Big Starts Breed False Victories

Every startup launches victoriously — it's the rest of the journey that tends to put an end to it.

How many times do we have to see this same movie before we realize how it ends? Tell me if this sounds familiar: A startup launches with great fanfare — big funding, a "transformative" product, and heaps of early praise only to be nearly extinct in just a few years.

Whether it's the "next great media platform," Clubhouse ($4b valuation in 18 months, now almost defunct) or Bird ($2b valuation in just over a year, now worth $40m), we just keep seeing the same thing happen over and over.

What we're missing is the ability to discount those early announcements in favor of waiting for the actual results. We need to be able to see the early victories as fanfare, not success.

We Just Raised a Funding Round!

One of the most over-celebrated hollow victories is a startup's funding round. Now, don't get me wrong, raising a round takes real work and is vital to the success of some startups. But with that funding round often comes a notion that the startup has already succeeded somehow.

We see this in full force because, well, as startups, we all of a sudden have a ton of jack to spend! It's easy to think we're "doing well" when we're hiring with a ton of money we didn't earn (from customers) or spending like drunken sailors to acquire customers that will never be profitable.

That funding will invariably get spent, and when it does, we either have something to show for it (ideally a stable business), or we don't. It's one thing to convince a handful of investors that a startup might work, it's a totally different achievement to convince paying customers.

Our Incredibly Novel, Transformative Product!

Almost every startup launches with a novel idea or at least a novel take on an existing business. Where we get led astray is when we start confusing "novel" with "better." Startups are quick to assume titles like "Facebook killer" or "The Next Google," but you know what — decades later, those companies are doing just fine.

Being novel doesn't mean we're better; it just means we're new. Remember when crypto was going to transform everything? We're all going to be doing all of our transactions on the blockchain now, right? It's new, so it must be better, no?

Anyone can launch a new, transformative product. That's not a victory, although it is admirable. The victory doesn't come from launching a product; it comes from launching a product that customers pay more for than it costs to produce. No matter how obvious that equation seems, the math is consistently forgotten when new products launch.

Everyone Loves Our New Product!

With the killer combo of new funding and a novel product comes heaps of empty praise from all of social media. In 2001, when the Segway launched (it's OK if you don't even know what that is, it will only prove this point more), Steve Jobs was quoted as saying, "Cities will be designed around this device."

If Jobs meant that a dozen cities would offer "Segway tours" to the nerdiest families visiting that city, then yes. It's easy to throw praise at what something could be, because it's free to do it, and it's kinda fun.

That early customer and pundit praise is wonderful, but we overlook the fact that it's fleeting. All the early praise for what we "could be" doesn't amount to jack shit when it comes time to actually prove that we can live up to the hype. To be fair, my kids have a Segway Ninebot which they've logged well over 45 minutes on collectively in its lifetime, so perhaps Jobs was right after all.

Celebrate the Real Victories

While it's fun to get caught up in the excitement of new startup launches and the press and media surrounding them, we must remember that those big starts are false victories. The real victories come years later when we build real companies with real, profitable customers. We just don't ever see those press releases...

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