Getting to "yes" in a world of "no"…

Archive for March, 2011

Bananarama, startups, and success…

OK, the following probably won’t mean much to (the overwhelming majority of?) startup people under 30, but it is what it is.

When I was a kid, I never really got Bananarama. If you managed to miss that particular treat, it was a three-girl pop band singing not brilliantly in slightly jokey videos wearing way too much foundation. As I saw it back then, they had a bit of music, a bit of style, and a bit of sexiness, but not really enough of any of the three to electrify me. Yet they enjoyed (and sustained) a fair bit of chart success.

What, then, was the secret of their success? Was it electrifying people or just ticking the quality boxes? Were Bananarama subtle musical geniuses, or an ISO 9001 certified factory cranking out music-related products?

Personally, I’m pretty sure that success has almost nothing to do with ‘secrets’ (which are, for the most part,  just props for retrospective “success theatre” presentations), but everything to do with working hard & engaging with your audience. And that’s as true for startups as it was for Bananarama.

Business angels claim to be looking to back edgy, exciting, rule-breaking companies, with an explosively dramatic story to tell on a big (world) stage – kind of “the Sex Pistols of startups”. Yet this is basically missing my point, which is that business success rarely comes from surfing some mad adrenaline-fueled development high, but usually comes instead from developing and growing a long-term relationship with an audience.

If Bananarama were a startup, how many angels would have invested in it?

And what kind of band would your startup be?

Death to startup theatre!

I try to keep up with startup-related forums & newsfeeds, I really do: but I have to say it’s a challenge that’s getting harder and harder. It’s not simply the continued absence of any genuinely good news that makes it painful, but the overwhelming preponderance of ‘startup theatre’ – the pouty cheeks and defiant jaw of the face nearly every startup seems to want to present to the world.

As far as I can see, there is basically zero genuine startup journalism going on out there, nothing that manages to stop itself from tumbling into the self-pleasing techno-vacuity of Wired, whose love affair with technology shows no signs of abating – still gadget PR-crazy after these years, still delighted to “go gonzo” by fetishizing some ultra-obscure MIT-style spin-out in a cool-sounding field. At some point, Wired became practically a paean to the putrid pagan altar of VC – and as such has everything to do with the vanity of hyper-money, and nothing to do with the real 99.9% of startups actually building the future.

All the while Wired-style startup journalism continues to suffer from narcissistic personality disorder and budding companies continue to feed journalists willfully optimistic semi-spinned bilkage, there probably is no answer. As a result, we appear to be stuck in a situation where

  • all available information on starting companies is largely outdated and irrelevant
  • startups operate within a financing segment that is barely alive
  • startups have no effective information channel to/from their financing markets
  • ultimately, nobody believes anything any startup has to say about anything

Though I’m mainly talking about UK print media here (when was the last time The Economist genuinely looked at startups? Or the Financial Times?), I think the same is – perhaps surprisingly – no less true online. Despite occasionally hosting dissenting guest columnists (such as me here), TechCrunch Europe as a rule rarely reaches the level of what anyone else would term ‘journalism’. And for all Sara Rizk’s hard work at Startups.co.uk to get interviews with UK  ministers, nobody right now is (for example) currently flagging the 100x disparity between the government’s notion that startups’ growth will revitalize the economy (as long as they can start up without needing any money or support, presumably) and the actual size of the macroeconomic hole we’re all stuck in.

Startups themselves do bear some of the blame here, because – as I mentioned – most seem trapped in a spin-heavy broadcast-only PR loop, unable to open any kind of realistic two-way dialogue with the financing community. So, I say, DEATH TO STARTUP THEATRE! – if it reads like a piece in Wired, you’re doing it wrong.

In some ways, this blog functions as a kind of “startup anti-theatre” – saying the kind of things hardly anybody else wants to say, particularly about financing – but that’s not really proving a terrifically helpful exercise either, as it doesn’t seem to be provoking any middle ground into existence… it’s all antithesis and no synthesis, if you’ll forgive me this Hegelianisticism.

So here’s today’s startup challenge for you. The specific innovation that I think is missing here is an effective and credible information channel between startups and financiers, a place out in the open where funding-related dialogue can take place. The question is: what could achieve this? Should startups (for example) press B.I.S. to sponsor the FT to include a weekly / daily startup column, containing a mix of interviews (with startups, angels, Prisk/Cable, etc) and op-ed-style pieces? Alternatively, might The Guardian, The Telegraph, or perhaps even City AM be an effective host?

Business models and lickspittle leeches…

Why are so many people in the startup community so obsessed with business models?

Strip away all the McKinseyite high-concept clutter around them, and I think you’ll find that nearly all so-called “business models” reduce down to only two important aspects:-

  1. How the company fits (or doesn’t fit) into a given industrial / cultural / social infrastructure
  2. How / when / how often the company persuades its customers to pay it for what it does for them.

But we can make this even more straightforward. You see, as far as #1 goes, if you accept your business environment, you’re a lickspittle: while if you seek to change it, you’re a revolutionary who’s probably too bolshy for his/her own good.

Similarly… as far as #2 goes, if your transactions happen one at a time, you’re essentially an egotist, who would prefer to avoid forming any kind of longterm relationship with his/her customers: while if you sell a stream of smaller transactions, you’re far too attached to your customers to be healthy, hence are at heart a leech.

Happily, you’ll be delighted to hear that these form a neat little 2×2 grid, exactly the kind of thing business schools love so much.

Of course, with this matrix in place it become painfully obvious what has gone so very badly wrong with the UK startup sector: it’s full of lickspittle leeches (specifically financial services), at a time when it needs more bolshy egotists.

Where on the grid do your companies sit?