The Long Lost Truth About Startups

The Long Lost Truth About Startups

Review of Rand Fishkin’s Lost and Founder (Short form AMP Story review here)

Entrepreneurs are highly celebrated in Western societies. Not only idolized on the digital platforms said entrepreneurs created but also celebrated in popular culture with magazine front pages and TV Shows. And for good reason: Many startups are creating jobs, growth and wealth. Some startups are even improving the world (although it’s probably too soon to tell if the net effect of most startups is positive/negative). Many people are dreaming about becoming entrepreneurs. This dream is at least partly built on the Silicon Valley narrative to work hard and become a billionaire. But the dominating narrative is one-sided and exaggerates the benefits of being an entrepreneur versus pursuing other career opportunities. It means many people are drinking the kool-aid and becoming entrepreneurs for the wrong reasons. And end up deeply regretting it.

Enter Lost and Founder by Rand Fishkin. Fishkin is a successful entrepreneur out of Seattle who co-founded the SEO Software company Moz, which generated $47 million in revenue in 2017. Fishkin’s quest is to tell how it really is to found and lead a tech company in the US. To tease apart myths from reality. To help aspiring entrepreneurs identify pitfalls and tactics to overcome them. To explain the incentives and dynamics. To create transparency in a secretive world.

Pursuit of growth or happiness?

Long hidden in the usually glossy portraits of entrepreneurs are all the personal pains entrepreneurs suffer. By detailed describing his own depressions, regrets and even self-loathing for failing product launches, Fishkin helps other current and future entrepreneurs understand they are not weak or alone in such suffering.

One of the most important debates in tech right now is that of workaholism. The mainstream VC – and dare I say old school capitalist – approach is to celebrate extremely long work days and borderline burnout. This is classic exploitation that serves the purpose of benefiting investors by pursuing growth at any price on the expense of founder and employee health and happiness.

Fishkin has been working as much as any venture backed founder. Which, as Fishkin notes, is the bargain founders make when taking VC money. But contrary to mainstream Silicon Valley, Fishkin doesn’t evangelize this lifestyle of excessive working hours. On the contrary, Fishkin warns that VC money comes at the expense of personal well-being: “Personal happiness and successfully raising venture capital are rarely correlated”. Rand is a sober and important voice in this debate. If you want a rich life that contains more than work, build a company that doesn’t need venture money.

The book does a very good job explaining the incentives VCs have when investing in a company. When a deal is signed, there usually is great alignment between company and VC. But this changes over time depending on how the company – as well as other companies in VCs portfolio – is performing. Understanding these incentives is critical – and probably more important than any of the cheat codes – to secure long term happiness as an entrepreneur.

Fishkin’s Cheat Codes

Fishkin starts out positioning the book against most of the current Silicon Valley literature that claims universal truths, often reduced to slogans that can be put on cheesy memes. Fishkin correctly states that universal truths are rare to non-existing: “Silicon Valley-startup advice is … only applicable to a tiny subset of companies and founders (even though it’s dispensed to everyone with one-size-fits-all uniformity).” Herein lies a challenge for Fishkin, as he sets out to give the next generation of entrepreneurs advices.

Fishkin is seeking to give advices without falling in the universal truth trap. Fishkin proposes a number of cheat codes – or tactics – to help founders skip through unnecessary pain and suffering in critical business and personal situations. Business situations such as handling investors, choosing the right growth channels and developing new products without ruining your brand. And personal situations such as depression, physical pain, lost opportunities and personal debt. The business and personal challenges might seem very different at first glance, but herein lies a fundamental point in Lost and Founder: in a startup, the founder and business are so intertwined that they traits and issues are flowing back and forth.

The tactics in the book are surprisingly useful, but do of course have to be applied with care. If taken 1:1 without properly understanding the context, these tactics can be perceived as one-size-fits-all. Luckily, Fishkin is giving sufficient context for the reader to make an informed decision. For example, after describing content marketing as a growth tactic for Moz, Fishkin does not suggest it to everyone but concludes “If your stats look like Moz’s, you’ll probably want to adopt a similar, slowburn conversion process.”

Ship Yourself

“You ship your org chart” is a well-known expression in technology. It states that any given product is a manifestation of the company that built it. Fishkin makes a similar point on a micro level: Companies inherit their founders personal traits. If the founder is a strong marketer, the company will be focused on marketing and have other blind spots such as engineering. If the founder is a risk-taking person, it’s likely that the company also becomes risk-taking.

Many people – founders or not – do not truly understand their own strengths and weaknesses. This lack of self awareness causes problems in the startup as the characteristics are passed on. This might be fatal if not properly understood and addressed by changing personal behaviour and/or building out the executive team with people with contrasting traits.

It could be worse

Throughout Lost and Founder, Fishkin comes through as highly value driven and a strong humanist that firmly believes in diversity and empathy. Not because it bolsters the business (which he proves it does) but for the inherent merit of these values.

Being a founder in a VC backed company clearly hasn’t been a smooth ride for Fishkin. When he tells the stories about intimidating situations, he is taking the time to reflect that said situations are even worse for women and minorities. For example, Fishkin describes how VC offices are set up to intimidate founders like him. Fishkin concludes the story with this powerful reflection: “I can’t imagine how doubly intimidating it would be as a woman founder or a founder of color to see only white (and a few Asian) men on the staff, in the magazines of the coffee table, and celebrated on those walls highlighting great exits.”

A book for you?

Lost and Founder is delivering on its goal: it’s an excellent field guy for entrepreneurs. But it has some limitations: As Fishkin and his company Moz are both American made, the book is US centric. Although the challenges and narratives are quite similar in Europe, they seem less extreme in Europe (most importantly in terms of how much VCs expect founders to work and how quickly to grow the company). Furthermore, as a reader it’s tempting to take one of the many good advices and implement at once. The different tactics are prescriptive by nature, but the reader has to be mindful about their context vs the context in which then book was written. Contrary to most business books, Fishkin is going through great lengths to help avoid unfounded implementation.

Fishkin is doing a great job shifting between first hand experiences and general reflections on the tech industry. The first hand stories alone – which can’t be conveyed in book review – make it well worth the time to read the book. Through great storytelling, Fishkin gives the reader sufficient empathy to understand how life truly is in a US startup. These stories will help the reader decide if and how to found the next generation of businesses.

 

One Reply to “The Long Lost Truth About Startups”

  1. Hello Thomas,
    Very transparent post. I especially liked the part ‘Ship Yourself’. It is indeed difficult to understand what you are best at. But I think it is more difficult when you have a passion different than your strength. If both (passion & strength) are same then, it works as the best case but other times, people tend to take chances. Sometimes they survive and sometimes, the downside Fishkin talked about.
    But great post. Thanks.

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