Reality Distortion Field

I found this fantastic rant by Dave Grohl, of Nirvana and Foo Fighters, describing his documentary Sound City:

“This movie wasn’t made for cynical middle-aged music critics, it was made for my daughter, or for the teenager down the street who’s trying to figure out how to start a band. When I think about kids watching a TV show like American Idol or The Voice, then they think, ‘Oh, OK, that’s how you become a musician, you stand in line for eight fucking hours with 800 people at a convention center and then you sing your heart out for someone and then they tell you it’s not fucking good enough.’ Can you imagine? It’s destroying the next generation of musicians! Musicians should go to a yard sale and buy an old fucking drum set and get in their garage and just suck. And get their friends to come in and they’ll suck, too. And then they’ll fucking start playing and they’ll have the best time they’ve ever had in their lives and then all of a sudden they’ll become Nirvana. Because that’s exactly what happened with Nirvana. Just a bunch of guys that had some shitty old instruments and they got together and started playing some noisy-ass shit, and they became the biggest band in the world. That can happen again! You don’t need a fucking computer or the Internet or The Voice or American Idol.”
Rock n Roll Jedi, Delta Sky Mag

I wonder if people in other vocations feel the same about how reality television distorts their experience?

Do chefs love MasterChef? Do property developers love The Block or Property Ladder? Do people who work with troubled kids love Super Nanny? Do architects love Grand Designs? Does anybody love The Beauty & The Geek?

I doubt it.

Because if you substitute musicians for start-up founders, what Dave Grohl described is exactly how I feel about Dragons Den and the like.

All of these shows are entertainment, which is fine. No harm, no foul. Very little reality, despite the name. Except that it seems that many people often fail to make that distinction.

Despite all of the evidence to the contrary, people do believe that entering a talent show is the path to a career as a singer, and they keep lining up every time there is a call for auditions. These train wreck shows seemingly have no problem finding folks who think that inviting cameras in to film their wedding planning or their house build or their blind date with a stranger is a normal and constructive thing, without appreciating that the only possible winner from that equation is the person selling advertising around the eventual show when it screens. Even the viewer, as entertained as they might be at the time, is a loser by any reasonable measure of opportunity cost.

It is, to use Dave Grohl’s patter, fucking nuts!

And, it makes me sad and angry to see it happening more and more in my industry.

A contrived start-up experience has as much in common with a real start-up as being a contestant in Survivor has with living unassisted in the Amazon for three weeks.

But, there is a large and growing group of people who think that the only way to a successful start-up is via an accelerator program, where they get locked in a room for twelve weeks, inundated by mentors, pressured into customer discovery and product pivots and whatever else is the buzzword de jour, taught to pitch and then pushed on stage to pimp their pre-pubescent start-up to a room full of investors. And then… who knows what?

This is just Startup Theatre: a scripted experience that has very little in common with the things that successful startups in the wild fill their days with, in my experience. The only thing missing is the film crew, although surely that can’t be far away.

The latest “season” of Lightning Lab had their demo day in Wellington last week.

This is how I saw it promoted on Twitter:

UPDATED: removed the link to this tweet, which has now been deleted. :-/

Seriously? Did it rain? Were folk hustled?

The people who are advising founders to approach investors in this way are naive and wrong. Be aware that you’re creating a significant selection bias by doing this, because smart investors do not want to be hustled and won’t be tricked into investing in your dinguses.

Likewise, if you think this is the best way to access people who you would otherwise struggle to connect with, you’re massively underestimating how easy it is to reach smart investors in a small place like New Zealand (or a large place like San Francisco, for that matter) if you have something compelling to pitch them. But you do have to get the train in front of the tender. Otherwise you’re not really a founder.

(I keep talking about smart investors, but I realise I haven’t ever explained what I mean by this. It’s possibly a subject for a future post, but for now I’ll define it simply as those who typically contribute more value than they capture, both in terms of dollars and, more importantly, in terms of advice and support.)

So far the results from these sort of programs locally are pretty skinny. But, we only need to do this a few more times before one of these companies becomes Dropbox or Airbnb. That’s how the maths works, right?

In fact, we believe in accelerators so much that we now have a government grant programme designed to accelerate accelerators. That’s four derivatives, if my calculus is correct!

(The questions I would ask those that approve this sort of funding are: a) how will you measure the impact you have on the companies who benefit from this investment?; and b) what is the control group?)

Please, don’t hold your breath.

You may reasonably ask: if this is so wrong, why is it increasingly common and popular?

I think the explanation is simply that doing a start-up is hard. And more than likely a complete waste of time and effort. So we’re all attracted to this sort of reality television approach because we think it might be an easier route, or increase the likelihood of a successful outcome.

But, I think the short cut we hope to find in this approach is a mirage.

I tried to opt-out of this debate a while back, as I figured there was little chance that I would convince anybody who believed otherwise, and there was no shortage of better things to put my time and energy into. I still believe that. But, I’ve realised I never explained the alternative.

I think Dave Grohl has the answer: You have to enjoy the walk.

If you’re a would-be founder, don’t be impatient. Realise that the person promising you a short cut is probably trying to sell you something. Rather, find some friends to work with, and understand that for quite a while you’re going to suck. But suck in the knowledge that you’ll look back later and realise how much you enjoyed sucking, or more accurately how much you enjoyed sucking slightly less each day. Accept that it’s better to suck in relative obscurity. Don’t be tempted too soon by the glare of the spotlight. Tell your story to everybody who will listen, and if you have something that’s actually compelling word will spread. And know that after taking a few small steps forward each day you’ll look back and be staggered by how far you’ve come.

If you are a would-be investor, don’t be lazy and sit back expecting good ventures to come to you. New early-stage investors often fall into the trap of thinking their job is to pick which companies to invest in, but the smart investors realise that the best companies select their shareholders, rather than taking any money they can get. So, get out there and find the people working on interesting things and roll up your sleeves and help them out in whatever way you can. There is a huge dark net of start-ups, beyond the prominent few that make all the noise. Pick one or two, validate that they are willing to take guidance, and prove that you can contribute more than just cash. And then, when the time comes, there is a better chance they will choose to talk to you.

Of course, doing all of these things still provides no guarantee. Not every group of friends playing grunge in their garage in the 90s became Nirvana. Sorry I don’t have a better bridge to sell you. But, since you’ve read this far, I assume you’ve decided it’s all worth it, despite the odds.

17 thoughts on “Reality Distortion Field”

  1. Totally agree Rowan and I haven’t been too impressed with Lightning Lab this year. I even turned up to Demo Day without any clue who the companies pitching were. Lightning Lab website very lacking in updates.

    Also found one company did not pitch due to some problem. Missed opportunity? No doubt they will be chopped from the hype machine going forward with little care. I’ve also been warned off one company already by a fellow investor who has had bad previous dealings with them. All the companies seemed very gimmicky to me and I think your post sums it up nicely really. Any company with a worthwhile offering is out there already doing it meaning the accelerators are left with the rubbish at the bottom of the barrel.

    1. The company who didn’t pitch did so for some very good reasons. In essence they realised that going forward with their existing team just wasn’t going to work and not taking investors funds with them was the best thing to do.

  2. Thank you!

    Everyone seems to think the only (and easy) way is to avoid the proverbial garage and slip into the fast lane that Labs and pitchfests promise. Especially the promoters of these events.

    Sure, get out and seek advice from anyone who will give you 15 mins and accept a coffee. Yes, discuss your idea with anyone who’ll listen, and soak up every drop of feedback you’re offered.

    But if you’re spending more time on your presentation (“15 pages, 15 minutes!”) and elevator pitch than sketching, and re-sketching every single frame of your site, something’s drastically wrong.

    You’ve gotta get under your product’s hood and get your hands dirty. Once that’s done, once you’ve proven to yourself and your audience that you can make it and make it work, then, and only then, have you earned the right to pitch ‘n’ pimp it.

    Then again, maybe I’m old-fashioned that way.

  3. Thank you Rowan, you are so right! i attended the Demo Day this year, and last year, and you encapsulate my ill-thought-through doubts about the whole concept. In many ways, the real worry is the number of politicians and bureaucrat jobsworths who enthusiastically cheer on and fund this stuff.

  4. Although I share some of the concerns with an accelerator program you articulate, I don’t think Lightning Labs are funded centrally to the extent they’re awash in taxpayer funding like the examples you cite.

    It seems a lean and fairly focused program sensibly pulling people into a room. I agree there’s space for criticism and the tweet pictures were dumb. Some people are dumb on twitter and maybe they could have spent a little more on a professional comms person on the twitter account with common sense. I would have liked to see a better storytelling of how they were getting on in the program for my own benefit but that’s secondary to running the program.

    What was your experience of JFDI like and do you have the same opinion of their accelerator program?

    I wholeheartedly share concerns with the accelerator idea going beyond Lightning Lab. To hear morons talking about setting up additional regional ‘accelerators’ to compete with LL would be terrible.

    While I like the plan of sucking and that’s a strategy that sits uncomfortably close to the bone, there is an issue of being clueless about raising money and not knowing when it’s right until you’ve done it in the past. I suppose that’s where advisors come in – we’ve got someone who we pay for assistance and that relationship is far more value-creating than informal coffees etc. and well-meaning advice.

    1. JFDI in Singapore is part of the TechStars Network, just like Lightning Lab. I’ve been a mentor there twice – for three weeks in 2012 and two weeks in 2013.

      See: (complete with slightly unsettling video of me with hair!)

      I’ve also visited the Chicago TechStars briefly on this current trip.

      My observation is that there is a hierarchy of accelerator programs, and that the quality drops off exponentially as you work your way down the list. At the top of the pile is Y Combinator in Silicon Valley and TechStars in Boulder. They are successful because they are able to pick from the very best of a long list of applicants and have an amazing list of pretty highly engaged mentors.

      As it was pointed out to me on Twitter both Nirvana and One Direction have been successful in the music industry, so if you’re determined to go down the accelerator route, then I would encourage you to apply to one of those. If you have a focus on Asia then JFDI is a great choice, given the connections they have in the region. There have been kiwi founders in all of those programs in the past, who would be useful to talk to for advice.

      And, if that sounds too hard compared to a local option, it’s worth thinking about that a bit more, I reckon.

      The problem with accelerators generally in the NZ context is that it’s a volume game and that is not our competitive advantage.


  5. As someone who has been part of many a venture through traditional means building up networks from the ground up in one industry, and then being part of a venture through an accelerator (that has context to this post) in an unrelated industry needing fresh contacts for traction… I just popped my popcorn to watch the comments section with baited breath about which side will be able to hold the bite on their lip the longest.

  6. A couple of thoughts after 24h reflection:

    – We can all agree that accelerators like y-combinator have had awesome companies come out of them. Yes, this is made easier by the fact that they have a huge number of applicants and have a lot of experience picking probable winners from that pool. But to suggest that’s the only reason is to say y combinator are nothing but a talent aggregator and contribute nothing to the companies themselves. This conflicts with what alumni tend to report (including the likes of Dropbox and AirBNB founders). I think that an excellent accelerator program can probably make a significant positive contribution to the right (i.e well suited to an accelartor) kind of startup, even if that startup might have succeeded anyway.

    – If we accept that an excellent accelerator can make a significant positive contribution to a great startup, it can probably also make a positive contribution to an ok startup.

    – ‘Smart’ investors are obviously interested in the output of top accelerators: Sequoia and a16z certainly don’t sit out the yc demo day.

    This all seems to point to top accelerators being good for the startups who are accepted to them (as you’ve already stated in earlier posts Rowan).

    I’m not sure it necessarily follows that lower tier accelerators are BAD for the startups that choose to apply and are accepted into them though. With a smaller pool of applicants, as in NZ, there’s certainly going to be less scope to exclude all but the exceptional. But unless the advice/guidance from the lightning labs crew differs from that given by YC to the point of being actively bad, it’s maybe still of benefit to those startups (who likely wouldn’t have got into YC anyway… or, if they could have, are fools for not going!).

    The bad side effects might be:

    – NZ investors start to think that the only good NZ startups will come out of accelerators, and so don’t consider investments elsewhere. This has been discussed as an issue in SV with yc (and Stanford), but if the NZ community is small and NZ investors stay alert to opportunities that maybe reduces the risk here.

    – NZ startups start to think that the only way to succeed is to go through an accelerator. If this huge dark net of startups exists, and I think it does, then it follows that there are lots of people who don’t feel that way.

    – NZ startups who go through an accelerator are somehow killed by the process and priorities. I can easily see this happening – I think the super rapid iteration and discovery pressure and pivots etc could easily stop people from taking a deeper look into a potentially interesting area, one that might have borne fruit with a year of curious exploration but not 6 weeks of urgent scrambling.

    As for stuff to measure, some (annualised?) metrics could be:
    a – # of person.hours/year invested in startups that don’t go through accelerators
    b – # of person.hours/year invested in startups that do go through accelerators
    c – $ generated (profit? revenue? + exits) by startups that don’t go through an accelerator
    d – $ generated (profit? revenue? + exits) by startups that do go through an accelerator

    I initially used ‘# of successful startups for c and d, and ‘number of startups founded’ for a and b, but reckon these values would be more useful. Perhaps exclude any person.hours from ‘a’ which are below some threshold (people who aren’t actually ‘working’ on their startup at all)

    If ((d – accelerator cost) / b) > (c / a) then there’s something to indicate that accelerators are good… even though their selection process obviously allows them to bias the result positively.

    For me, personally, as a founder of startups, I don’t think my life has been made any worse by lightning labs existing… and is probably better. I don’t feel I’m less able to directly approach investors (dumb or smart). Of course, I might be wrong.

    I definitely don’t agree that Lightning Lab is the only accelerator that should exist in NZ though. Yes, there’s obviously a supply volume problem. But as long as lightning lab are rejecting applicants, and there’s other people in NZ who are willing to try and do a similar program but better… let the competition decide. And if both other councils than Wellington want to support their own ecosystems, good! But if they do want to support startups, then they probably shouldn’t limit it to those startups that are willing to go through accelerators. You need some criteria to avoid pouring money into losers, but I don’t think “got into an accelerator program” is the only or best one.

    And now I should go and work on my startup :-)

    1. Nick –

      It’s not clear to me what problem you think an accelerator solves in NZ.

      To compare a local accelerator to YC is a bit misguided, in my opinion. There are many things which work at US-scale which will never work at NZ-scale. I think this is one of them. I might be wrong. But, keep in mind, the “huge” dark net I referred to is still smaller than the number of companies which apply to every intake at the larger global accelerators.

      The purpose of this post wasn’t to belittle Lightning Lab, despite how it may have been interpreted. It was supposed to promote the alternative approach, which has also generated some amazing companies, and which is available to everybody, starting immediately.

      Cheers, Rowan

      1. I don’t think it would solve a problem for me, which is why I don’t apply.

        But if some startups found, for whatever reason, that they could get whatever they needed to grow/succeed more easily through an accelerator than independently of one, that’d be solving a problem for them.

        I guess your view is that they could easily get what they needed to grow without the accelerator if they’d only ask investors/mentors directly, and that the result would be better? But in this case doesn’t the accelerator only become a bad thing if they DON’T ask directly BECAUSE of the accelerator? Maybe that’s happening. This is why I really enjoyed your post – it called out some of the less attractive aspects of accelerators and advocated the alternative.

        1. Coming back to this a week later, and having heard a bit more about personal experience of people going through the Lightning Lab program, I think I’ve identified one problem the program at least addresses (if not permanently solves): Motivation.

          As you say, startups are hard. There’s lots of reasons they’re hard, but one of the reasons is that you have to wake up every day and be motivated to go and work on your hard thing rather than stay in bed or slack off or go and get a normal job. When the going is good and you’re winning, it feels even better if you’re sharing it with a bunch of other people, and when the going is lame it’s *vastly* better if you’ve got a bunch of others around who can tell you to stick at it and put it in perspective. Even if the various support services lightning lab offer were worthless (and, by all accounts, they’re actually often quite valuable as long as you don’t let them overwhelm you and don’t do every single thing every mentor says), the simple function of putting 10 groups of similarly minded people in a single room and getting them all psyched up to work hard and be creative and then *stay* that way – more or less – for 12 weeks while they run into their various hard problems, and support each other, and compete with each other, and draw motivation from each other, is a really valuable function.

          I don’t really like the ‘hustle’ and ‘make it rain’ sentiments either, and maybe it is a bit theatrical… but when did you last see a non-theatrical product launch? I don’t think investors are walking in there stupid and ready to be fleeced.

          NZ’s small scale might make it harder for something like lightning labs to work on a success-by-numbers basis, I think the small scale also makes the community building function of things like lightning lab valuable. The startup landscape can feel a bit sparse and hopeless when you don’t have visibility of the other people in it. The problem with the dark net of startups you mention is that it’s dark :-) If stuff like lightning lab shine a torch on part of it, good, and maybe it’ll draw some others out of the shadows. Maybe you can get some of the benefits through a simple coworking space, but I doubt there’d be the same sense of urgency or excitement.

          Of course, it’d be easy to say “If you don’t have the courage to get up every morning in the face of huge adversity and *enjoy* it you’re not a real founder”. But that’s a bit like saying “If you don’t have the courage to do a solo winter ascent of Mt Cook you’re not a real climber”. All respect to those who pull it off in isolation, but if you’re trying to get as much success as possible then encouraging people to go with others and lending them ropes and ice axes seems pretty reasonable.

  7. Also, while I don’t like the implied values of ‘Make it rain’, it’s probably a better choice for building an enthusiastic atmosphere than the undistorted reality message of: ‘Statistically speaking, most of you will fail’ :-)

    1. The opposite of “make it rain” is not “you’ll probably fail”. It’s “find an investor who you like and trust and who can contribute more value than they capture, and work hard to get them on-board, then work together to create something amazing”.

      Granted, that doesn’t fit so snuggly on a postcard. Good advice takes time… :-)

  8. Well reasoned and, I have to say, sensible and passionate view from +Rowan Simpson about the start-up ‘TV circus’ that has the potential to promise shiny-shiny to those wanted to make a difference but deliver little more than a small pot of gold and no on-going support.

    The worse affect I see is that it becomes self propelling and that the ideas are built to the ‘script’ and those that do well are those that know how to play the game taking away the opportinity for those with a passion to make a difference.

    In the long run through this might be the effect of pendulum swinging too far – not long ago it was near on impossible to start-up a tech company as the community, the support, the “you can do it” was in such short supply. Now, however, there might be too much “you CAN do it and here’s the yellow bricked path to take”. Perhaps.

    And what of those companies that are no longer “start-up” but “survivalist” with staff, paying clients and a view to growth – isn’t that now the waste land of community, support and “you can do it”?

  9. I can handle being called a hater. I’m a big boy. Sticks and stones, etc. I *was* being dismissive. The blog post above explains my rationale. So far the responses I’ve read on Facebook seem to focus on what has been invested rather than the impact created. I think that’s the wrong way to measure it. Actually, the purpose of my post wasn’t to put the boot into those involved, it was to highlight to would-be founders and investors that there is an alternative approach which I believe is better.

    However, I do take issue with being called selfish. My days are full to overflowing working closely with a few selected ventures into which I’ve chosen to invest my money and my time, post Trade Me and Xero. My approach is to be founder centric, and so I rate myself based on how much the specific founders I work closely with feel I’m contributing. I’m confident that I’m creating more value than I’m capturing, even if you don’t read my name in the newspaper much (actually, that’s generally the way I prefer it – I think it’s pretty stinky when I see investors who want to make the success they are part of all about them, unless they are also happy to take responsibility for the failures too).

    For example, Vend was just Vaughan when I got involved. We’ve now raised ~$35m of investment from a dream list of early-stage investors. The team has grown to ~140 people (and counting!) and, more importantly, 10,000+ stores around the world are using our software to run their business. That sort of growth doesn’t just happen. I continue to work on it closely and it soaks up a good portion of my time.

    More recently, I have followed a similar track with Ryan and Andrew at Timely, where I was the first non-exec investor. They have grown significantly since then, by every measure. We now have 12 people on the team and just announced that we have raised $1.3m to fund the next stage of growth.

    Along with the team at Southgate Labs, I’m excited to be an investor and advisor to two new ventures: Atomic and Revert. Keep an eye on those over the coming months.

    But, focus means saying no, and in my case that means not getting sucked into endless coffee meetings and community events. I have no interest in spreading myself thinly across lots of things. My aim is to be involved in a small number of great ventures, not the most ventures. Don’t confuse that with selfishness. This is how all of the companies that people cite as role models were successful. I’ve been fortunate to see that first hand. Hopefully I can convince more of those people putting their time and money into trying to create an ecosystem indirectly to instead get involved in one venture and do what they can to make it awesome. Then we’ll have an ecosystem!

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