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| The San Francisco Fallacy: The Ten Fallacies That Make Founders Fail • by Jonathan Siegel • Lioncrest Publishing • ISBN-13: 978-1619616325 • 130 pages • £13.15/$16.99 |
Other cities are cheaper than San Francisco and have better infrastructure and more talented people who aren't already in good jobs. So why do the tech companies who like to think of themselves as disruptive outsiders flock together somewhere so inconvenient?
Jonathan Siegel, who has founded, closed and sold a number of technology companies, wants to dissect that herd instinct and some other fallacies that are common to startups wherever they are, based on his own failures and assumptions -- and the times his startups did succeed.
The core lesson of The San Francisco Fallacy is there from the very first story: it's not all about the technology. That lesson is very true, but the conclusion Siegel draws from his own experience is still not wide enough.
His story of setting up a BBS to redistribute adult images but not being able to make it profitable shows mainly that the marketing and payment systems are as important as understanding customer needs.
A note about copyright and maybe asking your parents for permission before running a business out of your bedroom might be useful here, although that doesn't fit with the usual break-the-rules startup attitude typical of Uber, Facebook and any number of other Silicon Valley companies.
What Siegel calls the 'fallacy of democracy' is more like mistaking democracy for having no management and no HR team. There's probably a sweet spot somewhere between having the one true visionary founder and needing to have someone to break the deadlock when everyone disagrees.
As Uber has found out very publicly recently, and other startups have discovered over the years, investment is a double-edged sword because it gives investors so much say in what your business can do.
By contrast, Snapchat's approach of non-voting shares give the company so much control that institutional investors are avoiding it. Siegel's startup doesn't reach those heights, but his investment fallacy -- that getting investment isn't always good news -- is the other side of the issues playing out at Uber about founders and control, as well as a lesson about not letting someone force you to pivot to do something you don't love.
If there's anything that really drives startups, it's passion. However, the lesson of The San Francisco Fallacy is Siegel's journey to understanding that passion isn't enough, and can get in the way of startups becoming businesses.
If it baffles you that Siegel would much rather spend hours writing the code to create an online posting service than print and post his own invoices, then you're not a startup founder. This particular fallacy is about it being OK to fail -- and you may indeed be expecting failure when Siegel reveals that he spent $500 on Google ads for every customer who signed up to pay $5 a month for the service.
This time there's no long drawn-out struggle, just the realization that next time he could run the ads to find out what people will pay before writing the code for the service they'll be paying for. That's a shortcut for the startup, but possibly a less appealing prospect for customers.
On the other hand, customers very much want startups to learn the lesson of how to fail as early and with as little fallout as possible.
Read the original article on: http://www.zdnet.com
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