A Few Thoughts on Startups, from a Company That Isn't One

Sometimes I grumble about startups.

When someone calls Figure 53 a startup, I'm quick to correct them: we're not.

I've even been known to question the push for new startups in my city of Baltimore, a stance that must come off as a head-scratcher to the people working so hard to build a stronger culture of entrepreneurship here.

The thing is, I don't actually dislike startups per se.

Sure, I get pretty annoyed when they're lionized as the only game in technology town. And there's plenty of startup culture I could do without. (What's the deal with crushing things? Take a breath, people. I know you're a rock star with some deals to close and MVPs to pivot, but take a breath and let's stop with the crushing of whatever it is we're all crushing.)

So yeah, sometimes I grumble about startups.

But I actually, honest-to-god, don't dislike startups. I think the good ones are amazing, and the great ones change the world in incredible ways. We need them.

So what's the deal?

Why do I grumble about startups? Is it just the less savory examples of startup culture? If so, that's incidentals, not fundamentals. There are jerks in every field.

I think my reservations do touch on some fundamentals, though. I'll try to sketch them out. But first, let's start with a few

Disclaimers

Here are some reasons you should question what I'm about to say:

  1. I have never worked in a startup.
  2. I have never lived in San Francisco.
  3. My knowledge of investment capital is minimal. (My company is bootstrapped.)

I want to make it clear I (hopefully) recognize my limitations here, so that what follows can be read as "an incomplete perspective that may be useful to fill out the whole".

Now let's move on to a key

Definition

When I say "startup", I mean a company that's trying to get very big, very fast. Paul Graham laid it out as well as anyone I've seen. Some folks will call any young technology company a startup, but I don't like that usage. It waters the word down to a generic catch-all. If an early version of my company and an early version of Facebook are both "startups", that tells you almost nothing useful about those two companies. Instead, a startup is very specifically about getting big, fast. It's a great word. It quickly communicates a lot about what the company is trying to do, how they'll need to do it, what their challenges might be, etc. If we water down "startup" to mean any kind of young tech company we've lost a great tool for communication. We desperately need a name for the other kinds of companies, but "startup" isn't it.

Okay, so, "startup": a company designed to get very big, very fast. Usually using technology.

Now let's review some

Basic Properties of Startups

For the sake of brevity, I'll claim there are well-known practical realities of how startups work. Maybe I've got these wrong, but I'm going to assume they're true for the present discussion:

  1. Most startups fail.
  2. If a startup succeeds, it must do so quickly. By definition, if you aren't growing fast, you have failed or are at serious imminent risk of failure.
  3. Startups are hard. Emotionally and physically. The hours are long, the competition is fierce, and you're usually failing. (See #1.)
  4. When a startup wins, it wins big.

Okay, we've got some context here. Great. Now, the next step, is to take a look at

The Argument for More Startups

Lots of places are excited about startups. The place I live — Baltimore — is one of them.

Many folks in Baltimore (and Maryland, generally) are pushing to light a fire under the startup scene here. Can we do it? I think we could.

One of the best pieces I've seen laying out the strategy for investment in a wave of Baltimore technology startups is from Dave Troy, who is himself an angel investor and startup success story. He points out, among other things, the amazing fact that the Baltimore/DC metro area has the largest concentration of IT professionals in the world. More than Silicon Valley. (?!) He describes a strategy that would invest in "150 or more" companies, because, again, lots of failure is part of the process.

I'd really recommend reading Dave's post, as it's a thorough, smart vision for developing the economic engine of this city by investing in a wide array of small startups. (I'm not writing this as a response specifically to Dave's post, but his post is a convenient example of some of the good, smart reasons that a lot of places are probably excited about startups.)

So what, again, is the deal?

If I can get excited about this kind of vision of more startups, what's my hang-up on startups?

It comes, I think, in two parts.

The first part is about the devil in the details. About the practical reality of getting from where we are to where we imagine we might be.

Take, for example, Baltimore's vast pools of talent. Now, that talent is here (as far as I can tell) because we've got lots and lots of government and corporate business. Part of the push for new startups will be getting the message out to these people walled up in cubicles. Ho there! Fellow geeks! There's a brighter, fresher world out here, where we iterate quickly and deploy to Heroku between sips of freshly brewed coffee and make meaningful products and maybe even make a lot of money! Come! Join us! I know it sounds risky but you should try it!

I think we can succeed in getting that message into the ears of the geeks.

But I don't think we can do it instantly. The talent frozen up inside these deep bunkers of bureaucracy isn't going to thaw and come flowing out all at once. If we succeed, it will be a trickle before it's a flood.

Okay, well, fine. So maybe we can't launch 150 startups this year, but we'll launch 5. We have to start somewhere.

But! (And here's where I start to get nervous.)

All five of those startups will probably fail.

And the next five will probably fail.

And the next five.

And they fail in a relatively short amount of time. A few years, perhaps. A few very challenging, very emotionally and physically draining years.

So now we have a more complex story. We're inviting our first wave of brave entrepreneurs to dive into the surf, and probably crash on the rocks, and...then what? What happens next, in the early days of a startup city? If our culture was established, there would be new startups to try, new jobs to switch to. But if those don't exist yet, what? Back into the bunkers?

What happens if we ask people to jump in, and they kinda just... drown? All of them? For years? Aside from my concern for those people, will this get us where we want to go? Is there no intermediate stage between here and there that might make the transition smoother?

More words for snow

The second part is about the cost of ignoring the other kinds of companies. I mentioned above that we have few names for technology companies that aren't startups. I consider this a serious problem. At Figure 53, I experience this all the time. People don't know how to think about us. They're confused by us. They don't have the benefit of an established archetype, like the startups do. ("Oh, you're a lifestyle business?")

Even if we're lucky enough to have the resources to become a startup city, going all-in on startups seems narrow. When we tell stories about ways to solve interesting and important problems as entrepreneurs, about setting out into the white, raging blizzard of the unknown, I think we need a richer language. We need more words for snow. (Or for snowshoes? Anyway, you get the point.)

So what then?

Well, I'm not sure. Like I said, I only see a limited piece of this puzzle in my day-to-day entrepreneurial life. But one thing I do see from here is kind of interesting:

I've created employment agreements that are explicitly designed to support outside entrepreneurial activity. To date, Figure 53 has supported at least three local companies as a kind of under-the-radar incubator.

Figure 53 is not a startup. But I think it can play a role in the success of the startups. And maybe there are more stories like ours, waiting to happen. Are companies that aren't startups less likely to fail? If so, what role might we play in fertilizing the soil where next year's crops will grow?

(And how many different metaphors can I shove in to this piece?)

Let's keep working on it

Look, when the hordes on Hacker News mock me for business practices that don't scale, well, that's just annoying.

But I don't really want to be a grumpy gus about startups. I don't reckon they're for me, personally, but I like them, and I want them around.

I'm just asking for a conversation that isn't all startups, all the time. Us little guys would like to help out too, and I think we can. And maybe there's a place for more little companies, in addition to more startups. And maybe "a little company" doesn't necessarily have to mean "a company that failed to get big".

Chris Ashworth is the founder of Figure 53
@Chris_Ashworth