of 1-hour coaching sessions.  Traction is the result of endless fiddling with the product, market, and message.  It comes from going down blind alleys and licking your wounds.

I'm a big fan of Tandem Entrepreneurs (and no, I don't have a financial stake in that organization).  They take on a handful of startups and work with them intensely (the startups all work in the same house as the Tandem team).  It's costly--10% of the common stock--but the value they provide is far greater, and I've steered a number of startups their way.

Tandem is an old fashioned workshop, where master craftsmen work on perfecting a couple of pieces of work.  It might not generate the volume or make as much money as a production line, but the products of the workshop have that old-fashioned quality.

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