Enough startup bullsh*t. Let’s build companies instead

Startups are great, right? They’re fun, cool, innovative and dramatic. High-risk and high-reward. Working at a startup isn’t like having a real job - you can be in charge of your time, come up with ideas and break things. 

Companies, though? Not so much. When you work at a company, you’re a slave to the man. You’re chained to your desk, watching the clock, worried about layoffs, politics and performance reviews. There’s little room for creativity, pressure is high and the work itself is dull.

These are both stereotypes, of course, but it’s amazing how widely they’re held. Tell people you’re at a startup and they’ll be fascinated. Tell them you work for an established company and they’ll glaze over, unless it happens to be a particularly cool one.

The problem, though, is that startups don’t succeed. It’s only when they become fully-fledged companies that they’re able to make a real difference in the world, and this transition is hard - in fact, McKinsey’s research has shown that even once they’ve developed a viable product, 78% of companies fail to scale effectively. They never make it through the awkward teenage years to become the fully realised version of the business they promise to be. 

It’s hard to scale a company, and it’s made even harder by the fact that an entire industry has emerged based on what I tend to think of as “startup bullsh*t”. It’s populated by people who are experts without experience, advisors without hard-won wisdom, and leaders jumping from startup to startup, never taking the hard path of committing and growing their business. There are more than 750 accelerator and incubator programmes in the UK alone, which is far, far too many, and in many cases the startup narrative holds promising businesses back.

Every company begins as a startup, and it's a critical phase. Testing your assumptions, refining your product and using the market’s feedback to shape your future trajectory is important, and it’s smart. There’s a definite energy and romance associated with the startup period of a business, when there’s not much to lose from giving it everything you’ve got in an attempt to change the world. But when you’re still referring to your company as a startup in year three, four, five or beyond, something has gone seriously wrong.

This doesn’t mean every business needs to become larger. “Startup” isn’t a size thing, but a mark of maturity. Scaling companies find ways to repeatedly deliver an exceptional product, service or experience to more and more customers, develop new, effective ways to solve problems and in a profitable manner with clarity and intent. They have processes, clear accountability, an established culture, governance and a solid business model. When companies scale well, drama becomes less frequent and although the stakes often increase, the capability of the organisation to deliver and the resources at its disposal means that the daily battle for survival is long gone.

Remaining in startup mode is exhausting. It’s operationally chaotic, expensive and full of surprises. You’ll struggle to consistently attract and retain talent, deliver to your customers and provide a return to your investors. Your chances of actually delivering on your Mission and Vision are slim.

So, instead of building a startup, why not set out with the intention of being a “proper” company? Yes, you’ll need to experiment, pivot and be agile in the very early days, and too much process will slow you down. But you can set out on your journey with a long-term vision, a clear plan of action and a thought through path to (gasp!) revenue and profit. While your initial assumptions may change, from day one you should have a hypothesis around who your customers will be, what problem you’ll solve for them and how you’ll monetize that problem. It’s important to think about the processes and systems you’ll need to deliver effectively, the key people you’ll need to hire and the partnerships you’ll need. If you’re in a capital intensive industry with a long path to commercial revenue, you should plan multiple options for an exit and a return for your investors beyond your next VC raise.

If you’re really serious about bringing your innovations to life and having a significant impact on the lives of your customers, don’t launch a startup. Build a company. It’s harder, it will take longer, and it won’t be as exciting a story to tell your friends, but you might just be successful. Isn’t that the whole point?

(If you know someone who needs to hear this, send them this blog post and encourage them to subscribe to Versapiens. And in the comments, tell me about your startup bullsh*t stories!)