The allure of startups and why most people should choose to be small business owners instead.
In Silicon Valley, it seems that everyone’s aspiration is to “Be A Founder.” I chatted with Jon Westenberg, who thinks that most people should focus on building a small business instead of chasing the startup dream.
Why do you think Silicon Valley culture encourages startups over small businesses?
JW: Silicon Valley lives and breathes on VC money, and no fund is able to justify investment without the promise of a 100x return. I don’t have any real criticism of that process or system. The angle that I come from is that while every VC firm needs to be funding high growth companies, not every entrepreneur should be trying to build one.
Do you think there are general differences entrepreneurs who aspire to be founders and those who want to be business owners?
JW: I think founder is a title that people want because it has connotations, it has prestige and it has that “cool” factor. We’ve reached a point in entrepreneurship where startups are mainstream now. It’s like a reality TV singing contest. This is an example I use all the time. When you read about the wannabes who go on X Factor or Idol, they’ll always say that their life long dream is to be a singer. They never say their dream is to sing. And this is because what they really want is the success and the lifestyle and the glamour of being a singer. That’s why they’re jumping in front of a camera. If what they really wanted was to sing – they’d be out there every night playing gigs and building an audience and doing what they love.
Even though you’d advise most people to focus on building a small business, are there any situations when you believe that they should pursue a startup instead?
JW: I think if you want to achieve success in certain verticals, you can’t operate as a small business. Uber, for example, are a sticky growth company that needed huge levels of funding to build their user base among drivers and riders. Facebook, Twitter, Vine – platforms like that can’t grow as small businesses.
So, the first thing you’d consider is whether or not the business needs to scale in order to succeed.
JW: Starting a big, huge, fancy, sweating tech company isn’t the be-all and end-all, and choosing not to do that doesn’t make anyone stupid. In fact, going in the opposite direction is likely to make you happier, healthier, wealthier and a [lot] wiser.
I don’t disagree that startups are the cause of a lot of heartbreak but you’ll have to walk us through what you mean by “it’ll make you happier.”
JW: You Can Focus On Simplicity:You’re literally building something small, within clear limits and boundaries. There’s no giant pressure to add features, meaning you have the freedom to focus on the smaller things that matter deeply to you and your users.
People Matter More: When you stay small, you can spend more time with the people who really matter in your business. A small business is about people.
Keeping Things Personal Is Easier: I love seeing a personal touch in every business and every product. You can take the time to ensure that your users and customers are given a little magic every time.
Small Doesn’t Mean Poor: Small means lower overheads, lower cash burn rate–and the chance to keep all profits within your own company and your own pocket.
You Don’t Have To Stay Small Forever: If you do want to grow, you’ll have a much better chance of doing it from a position of power with a successful, profitable smaller company.
If you’re just talking about being profitable enough that you don’t need investors, then that’s called bootstrapping.
JW: I don’t think that necessarily captures it. To me, bootstrapping just means funding a company yourself. Starting a small business means funding a company, setting boundaries and limits, understanding your product or service and what you want it to accomplish and working to a plan of meeting your limits. If you do that, you’re not going to be a billionaire. But you could be a very happy millionaire. And to me, that’s a pretty good option.