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The 10 Ways Startup Advice Is Flawed

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iStock_000002891255SmallBoy is there a lot of startup advice floating around these days. To be sure, I routinely feel bad about adding to it. And yet I’m about to do it again.

This time, I’m going to itemize 10 ways that startup advice — typically presented in some form of “I did this, then I got really rich and/or famous, so if you do the same thing, you’ll also get rich and famous” — is flawed.

Startup Advice: The Bad

1. Maybe the thing they did really didn’t cause them to get rich. A lot of startup stories are after-the-fact rationalizations or outright myths. As they say in Latin (and on the “West Wing”): Post hoc ergo propter hoc. In other words, just because something takes place after something else, doesn’t mean the two have a causal relationship.

  • 2. Maybe they got lucky. After all, as my grandmother used to say, “Even a blind pig eventually finds a truffle.”
  • 3. Maybe they did the thing they said and it was actually a bad idea, but they were in the right place at the right time. A lot of powerful businesses (especially network-effects businesses) are largely resilient to incompetence.
  • 4. Maybe the thing they did worked, but only in conjunction with some other unnamed factor. For example, many visionaries partner with a heads-down, practical type.
  • 5. Maybe the thing they did worked, but it only under certain circumstances. For example, perhaps it worked in their industry and not in yours, or only in certain phases of growth, or for certain kinds of teams.
  • 6. Maybe the thing they did used to work, but it doesn’t anymore. For example, perhaps competitors now know how to counter such a move.
  • 7. Maybe the thing they did worked, but for a different reason than they think. For example, perhaps it was the feedback of their customers, not their grand original idea, that was key to success.
  • 8. Maybe they didn’t really do the thing they said they did. Most of the mythological startup stories are highly misleading. Many of us remember the past the way we wish it had been rather than the way it actually was.
  • 9. Maybe they’re not really rich and/or famous. A lot of startup energy goes into what I call “success theater” –- that is, convincing the world that you and your startup is successful. Next time you’re listening to a guru, ask yourself: How do I really know that they’re successful? What is their definition of success? What’s mine?
  • 10. Maybe they have an agenda. Ask yourself: Does this person stand to benefit if I follow this advice? The VCs I know and trust are honest and very pro-entrepreneur, but I routinely hear others give advice that entrepreneurs should be suspicious of. Fundamentally, their incentives are based on having a portfolio of startups. As an entrepreneur, you have a portfolio of one. Think about that the next time a VC advises you to swing for the fences.

  • Startup Advice: The Good

    I hope by now you’re wondering: If all that is true, why should I listen to you? Indeed, you don’t know how successful I’ve really been. You don’t know if the things I say I did really contributed to that success. And most of all, you don’t know what my real agenda is.

    Startup advice can, however, be very valuable — the key is to look for actionable advice that can be applied in small batches, has a measurable outcome and is based on coherent principles that you understand.

    Actionable advice proposes a set of behaviors that you’re capable of emulating. I laugh when I hear advice that starts with “Raise significant capital from the top one or two VCs” or “Raise money from VCs you’ve already worked with.” Not everybody has that option. So advice along those lines is interesting but moot.

    Advice that works in small batches can be tested and applied over time. Ask yourself: “If this theory is wrong, and I attempt it, am I doomed?” I have found that most good ideas are good in parts, too. Can you try listening to customers just a little bit, and see how that goes? Can you try a slightly more agile release process? Be especially wary of “all-or-nothing” advice. Few things in life are truly that binary.

    A measurable outcome doesn’t necessarily mean hard data. It just a way to assess the effect of the advice you’ve taken. To that end, small batches really help, because you can try lots of different kinds of advice, and pay attention to the correlations between outcomes. This kind of associative, intuitive process is something at which humans excel. Use it.

    And finally, find a coherent set of principles that makes sense to you. Extreme Programming is an especially good example of this. Each of the practices is based on a set of clear principles, and these principles suggest a series of interlocking practices –- each one reinforces the others. Lean Thinking, Boyd’s OODA loop (maneuver warfare) and Customer Development are other good examples.

    But most importantly: Be wary of advice that you don’t understand. If you don’t understand the principles behind what you’re being advised to do, you won’t be able to tell if applying them is working or not.

    Eric Ries is a serial entrepreneur and author of the blog Startup Lessons Learned.

    21 Responses to “The 10 Ways Startup Advice Is Flawed”

    1. Ok we can forget the advice. Just show us the money. We have a great team, market potential, and business model. All we need is the capital in place, then off to the race. Do you have a list of investors that are interested in a great story and a better exit strategy than the story?

    2. Thanks Eric,

      I agree with the 10 that you have. I have been on both sides of the coin having received advice from “those who have done it” and have given advice as “one who has done something”. I definitely think it is important for people seeking advice to understand what level of done it or done something is being offered.

      As we all know the number of people who have “done it” is pretty small and more likely you will be relying on people who have done something so try and find people who will be honest with you and tell you what they did and what happened with out a lot of puff and fluff.

      In my most recent company we are attempting this by posting out a series of blogs on “Eating our Own Dog Food” and “How we created and implemented X Strategy as a startup”. We took this approach to promote our product, which is for implementing strategic plans and we figured if we showed people that we actually used our product and then what we were thinking or doing a particular period then people would be able to draw from that.

      Who knows where the company or the product will go but at least it will be clear to us and others what we were thinking at a particular time!


      Ed Loessi

    3. Dave Huer

      IMy friends tell me they have learned from my mistakes! So hopefully this means I ought to be able to set myself up by saying ““I did this, but didn’t get rich and/or famous, so if you do the same thing, you’ll also…”

    4. Thanks Eric. I am a big fan. And your key message ” look for actionable advice that can be applied in small batches, has a measurable outcome and is based on coherent principles that you understand.” is hopefully not only applicable to start ups, but to life in general. I’d also rather hear some advice from entrepreneurs what went wrong, what they thought would work etc. I know of a company which is rather succesfull (market leader in their field and expanding globally) whose business idea came from an intern at their original company.

    5. I think a lot of would-be entrepreneurs should rethink the popular conception of “start up”. Forget the dreams of going public. Forget the dreams of getting bought out. Focus on starting small, lean and mean. Focus on generating steady cashflow. Focus on keeping costs rock bottom. Focus on beating your customers’ expectations. View “success” as controlling your own destiny while making a good living. Yeah it’s not sexy, but this is the new reality. Trust me, you’ll be much happier.

      Ed Yang
      President of Firecracker PR

    6. I would bet #2, they just got lucky, happens more often than not. I can’t remember what that toolbar startup was in 2000 where it was basically a pyramid scheme for a downloaded ad bar on the bottom of the screen (created by 2 Harvard or Stanford students I think). They likely made a ton of money before most people realized it was a stupid idea that was going nowhere.

    7. The “bad” list of 10 maybes was so broad that it pretty much covered every single possibility under the sun, making it for a bit of tough reading. But the general principle of this post is helpful in guiding would-be entrepreneurs.

    8. and there is a whole industry trying to make entrepreneurs feel insecure and miserable, so they can benefit from them … eg – big VCs, coaching pundits, MBAs with no useful experience, english majors who just want to write another book, business consultants etc etc

    9. Snappy and well-written, your blog post gets sharply to the point and is useful. There are lots of supposedly successful people making their money teaching others to “do what they’ve done” and they’ve not actually done it (yet). However, one doesn’t always need to have been in their client’s shoes to help them determine a problem and solution, but if the advisor is saying they have when they haven’t, therein lies the danger.

      My mantra with new learning is always to ask, “Is it value added?” Did something positive come from that advice, feedback or training? If yes, then continue to use it. If your results after using it are unmeasureable, confusing, or you have to sign up for the next program to “really get it” – then make an about face and go elsewhere for authentic support that’s more about you than them.

    10. I can’t believe someone finally said this. Thank you so much. Until now, I thought I was a mismatcher. No joke. You’ve been promoted to my #1 blogger.

      I would probably add one thing – if I may:

      You might not have nutted marketing or the target market on the first pass. Don’t listen to folks who say that you must have a full-on marketing plan out of the gate. It is ok to have a great idea in search of a market and keep trying until you’ve found the best thing that resonates with your value proposition. The most important thing is the core value prop and not the market – that is until you’ve found it.

      Thanks Eric. Great Post!