Amy Hoy (@amyhoy) is an old friend of mine. We have spent untold amounts of hours on IRC together. We’ve just recently reconnected on Twitter, where yesterday she tweeted a link to “Don’t bite the shit sandwich” on her blog. I’m an avid follower of the startup scene, especially a number of the bullshit peddlers she warns against in her post. I’ve been actively involved in that scene as well, and while I don’t have a huge success story, I think the mistakes I’ve made lead me to some slightly different conclusions.
First of all, I’d get a lot more viewers here if I came out and said “Eric Ries is wrong, lean startups are bad,” or even “Amy Hoy doesn’t know what the hell she’s talking about,” but I won’t. The truth is in the middle. I agree with several of Amy’s conclusions. Startup methodology, like development methodology, exhibits a lot of characteristics of a religion. I believe a lot of great startup companies fail because of the idea that they need to give a product away for free to attract eyeballs, gain critical mass, create shareholder value and then exit. I was part of one of those.
I’ve started an Internet company and I’ve started more traditional small businesses. What I’ll say about the small business world is that it’s steeped in reality. No income coming through the door? Speculative business idea? Don’t look for help from your local bank. More money flowing out than flowing in? Hope you have a rich uncle to fund your “speculation.” Most of the country works this way, real businesses, exchanging dollars for good and services from each other.
If you want freedom from Corporate America (which I’m seriously considering at this point), you can follow Amy’s model (and Charlie’s too). I’d like to see a lot more like those two as well. However, it’s not really new. Plenty of people have been out selling themselves for years. Artists, writers, consultants, you name it, there’s plenty of small businesses built around a person.
The problem with her concept of not taking funding or building to sell is if you have an idea, a great idea, a world changing idea, or maybe even just an idea that’ll fill a great niche, you’re going to get pushed into a service based model. Maybe you have to do consulting on the side to start your business, which is a major distraction. If you don’t, your business is going to be pushed into compromise to make revenue early and be forced early on to attempt to extract value from your idea when it may not be the time to charge for it yet. You’re going to be forced into overhead for customer service, general administration, and key early stage development cycles are going to be consumed attempting to respond to customer demands when your vision for where the product should be going should be the right one.
There is no right answer. If you’re looking to create a product business and not a service business though, don’t discount financing your business with an early stage capital investment. Google doesn’t get built if Sergey and Larry turn their search engine into a product for a specific customer and lose their long term vision of indexing the world’s information. Facebook, recent controversy aside, does not get to be a household product if Zuckerberg spends his days trying to find a way to bring in revenue three months after Facebook’s founding. Nothing wrong with creating a brand around yourself and spending your days free from bullshit either, though.