Is It Time to Kill “Start-Up” Culture?
Over the last decade, start-up initiatives rule the landscape. From high tech incubators to national initiatives and small business boot camps, the chorus reigns loud and clear: we need to encourage more startups. Small business, the saviour of economic woe, freer of the labour oppressed and solution to every problem of our modern time is the new demi-god and those of us so lucky to serve at its altar, must bear witness to the life-changing effects it has on our lives.
Start-up culture is a global movement,focused on encouraging small business development. Its homogeneity is ubiquitous, and its reach all encompassing. It has infiltrated national policy & creates soundbytes for politicians interested in furthering their careers. It exists in nearly every sector, from the not for profit, to banking, but its alter exists in the world of high tech.
Leaner, faster, stronger. This is the new mantra of business, and its gods are the high tech millionaires and billionaires, generally under 30, mainly male and very intelligent. Priests serving this deity abound. Cloaked under the auspices of “consultants”, these priests and priestesses of modern technology advise, write, speak and work to develop a culture that is focused on birthing small businesses and getting more people on a path to salvation.
I used to be one of its priests. I worked with clients to start-new businesses, get funding and grow as quickly as possible. And I was good at it. I secured millions for clients. I watched young entrepreneurs change their lives over night, build empires and become leaders. It was addictive in many ways, the energy of start-up, the passion, the drive and excitement. I saw the absolute joy that people experienced when they got their funding, when they could see their dreams begin to develop shape and fruition. There was satisfaction that I was helping good people start companies and get funding.
There is however, a fallacy in all of this. We have a culture so focused on start-up and we do little or nothing to help people once they have a business. Anyone who has ever run a business can tell you, the hardest thing is not starting a business, the hardest day you will ever have, is when you finally open the doors. This is when the real work begins.
Start-up culture is driven and focused on youth. The language it uses, the time frames it operates in, and the adjectives: leaner, faster, stronger, are adjectives of the young, or those that want to be young. The focus is on building a multi-million dollar business as quickly as possible. We focus on maximizing market penetration, and increasing shareholder returns. Our definitions of value are not long-term temporal, they are immediate.
The trouble with all of this is we only focus on the successes. We only see the tech millionaire and not the million others that never gain notoriety, fame or fortune. We have not created a start-up culture or system that is sustaining and business strengthening. We have not encouraged the growth of business but rather the proliferation of start-ups. The facts are staggering. Over 90% of tech start-ups fail; 75% fail to pay back investors and many successful tech entrepreneurs have failed once (or many times) before being successful. High failure rates with small business is nothing new. Consider that over 75% of restaurants fail within 5 years, nearly 90% within 8 years. Why do they Fail? They do not pay attention to their customers, the quality of their product decreases, and they run into financial/cashflow trouble. This is the same for all small businesses.
It is time to stop the start-up culture, and move towards a culture of long-term sustainability, growth and shareholder value that is NOT quarter to quarter, but year to year, and decade over decade. This is real entrepreneurship and community building.
Next week, we will look at how start-ups can be successful.