A dose of reality

Ian Lurie

Time for a bit of reality, folks.

Yes, I write a lot about how failure is good, internet marketing is super efficient, costs a fraction of other marketing, etc..

But the NY Times just took that idea to an extreme that leaves me shaking my head. In an article today about whether web entrepreneurs still need venture capital, the interviewee and/or writer said:
“Web start-ups are routinely started for less than $50,000.”

And a few other gems. You can read the article for yourself. My response:

“Web start-ups are routinely started for less than $50,000. It’s true. And 99% of them go bankrupt, for free.”

Way, way wrong

Claire Cain Miller, got it way, way wrong:

We all hear the stories of the guy who started his company on $50 and a stamp collection, and now owns The Next Facebook. We don’t hear the more common story: Someone puts up their life savings and ends up broke.

I’ve been in this business a long, long time now. I’ve seen some great successes. But more often than not entrepreneurs start their venture with far too rosy a forecast for their first 2 years in business.

So they under-budget.

And then they go broke.

Ms. Miller’s article, and the subject article by Robert Hendershott, does a poor job of explaining that, focusing instead on the sensational idea that you can just float an application idea in the Apple App Store and bam, you’re a success.

And don’t tell me that’s not what the article says. We all know damned well the conclusion folks will draw from it: “I can start a successful business for $50,000 or less! I can quit my job!”
Don’t we have enough problems without this kind of silliness?

The truth is, you can succeed online. You don’t need millions of dollars from venture capital firms. But you do need a reasonable budget planned for your business and at least a 2-3 year cushion. And you need to have reasonable expectations.

Rant over. As you were…

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  1. Reality is a bitch. It’s cold, unforgiving and extremely nasty if you upset it. However, I think it’s kind of fun because you have no safety net. Then again I’m young and stupid about life. đŸ˜‰

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