Everybody has an opinion when it comes to startups and entrepreneurship. Sometimes, they might be right for specific circumstances but generalisations might also disturb your perception if you take them as absolute truths. This is how some misconceptions and misunderstandings are born. In this blog post, we will bust some of the most popular myths that are tainting the startup ecosystem.
Myth #1: You are not a real startup if you are not growing exponentially.
The Reality: Every industry has different dynamics, every founder has different skills. The hockey-stick growth benchmark might be true for a software startup in Silicon Valley, but there are hundreds of different types of companies. The only thing that matters is whether you have customers who would miss you if you were gone. Find your own pace.
Myth #2: If you build it, they will come.
The Reality: No they won’t. This myth used to be trued in the early 2000s, but it is not now. It is incredibly competitive. Building a community of people whose attention and trust you have, is more difficult than building the tech product, most of the time. Today, building a business goes hand in hand with growing a community and constant user feedback.
Myth #3: Your success depends on your idea.
The Reality: The best way to think about a business idea is to see it as a “direction”. While without the right direction it is impossible to succeed, knowing the direction is only 10% of the total effort. The other 90% is about the hard work, high-quality decision making, great work ethos, creativity, understanding people, finances and how market demand works.
Myth #4: You come up with great ideas like artists do, through inspiration.
The Reality: No, you come up with great ideas like scientists do, through research. Most importantly, once you have the idea, you move on to validation, not building.
Myth #5: You can’t be successful without a co-founder.
The Reality: In an ideal world, you should have a co-founder or a business partner to bounce ideas with and get feedback from. This will increase the quality of your decisions (one of the top factors for success). However, the lack of a co-founder should not stop you. You can achieve incredible heights solo. Just be 2x more careful to surround yourself with great people.
Myth #6: You should avoid making mistakes.
The Reality: Being afraid of making mistakes slows down learning. The pace of your learning is perhaps the biggest contributor to your success. That is why you should give yourself permission to make mistakes and learn. The goal is to make cheap and small mistakes with big learning value, rather than expensive and big mistakes. Learn from the mistakes of others when you can.
Also, make sure you understand the two different types of mistakes as once told by Bezos. Mistake A good, Mistake B bad. Mistake A: New domain, lots of unknowns, learning potential (opening up to a new market category, e.g. the fire tablet). Mistake B: Results are known, the trail is blazed, good library of past examples (e.g. opening up the 173rd fulfilment centre when you have a good blueprint).
Myth #7: Money is the most important capital.
The Reality: Money is just one type of capital. There are other types of it such as; Network Capital, Time Capital, Energy Capital, Respect and Credibility Capital, Reputation Capital, Technical Know-How and so on. For a business to succeed, all of these need to come together. Imagine you have funding but zero assets in other areas, it would be very tough to make it.
Myth #8: You have to differentiate and be unique to sell.
The Reality: If you are the only one selling what you are selling, how do you know there is any market for it? You can be original, creative and unique in the solution you are offering, not in the problem you are solving. You have a better chance to be successful if the problem is a common, easily understood and widely shared one. Sometimes boring is better.
Myth #9: If a startup does not have the potential to generate £1M in revenue, it is a hobby business.
The Reality: Heck no! You don’t have to work for your investors. You can work for yourself and your company. A business with the potential to generate “only” £250000 might not be attractive for Venture Capital funds. It does not mean it is a great business that will liberate you. The commonly agreed definition of what a startup is changing all the time. Stick to your own truth.
Myth #10: You don’t have to make a profit, as long as you are growing.
The Reality: The growth over profitability mindset has yielded positive results in a set of very limited circumstances for a very limited breed of businesses (Silicon Valley, SoftBank or Sequoia Capital-backed, WeWork type businesses). It is not universal and it is not scalable to the whole startup ecosystem. In fact, losing sight of profitability is the oldest and biggest business sin.
Myth #11: Great founders sacrifice sleep.
The Reality: Great founders make great decisions. Letting go of sleep is a s**t decision, to be honest. Good sleep means you are better at problem-solving, decision making, managing people, thinking strategically and executing with more perfection. Get your 8 hours of sleep a day. Start work with high energy and attack with everything you have.
How much sense would it make for Formula 1 driver or a footballer to start competing with 3 hours of sleep? How much sense does that make for entrepreneurs who have to compete with thousands of others in their industry? Make smart decisions, get your full sleep.
Myth #12: Entrepreneurs work all the time and don’t have hobbies.
The Reality: You are the chief design architect of your time. With the right systems, people and know-how you can indeed build a profitable business that scales with 6 hours of work a day, and also have the weekends for yourself. However, don’t crave work-life balance when you first start. It is a skill and will take time for you to build.
Myth #13: You have to choose between meaningful relationships or business success.
The Reality: You are the chief architect of your relationships. Good founders understand success comes down to an ability to make great decisions – which involves skills like being open to learning, being a great listener, empathy, care. These are also relationship skills. If you can build a business, you can build meaningful relationships. Make the time for it.
Myth #14: Great founders are great goal setters.
The Reality: Good founders set goals and strive to achieve them, great founders build the right habits so that the most important actions are on autopilot. Do great founders set goals too? Yes, but they don’t rely on willpower (which depletes and is imperfect) to achieve the goals but make it a lifestyle and rely on productive habits more than they do on goals.
Myth #15: You don’t need to make money as long as you can find investment.
The Reality: Making money is data-driven, quantitative proof of an appetite in the market for your service or product. This is hugely valuable. You don’t have to greed over money for money’s sake. But you have to understand that it is a signal that aligns the priorities in the business. Investment might help accelerate things, but never lose sight of the market.
Myth #16: You can educate your market.
The Reality: You most likely can’t. A lot of entrepreneurs are stuck in a position where they know they have a good product that solves a need, but their customers don’t have the demand for it. They think they can educate the market and engineer that demand like Apple did with the iPhone. Sorry to burst your bubble, but that takes huge amounts of capital.
Myth #17: You can do everything by yourself.
The Reality: No, you desperately need other people to build a business. You need customer feedback, you need assistants and associates, you need specific talent with know-how, expertise and connections. What is it that is stopping you from connecting with people who are smarter than you, know more than you do to grow your business?
Myth #18: Once you have a winning product that you sell, you have made it.
The Reality: You saw a demand, you built a product that filled it. Presto! You have a product-market fit. Have you made it? No. How do you scale not only the production capabilities but also the team, the office, the tech, the customer relations, the brand, the funds? A lot of businesses fail at this stage. Surround yourself with people who know how to scale.
Myth #19: You should keep your numbers (financial, growth etc) a secret.
The Reality: While there might be legitimate reasons for some specific industries to not share, 9 out of 10 times it is not only Okay but good for you to be transparent about your numbers. Why? Because it keeps you accountable. Here are some great metrics to share publicly.
Number of customers, customer acquisition costs, average lifetime value, monthly recurring revenue, gross profit margins, number of staff, investment received. What else would you add?
Myth #20: You should start building if you think you have a great idea.
The Reality: Stop, research and validate first, this isn’t 1995. Do structured interviews with at least 65 people (if B2C) and with 20 buying decision makers (if B2B). Do extensive competition research as well as looking into previously failed companies in this niche and why they have not made it.
Myth #21: You need a detailed business plan.
The Reality: No, what you need is a single sentence that includes the problem you are solving, your solution, how you make money and plan to grow. Business plans are good when there aren’t a lot of unknowns. The world of startups or internet entrepreneurship has a lot of moving parts, and in most cases knowing your direction and vision is more helpful.
Myth #22: It is bad to have competitors.
The Reality: It is the best thing in the world to have competitors! They do not only validate that there is a market for what you are selling, but they also make sure you don’t have to educate a market by yourself. What’s more, you can get inspiration and insights from the experiments they are running. It is an incredible blessing to have good competitors.
Myth #23: You have to raise money to make it big.
The Reality: No, you can bootstrap. Here are our favourite examples that have bootstrapped (i.e customer-funded through sales rather than VCs).
Myth #24: Founders enjoy absolute freedom.
The Reality: Freedom and responsibility are the two ends of the same spectrum. There is no such thing as absolute freedom, founders have to be free & responsible at the same time. They are responsible to their employees, their customers, investors and most importantly to their future selves. Which means you can’t take time off without good reason.
Myth #25: Good friends make good co-founders.
The Reality: Good friends or not, a good founder needs to check the box in about 8 core areas. The risk with good friends is that you will be much more likely to overlook their unproductive habits and have a difficult time objectively assessing their fit to be good co-founders. Here are the 8 key qualities you should look for in a co-founder.
- A good partner has the life design that fits being in a startup (can spare the time, energy, focus and finances required)
- A good partner shares the problem (sees the world in the same unique way)
- A good partner has a depth of knowledge on at least one topic related to the startup (you find yourself learning new things in each encounter)
- A good partner values good execution over genius ideas (knows success is more dependent on doing hard work and the teams’ problem-solving capacity rather than the ingenuity of ideas) Hint: Here is a litmus test. Ask your potential partner what she thinks has made the well-known startups successful. If the answer is among the realms of “a genius idea”, or “luck” take these as warning signs.
- A good partner focuses on increasing the quality of decisions (honestly prefers reaching better business decisions rather than ‘being right’)
- A good partner listens to you (open to learning from you and enjoys discussing ideas even when their direct impact on the business is not apparent)
- A good partner is intrinsically motivated (follows-up on her tasks without external reminders and volunteers for open tasks)
- A good partner is a life-long learner (sees the big picture, values design-thinking, quick to grasp abstract concepts, can change her ideas when presented with the right data)
Myth #26: You are going to earn more money than you would as an employee.
The Reality: The earning graph of an entrepreneur is inherently different compared to that of an employee. Entrepreneurs might not make any money for 3, 6 months or longer. The graph is geometric. You will spend a lot of time close to zero earnings, but once you have nailed a product-market fit, you can 10x or 100x that, going well above what you’d make as an employee.
Myth #27: Best ages to start a startup is 20 to 30.
The Reality: Quite the contrary. Data shows odds of success are highest for founders aged 35 and above. You have not only acquired critical business and interpersonal skills but also some funds to allow you to take bigger risks. Although, never forget age is never a limit. If you have the entrepreneurial fire within you, it is not too early, nor too late to begin.
Myth #28: You are too old to be an entrepreneur.
The Reality: We love this quote by Henry Ford. “Whether you think you can or you can’t — you are right.” When it comes to age, whether you think you are too old to start, or at the perfect age — you are right!
Myth #29: You need to know how to code to build a tech product.
The Reality: Technical know-how by itself doesn’t make your business successful. There are people you can partner up with or zero-code solutions among a lot of SaaS tools that are getting more user friendly by the day. Make up for your lack of technical understanding, by understanding commerce, markets, demand and user behaviour really well.
Myth #30: You can be successful if your investors, employees, and customers think you are.
The Reality: Only the “market” will decide if you are successful or not. Everything else is static noise.
Myth #31: Gates, Zuckerberg, Musk, Bezos and Jobs are good role models.
The Reality: No they are not. They are great inspirational figures, and we do have a bit to learn from them. But, they are NOT role models. They were born into a very unique set of circumstances at unique times, which might be very different from your reality. Do not copy their tactics, unless you are in similar conditions.
Myth #32: Pivoting your business is bad, and means you didn’t do your research.
The Reality: Great business minds change their opinions when confronted with new data. Sometimes, the only real way to gather high-quality data is doing market testing. You go into the market with a hypothesis and look to learn. Once you learn what you didn’t know, it is time to course-adjust, a.k.a pivot. It is healthy, and sometimes surprisingly necessary.
Myth #33: Follow your passion.
The Reality: Follow a problem you care about, not your passion. This is bad advice. (It works for some people but doesn’t for a majority of entrepreneurs.)
Myth #34: Innovation should be your number one priority.
The Reality: Innovation is good, sure. But it is EXPENSIVE. If you have a great number of resources (money to burn, time, energy, know-how etc) go ahead and make it your number one priority. If you have limited resources like the rest of us, be economical with where you choose to innovate.
Myth #35: Burn out is for losers.
The Reality: No, it is a condition, which you are in the high-risk group for. Appreciate this so you can take your precautions.
Myth #36: Your employee numbers show how big you are.
The Reality: No they don’t. Your team size is a vanity metric. The team should not be as big as it can be, it should be “the right size”. Grow only as much as you need to and when you need to in terms of team.
Myth #37: Your social media following signals your success.
The Reality: No, by itself your social following does not show your success unless you are a media business. But that’s the thing, isn’t it? Many businesses are also media businesses nowadays since it is so crucial to hold people’s attention and trust. So perhaps we will give this one a pass.
Myth #38: Customer needs determine the demand.
The Reality: NO! Customer wants, determine the demand. B2B or B2C is the same. I might need to lose weight, but I want to eat another slice of pizza.
Myth #39: You have to be ruthless to make money.
The Reality: No you absolutely don’t need to be ruthless to make money. You can even be an idealist whose number one priority is to heal the world, help others, educate the new generation or entertain people – while making money. What you need is creativity in making great win-win deals and a good understanding of market demands and people.
Myth #40: Making money means harming the world and the environment.
The Reality: This is indeed the case for a good percentage of large organisations. Since they are publicly traded or owned by large capital funds, maximising money generated might come at the cost of the environment. Startups and small businesses are fantastic because they can tip the scale by playing by their own rules. You can be profitable AND a force for good.
Myth #41: You can be an overnight success.
The Reality: Yes, you can, if you spend 5-15 years first!
Myth #42: You have to act confident to be confident.
The Reality: Quite the opposite. Confidence comes from embracing reality, being inquisitive, humble, curious. Confidence will come naturally as you learn more, build experience and understand how the wheels of a business turn. Don’t fake confidence.
Myth #43: You will be a billionaire with your startup idea.
The Reality: No you won’t. Although, you might spend 5-10 years of your life working hard, on meaningful things, where you help people and still make a very good amount of money. Hint: If you want to become a billionaire, the trick is to earn the first million and then multiply it through investments.
Myth #44: You have to be the first to market.
The Reality: No, in a lot of ways, being the second, third or even a latecomer to the market might have its advantages. Most important of which is that a) you have validation of demand b) a lot of examples on what people are buying and c) great data on how much they are paying.
Myth #45: Harder work means bigger success.
The Reality: How hard you work is only a multiplier of in what direction you are working for. Work in a way your effort brings you compounding returns.