The Myths of the Myths of Entrepreneurship

Pardon me, but I must protest.

Slava Rubin, founder and CEO of indiegogo is a successful entrepreneur, but his recent speech at SXSW Interactive, The Top Ten List of Entrepreneurship Myths, covered on Entrepreneur.com, offers some myths of its own. And for prospective CEOwners, believing these myths could be dangerous.

Fair warning: we are all the victims of our own experience, so I’m only giving my personal views here.

I think Rubin is wrong to suggest entrepreneurs should seek less startup funding rather than more. Possibly because his crowd-funding business does much smaller deals than the seven or eight figure VC investments we’re used to hearing about, he thinks aspiring entrepreneurs should ask for less money “than they want.” But first time entrepreneurs almost always underestimate how long it will take and how much it will cost to get to break-even. A wise counselor once told me to double both numbers in my plan. He was right. (I should have tripled them.) Running out of money before you have sustainable momentum in the marketplace is like twisting your ankle in the first mile of a marathon. You won’t recover. Better funded competitors will snatch the lead away from you while you shift from selling to fundraising.

He is wrong to dismiss the importance of the business plan. Yes, go out and see “if five people will buy what you make.” It’s necessary research. But do it as part of preparing the plan. I know – all plans go out the window within a few months of starting up. But that’s because you have to adjust to clients, customers and, above all, competitors. Investing the effort to create a detailed, double-thought and triple-challenged plan prepares you to improvise quickly and effectively when you need to.

He is wrong that “values and culture are as important as the product.” Values and culture emanate from the founder. He brings them with him into the business. If he is successful, he credits his success to values and culture (in other words, himself). If he fails, values and culture don’t get blamed. Values and culture are what you think about when you have the luxury of revenue growth and profit – or when you’re wasting time that should be spent on sales and marketing.

He is most significantly wrong to slight the role of marketing. In fact, if he actually said that focusing on the product and the happiness of customers is more important than finding and persuading customers to use the product (marketing), he’s dreaming. That kind of thinking comes from reading too many articles and books written by people who haven’t started businesses. Startups are fragile. Sales are the blood that secures their survival. Nothing is more important than sales. You have to find and hook those customers before you can cultivate their loyalty.

Other than that, I think Rubin got it mostly right.

Actually, I’d quibble with a few more of his points, but not here. It was, after all, only a speech at a conference.

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2 Responses to “The Myths of the Myths of Entrepreneurship”

  1. Heather Stone May 26, 2013 at 12:51 PM #

    Rick,
    Thanks for the post. I think entrepreneurs have a lot of different ways of looking at funding. I’m not certain whether entrepreneurs seeking outside funding should look for less money, though certainly bootstrappers would argue for trying to do more with less. On business plans, I guess it’s a question of what constitutes a plan. I suspect few entrepreneurs go into a business without any clue of their end goal. On the other hand, overly elaborate planning should not take the place of action.

    • Rick Barlow May 26, 2013 at 1:03 PM #

      I agree, Heather. You can plan yourself into obsolescence. Like Seth Godin says, you gotta ship.

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