MONEY

Why "Simple" is Getting Harder

It's easy to put together the front end of a website and mock up the back end. That's bad for anyone building a serious business that solves tough problems.
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We take so many remarkably complex things for granted that we often forget how hard it is to solve really tough problems. That’s especially true when we need a solution that is elegant, simple, cost-effective, and scalable. 

And we’re quickly inured to anything new. After all, an “invention” is only something that debuts during your own lifetime. Everything else is infrastructure, and taken for granted. All these innovations, and the continually lower costs and lower barriers to entry that they bring, are a very mixed blessing for the start-up world. They make it much more difficult to create sustainable competitive advantages, which, in turn, makes it much more difficult to succeed.

Another side effect of all this technology is that it allows a lot of folks to design and write front-ends to businesses and to create rapid prototypes that are broad in concept and frightfully shallow in content. That, in turn, creates two serious displacements in the marketplace.

First, we have a lot of uninformed but eager money chasing the wrong kinds of start-ups. A lot of otherwise valuable and productive effort and energy gets diverted into lightweight businesses that have no real staying power.

Second, the frenzied financing activity around these wanna-be businesses is obscuring the far more important need for entrepreneurs who are willing to put their heads down and do the long, difficult work of building real companies. Too many companies are obsessed with the top two inches of a problem -- I call these “top soil” terminators. We need companies to dig deep and solve serious challenges. That's how you build long-term value.  

The problem is that it’s really hard to keep your head in the long game when everyone around you is building pretend prototypes and then immediately selling them to an investor marketplace that has so much cash to throw around that they’re playing their own game of spray and pray. In some cases, like Dave McClure’s 500 Startups, they’re proud of their process and happy to tell you all about it.

I’m not knocking Dave McClure (he’s a fellow non-sleeper after all, and a great speaker) and I believe that there’s room for everyone. I just don’t want the guys doing heavy lifting and hard work to get discouraged or lost in the shuffle.

I see signs of this every day in conversations I have with some of our most talented entrepreneurs. I don’t want to name names, but the complaints are remarkably consistent.

Here’s what some of our most talented entrepreneurs worry about:

  • If you can’t tell your whole story in a sentence or two, it’s hard to get anyone’s continued attention. Some businesses are just more complicated than a two-sentence explanation allows for.
  • It’s so easy and cheap to mock up a front-end inquiry system, and to dummy up output for the back-end, that a whole bunch of people can present “businesses” that look just like yours without the stress and strain of having either built something or determining that they could build something
  • If too many wanna-bes blow up ahead of you, you may never get to present your story. By then, the investor window for your type of deal may have closed.  

The best hope is that we will find some investors who are patient and believe--especially now, at the very beginning of the big data revolution--that, if you want to build a big, sustainable, data-based business, you need to look for bright engineers and scientists, not bargains and quick base hits.

Last updated: Apr 3, 2013

HOWARD TULLMAN | Columnist

Howard A. Tullman is the CEO of 1871 ? Where Digital Startups Get Their Start and the General Managing Partner of G2T3V, LLC and of Chicago High Tech Investment Partners. He is a member of the Chicago NEXT & Cultural Affairs Councils and the Illinois Innovation & Arts Councils; an adjunct professor at Kellogg; and an advisor to many start-ups. He is the former Chairman and CEO of Tribeca Flashpoint Media Arts Academy. Over the last 45 years, he has successfully founded more than a dozen high-tech companies. @tullman

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



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