SHEER MADNESS: The Conventional Wisdom (Sucks!)

by Jim Burnett, founder of ExpertOpinions.info

Our start-up, ExpertOpinions.info, is an outlier. We’re building an online consumer recommendation magazine, not a tech site. Algorithms mean nothing to us – we create content through research and curation, performed by actual living and breathing humanoids.

We don’t have a traditional founder structure, which incubator GrowLab in Vancouver defines as “a hustler and a hacker.” We’re based in sleepy Nevada City rather than Mountain View or San Francisco. We’re a comprehensive consumer guide, not a niche site. We won’t generate revenues for 6 to 12 months after we launch.

By necessity, we’re a fat start-up, requiring $5 million to achieve lift-off during our first year and another $5 million to reach profitability in our second year.

Since we don’t have that kind of small change nestled in the sofa cushions, we need to raise the dough. So we’re following the sage advice of bank robber Willie Sutton and going where the money is – Silicon Valley.

But we have a massive roadblock in our path. The conventional wisdom in Startupland tells us we’re doing it all wrong.

Even if our unorthodox approach makes complete sense for our particular business, the conventional wisdom says it doesn’t matter. Even if a conventional approach would doom us to failure, so what. The conventional wisdom says we’re DOA, and that’s that.

Startupland teems with conventional wisdom, or, as I like to call it, CONWIZ. Sounds like a bathroom cleanser, doesn’t it?

In my initial contacts with big-time angel investors and VC partners, CONWIZ has run rampant. One angel told me doesn’t meet with start-ups who lack a technical co-founder. Period. A VC partner says his firm needs to see metrics in the form of revenues and eyeballs before sprinkling seed money on a start-up. A VC in Seattle told me we have to build a niche site first, because, well, that’s just how it’s done. Many angels and VC firms require an Introduction from someone they already know. The rules for pitching fill entire books – x number of slides, the appropriate font size, blah, blah, blah.

It’s ironic, no? Startupland is all about innovation and big dreams, yet most of the people with the resources to back the dreamers act like old-time accountants with green eyeshades, or fussy bankers checking off every last box in a 100-page loan application.

Plus, connections seem to be the key to the realm.

As a 2013 survey by Reuters discovered, you should fit into a certain CONWIZ mold if you expect to get funding from the big boys.

The survey, reported in Fast Company, revealed that 70 of 88 companies that received funding in the first half of 2013 fit what researcher Sarah McBride calls a “traditional background.” Definition? Founders who held senior positions at a big tech firm or worked for a well-connected smaller one; founders who previously created a successful company; or founders who attended one of just three schools – Stanford, Harvard, or MIT. The article concluded – “by and large, Silicon Valley is a place where success is defined by who you know.”

We know almost no one. None of us went to the Big Three. This is our first start-up.

We’re not just DOA, we’re the walking dead, to be avoided like the plague.

On some level, I get it. VC firms and angels are deluged with exec summaries and pitch decks. There has to be some system to winnow the field and manage the process.

But there are two basic problems with CONWIZ. (1) It’s so fucking boring; and (2) It doesn’t work.

The failure of CONWIZ in Startupland is not just an opintion. The failure of CONWIZ is not just a theory, either.

It’s a fact.

Take a gander at the rather scathing article in the May, 2013 edition of the Harvard Business Review, entitled “Six Myths About Venture Capitalists.”

“Behind the anecdotes about Apple, Facebook, and Google are numbers showing that many more venture-backed start-ups fail than succeed. And VCs themselves are not much better at generating returns. For more than a decade the stock markets have outperformed most of them, and since 1999 VC funds on average have barely broken even.”

Of course, if you’re a VC or an angel and you’re killing it with CONWIZ, congrats. The Harvard Business Review notes that a tiny number of firms are raking it in.

If not, there might be a better way. Perhaps more open minds and less closed loops? Just a thought.

Please don’t misunderstand. I’m not advocating a revolution. We’re happy to play the game. We have our pitch deck, business plan, 5-year projections, line-item budgets, and a dyn-o-mite proof of concept survey.

No, I’m suggesting a modest rebellion, a more expansive and less orthodox approach to evaluating start-ups.

Take PlacentaYenta.org, a nondenominational service business founded by two midwives and an attorney. The midwives graduated from the Nizhoni Institute in San Diego and the attorney earned her JD at tres declasse Southern California Law School. Not exactly your typical founders group.

Yet PlancentaYenta is gaining considerable traction in San Francisco, Los Angeles, New York, and Chicago, by capitalizing on the yupscale trend of placenta eating, more formally known as placentophagia, by new moms. In theory, new moms can derive significant health benefits from such a meal, although medical experts are dubious.

Nevertheless, even The New York has written about the topic, most notably in a column with the startling title, “I Regret Eating My Placenta.” Like many alternative health crazes, plancentophagia has been fueled by celebs such as “Mad Men” star January Jones, who made news when she devoured her afterbirth earlier this year.

PlacentaYenta acts as a matchmaker between new moms and hospitals, which generally consider the afterbirth to be medical waste to be discarded. It handles all the legal and logistical details of collecting, preserving, and transporting the placenta to the rightful owner when she returns home with her new baby.

Recipes are offered as well. Since the placenta is, in fact, an organ, you can prepare it as you would any other organ meat. Or grind it into pills if you are a finicky eater.

That’s just one example of a start-up that defies CONWIZ. There are hundreds, if not thousands, of others, but their chances of success are hobbled by CONWIZ.

Of course, start-up founders can get sucked into CONWIZ as easily as VCs and angels. As the Harvard Business Review notes, most new businesses obtain funding from sources other than VCs or angels. There are other deep veins of money that can be tapped.

Since we are most likely to be acquired, in a few years, by one of the Big 3 search engines or by a major media group, maybe we’ll knock on those doors sooner rather than later. Maybe we’ll stumble across a billionaire from Singapore who cornered the market in silica and wants to be a player in Silicon Valley.

Anyway, we plan to continue coloring outside the lines. But that doesn’t mean we think CONWIZ is totally useless. If you have some around the house, just toss it in the toilet. Swish it around, and in just seconds your bowl will be bright and sparkly clean. Then flush it.

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