10 Startup Fallacies

By February 25, 2012

The startup world can feel a lot like strolling through a zoo. You have the reptile house (venture capitalists), the nocturnal animal house (the hackers), and the baby nursery (the founders who aren’t old enough to gamble or drink). Just like zoo animals, each “species” in the startup world has their own way of doing things.

But what works for tigers doesn’t work for gazelles. The same is true in the startup world. Becoming a startup founder has never been more popular or easier. The barrier to entry is lower thanks to reduced server costs, and there’s no shortage of advice from founders who have been there, done that for wannabee entrepreneurs to reference. I encourage everyone who is thinking about starting a startup to seek out mentors and advice, but there are a few common startup fallacies floating around that can get you in lots of trouble if you fall for them.

As a startup insider, I know that the shiny veneer of startup life is a lot different than the reality. Here are 10 startup fallacies that need to die right now:

The most successful founders have dropped out of school, therefore I’m going to drop out of school!

This is a generalization fallacy. Mark Zuckerburg, Steve Jobs, and Bill Gates all dropped out of school, and they all went on to found billion dollar companies. But that doesn’t mean that dropping out of school to work full-time on your startup is a good idea. In fact, a large number of startup founders have advanced degrees in computer science and finance from top tier universities. Don’t listen to Pete Thiel when he encourages young founders to drop out of school. Listen to Mr. T. Stay in school.

We’ve got thousands of users on our beta list. This shows how much people want our product!

This is a false correlation fallacy. Just because people signed up for your beta list doesn’t mean that they will be paying users, or users at all. A lot of tech influencers sign up for beta lists for the sake of checking out the latest thing. There is even an app that helps users signup to be notified of new beta lists daily.

Paul Graham thinks that choosing a small, obscure niche is a startup killer. Paul Graham knows what he is talking about because he has experience with so many startups.

This is the appeal to authority fallacy. You should never change the your startup idea based on what industry players say in the public arena. Graham has written that choosing an obscure niche is a startup killer, but what if you go for an obscure niche and your startup is just what that niche has been begging for? You’ll have loyal users, and you can expand your product line as you move into different horizontal or vertical plays.

Either we go for vc money, or we bootstrap the company.

This is the either/or fallacy. The problem with this fallacy is that you have many more choices than this statement lets on. You could raise an angel round, then buy out your investors down the road. You could become profitable from day one by selling your software, or you could build a number of products and finance them by consulting and teaching classes. You can even bootstrap and then take vc money years down the road when you want to hit a few big key milestones to grow the business.

bootstrap tweet

Our company has to go to SXSW to get noticed. All of the influencers, media, and founders are going to be there!

This is the ad populum fallacy. You don’t have to spend valuable time going to events and meetups just because everyone else is going to them. The startup that I work for has millions of users, and we have never been to SXSW to promote our company. In fact, while everyone is partying in Texas, we work extra hard to get ahead.

SXSW tweet

We don’t need to ask users what they want. Steve Jobs never asked people what they wanted before he built products. He just knew what they would want next.

This is the weak analogy fallacy. You are not Steve Jobs. Stop comparing yourself to him. Besides, Apple has never created a product without looking to the past and future for inspiration. Many founders use the legend of Steve Jobs to rationalize why they build products in a vacuum. Steve made it look magical when he got onstage for a product launch. But the hard work was anything but magic.

Our A/B tests don’t show that the sign-up flow is a problem. We need to get more people to the site, then they’ll sign up. Let’s buy Facebook ads!

This is the appeal to ignorance fallacy. First, you state that you don’t have enough information, then you make a decision. Maybe the signup flow is a problem, but you haven’t had enough visitors to make a conclusion. Maybe you need to test longer. Throwing money at marketing won’t solve fundamental problems with your product. For example, maybe no one actually wants your product, no matter how awesome your signup flow is.

If I quit my job to do a startup, then I will have more time to work on my company. But I can’t quit my job, so I won’t have more time to work on my company.

This is the denying the antecedent fallacy. Many wannabe entrepreneurs use this as an excuse to sit at their corporate job and collects a fatty paycheck with health insurance by day while they sit at home and complain on twitter all night. If you are passionate about your startup, you can keep your day job and find more time during the week to work on it. As Jason Fried and David Heinemeier Hansson from 37 Signals write,

Stop whining. Less is a good thing. Constraints are advantages in disguise. Limited resources force you to make do with what you’ve got. There’s no room for waste. And that forces you to be creative.

If you’re not trying to be the next Facebook, you’re running a lifestyle business.

This is the fallacy of false cause. Just because you are not trying to be as big as Facebook doesn’t mean that you are trying to run a company that provides you with enough money to live well. Maybe you are trying to create value in the world by helping musicians get discovered, or you want to advance the payments industry with your 5 person startup. You don’t have to be super big or super small. A medium-sized startup is ok too.

Working 90 hour work weeks made these founders successful, so I need to work 90 hour weeks to be successful.

This is another generalization, and it’s the fallacy that ruins the most lives. You need to work smarter and harder, not longer. When you get burned out, you are at risk of gaining weight, burning out, and performing like hell. You’ll never get ahead if you find yourself staring at a computer screen for most of your life. Getting outside and having experiences in the real world will lead to inspiration and innovation. You could meet 3 new users in line at the coffeeshop if you just get out and get moving. Time outside of the office is unpredictable. What is predictable is that your ideas will be as stale as your cold murky coffee mug if you push yourself to work too hard in the office.

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