Startup Theatre

To encourage more people to work on startups, we often try to make them fun. How does that hurt?

I have, over many years, been critical of what I’ve called startup theatre.

Demo days, innovation showcases, startup weekends, hack-a-thons. Basically anything where the purpose, once we scratch at the surface, is to entertain people for a short period of time.

The most common defensive responses I get are:

What’s the harm?
It’s just fun!
People enjoy these things!
Why do you hate fun, Rowan?

It’s true! People do enjoy themselves at these events. They feel like a great way for people interested in startups to meet each other and learn useful skills. They seem like the obvious place to connect with potential investors and advisers.

Are they really, though?

If theatre sports are your idea of fun, definitely don’t let anybody yuck your yum. But let’s not pretend that this is how we create more great startups.

I’m not sure that many people who organise and promote these events have considered who they are trying to help, what constraints those people actually have, or how these events help reduce or remove those constraints. They are just trying to entertain people who want to be entertained.1 As a result there is no easy way to tell: are they are working or not?

If they feel good and seem like fun, does it really matter if these things don’t actually address a useful constraint?

Let’s consider that rhetorical question I get asked: How does it hurt?

It’s actually a much better question than those who ask it defensively realise…

🚀 Seeking escape velocity

There are two very different types of ventures that get grouped together and called “startups”: early-stage companies and high-growth companies.

When we consider the outcomes from startups, in aggregate, we need to separate these out. The ventures we should be most interested in are the small group that survive beyond the early-stages and become high-growth, because those are the companies that ultimately contribute more value to the economy than they capture.

It doesn’t benefit us much at all, collectively, to just have more and more early-stage startups pining for the fjords.

In order to be a founder or investor in a single early-stage venture, we have to be irrationally optimistic. The average startup is too small and doesn’t grow fast enough to ever achieve escape velocity.2

So, we need to believe we will be the exception to that rule.

But there is danger in reducing this to probabilities. Averages are not useful. The dynamic is not: play enough times and we will win eventually. It’s not a pure game of chance.

We need to dig beyond the surface layer and understand the reasons why some ventures are successful and others are not. And, often, this leads us directly back to the hard grind that startup theatre works so hard to avoid.

It’s tempting to pretend that we can get from zero to a multi-million dollar valuation in just a few weeks. Or to believe that the skills required can be learned by anybody in some fun weekend workshops. Or even to imagine that if we can just nail one great pitch in front of the right audience then investment will follow and success is inevitable after that.

However, when we consider the ventures that have actually been successful and achieved escape velocity so far, none of them have their origins in this sort of activity.

Perhaps yours will be the first?

There’s a simple explaination for this: The patterns promoted at these events are barely applicable to the reality of early-stage startups and the things they need to do in order to move into high-growth mode. It’s like watching Survivor on television and thinking we’ve learned the techniques required to survive in the actual wilderness (it’s all about alliances and winning the immunity idols, right?) There is very little discussion of the hard grind of building an actual startup. Because these events are designed to be quick fun. And, most of the time, that grind is neither quick nor fun.

On top of that, very few people who are actually working on or investing in high-growth startups have much spare time to hang out at these sort of events. So, who is really connecting with whom?

🤔 Who does this really help?

It’s worth asking: Who benefits from this theatre?

It’s definitely not founders!

In recent years we’ve stood up a large and growing industrial complex of organisations providing products and services that target early-stage founders as “customers”. Anybody who has spent any time in the startup ecosystem will recognise it.

I’ve described these collectively as derivatives.

Incubators, accelerators, shared working spaces, angel groups, regional economic development agencies, government funds-of-funds, tech clusters and innovation hubs etc.

It’s a long list!

These things all thrive by encouraging more people to work on startups, and to continue to work on startups, mostly without too much consideration of the likelihood of success. They increase activity, but often go to great lengths to take attention off the tangible results of all of that work. They obfuscate the difficult bits and focus instead on what makes being a founder and working on a startup seem exciting from the outside.

By doing that they unintentionally actually make it less likely that the startups operating within these structures survive and achieve that important escape velocity - because it’s much harder for those startups to learn the important lessons that only come from feedback loops.

In other words, they feel helpful, but they’re actually making things worse.

This is not widely acknowledged or even understood by those who work on and promote these things to prospective founders. Or to the bureaucrats and politicians who usually fund them.

This might sound like a rant, but there is actually academic research that supports this conclusion. Rasmus Koss Hartmann (Copenhagen Business School), André Spicer (City University, London) and Anders Krabbe (Stanford) have investigated this effect in depth and published an amazing paper in 2019:

Towards an Untrepreneurial Economy? The Entrepreneurship Industry and the Rise of the Veblenian Entrepreneur.

In my opinion this should be compulsory pre-requisite reading for anybody working in the ecosystem.

They describe the founders that operate within this type of ecosystem as “Veblenian Entrepreneurs” (named after Thorstein Veblen, the economist who coined the expression “conspicuous consumption”).

And they make it pretty obvious how they feel about this:

[Veblenian Entrepreneurship] masquerades as being innovation-driven and growth-oriented but is substantively oriented towards supporting the entrepreneur’s conspicuous identity work.


It is a form of entrepreneurship that seeks to appear outwardly as innovation-driven and growth-oriented in order for the founder to gain the social recognition afforded to this category of activity. However, Veblenian Entrepreneurship is substantively different in its triggers and the motivations underlying entrepreneurial activities, and in how the entrepreneur makes use of entrepreneurial resources. Veblenian Entrepreneurship is not triggered by entrepreneurial opportunities. Veblenian Entrepreneurship is triggered by the desire to be an entrepreneur, to build the identity of being an entrepreneur and to ostentatiously project that identity to an audience witnessing and appraising the entrepreneur.

Yikes! And people sometimes call me a hater!

⛑ First, do no harm

The baseline requirement for any derivative should be: At least don’t make things worse.

So, let’s consider three specific ways that startup theatre hurts…

  1. It amplifies the wrong patterns;
  2. It takes up all of the oxygen in the room; and
  3. It’s a poor use of public funding.

We now have buildings all over the country full of people copying a reality-television-inspired playbook for startups that doesn’t correlate at all with the things that our successful startups have done. And these patterns are leaking out into other sectors too.3

We dangerously promote the idea that failure is to be encouraged. This actually creates a perverse feedback loop: all of the negatives associated with a failed venture tend to get downplayed - in part because those involved have tied their identity to being a successful founders, so when something doesn’t work out they tend to only talk about the soft positives (e.g. networking connections made) rather than the hard negatives (e.g. financial impact, opportunity costs) and so are less likely to absorb the useful lessons

We continue to hand the microphone to these people running derivatives and the founders they want to promote. Often they are just emulating successful founders, without having done the work that creates the success they are trying to mimic.

Those founders who get coverage fundamentally shape what we all consider a founder to be. Only telling stories that make startups seem like a fun game of chance placed by want-reprenures distorts expectations and reduces the likelihood more people will consider it a serious career path.

The irony here is that actually successful founders are much harder to identify from a distance, partly because they are not so stressed about having to appear successful on the outside. It’s actually incredible (and depressing to me at least) how often the honest stories of successful startups are never told.

We have massively increased the number of founders working on early-stage startups without significantly increasing the quality. And the derivatives in the ecosystem themselves also employ many hundreds of people. At the same time, high-growth ventures are desperately short of skilled staff. Most of the folks who languish working on flailing startups would contribute much more by taking a job in a larger startup that has momentum where they would be able to specialise and be most productive.

Meanwhile, significant local and central government funding continues to flow to all of these derivatives, hoping that will support more successful startups. Most of these have long been proven to be failed experiments, if we were honest about where our successes have come from. But rather than think harder about this we continue to double down hoping for a change in fortunes.

Imagine how good things would be by now if that worked!

🫵 So, what can you do?

This is my advice for founders, wondering how to operate within this environment:

The amount of noise created by startup theatre can easily drown out the signal, but remember that it’s all optional. There is no obligation for you to worry about anybody else’s startup or feel compelled to participate in others’ events.

Pay attention to how you spend your time and who you spend it with.

If your days are full of ecosystem events with other founders or you spend all of your time pitching to potential investors, then realise that you are not spending that time speaking with potential customers.

It’s great to get support from others who are in the same position as you, and of course you need to make sure that you have enough money to fund your plans, but the warning sign is when that’s all you do.

And, importantly, have your own definition of success.

Be clear about where you want to go next and what constraint you have at each point in the development of your venture. Carefully pick people to work with who can help you remove those.

All of the successful founders I know have maintained a mild disinterest in things happening on the periphery of the startup ecosystem, and remained very focussed on their own work. I would argue that is why they were successful.

The biggest contribution you can make to a thriving and growing ecosystem is to first make your own company a success. Then pay it forward.

If you get this right, as I’ve been fortunate to experience first-hand multiple times now, it starts to be a whole different category of fun.

  1. Are you not entertained? Is this not why you are here?


  2. Nightingale & Code memorably called these sub-scale ventures “Muppets” in their 2013 paper:
    Muppets and gazelles: political and methodological biases in entrepreneurship research ↩︎

  3. To pick one example, the Ministry of Culture & Heritage announced a $60m Innovation Fund, to be delivered via multiple regional events. As explained in the Q&A on their website:

    Why is the Innovation Fund being delivered through events?
    Te Urungi is an adaption of event-based models that have been used successfully to generate innovation in different sectors including government, technology and science.

    So, they are copying a pattern that they think has generated “innovation” in different sectors, when there is very little evidence that it has.

    (╯°□°)╯︵ ┻━┻ ↩︎

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