STARTUP

The Backward Silicon Valley Thinking You Need to Ignore

If you pay attention to VCs, you'd think only the young build great companies and a crazy-viral app is the golden ticket. It's time for a reality check.
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Sometimes it seems that almost any business based in San Francisco can get venture funding. One of the newest: Blue Bottle. No, it's not running some new social network or a repository for personal data, although it does involve containers.

It was founded by someone who definitely saw his 20s long ago and has nothing to do with software or hardware. More like wetware. Blue Bottle is a popular chain of coffee shops where you can get something other than the drippings from over-roasted beans, produced by a Japanese brewing method.

I bring this up because so many entrepreneurs, people who want to shake the world with new ideas, are stuck in conventional thinking when it comes to launching a business. I hate to break it to you, but too many would-be business owners, investors, and others in the startup space have become the victims of hackneyed thinking.

For example, there's the assumption that if you're not in high tech or biotech or some other hot commodity sector that getting funding is impossible. It's not that money is unavailable, but more that you have to look outside the usual suspects in venture capital who are stuck inside what are becoming a silly set of rules. For example, VCs primarily want to fund young people, as Noam Scheiber describes at length in his recent New Republic piece. Forget the fact that some research has shown that people who have changed the world with ideas skew older. Look at Nobel Prize winners and developers of leaps in technology and you find that as many were in their 50s as in their 20s, with the bulk being 30 to 49.

Or they don't want to think about companies that come out from areas other than the Silicon Valley. Some of that is practical--only so many hours in the day and travel takes out large blocks of time. Still, skipping a great idea simply because someone doesn't live in California is almost as crazy a notion as you could imagine.

There is something crazier: buying into all this nonsense if you're an entrepreneur. The stories that the media often push are anomalies that don't represent reality. They are often distorted by the peculiar needs of VCs (or by the format of a so-called reality TV show) and the lack of connection that many who cover business have with most of the world. Another example: only companies worth billions are successes.

Are you kidding? There are literally tens of thousands of middle market companies--those with annual revenues between $10 million and $1 billion--in the U.S. They don't get hyped by the press. Instead, the entrepreneurs build long-term businesses with significant value that aren't so subject to the whims of the Daily Funding Fad. They collectively employ millions of people and make a difference in their communities.

Stop paying so much attention to the usual success stories. Find something that you want to do, that you'd be good at, and start building your business now. Expect to grow it over time. Master management. Help boost the country's economy. Break all the silly rules that don't really exist. Do you have something else better to do?

Last updated: Mar 28, 2014

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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