9 ms·

The coffeeshop fallacy

233 points by robfitz 15y ago

aloneinkyoto 15y ago
This is the paradox of capitalism. Focus on creating something inherently good and it will not be sustainable. Focus on creating something sustainable and profitable and it will most likely not be as inherently good as it could be. Example: McDonalds. Brilliant business model. Awful product.
- rick888 15y ago
  I have to disagree with you there. If Mcdonalds had such an "awful" product, nobody would eat there and it wouldn't be as popular. There are plenty of alternatives.
  - brador 15y ago
    I was going to reply with what you said but then I thought, since they're the in that "most calories per dollar" bucket, maybe poor people eat there out of necessity and not choice...
  - philwelch 15y ago
    Most of the alternatives are equally awful.
  - JoeAltmaier 15y ago
    Some of their food is very tasty; all of it is pretty bad for you physically. I particularly enjoy the large sweet tea for $1.06. However I have to agree that others do it better. Hardees has the best fast-food burger around. Also the best ads :)
  - aloneinkyoto 15y ago
    The point I was trying to make with the McDonalds example was simply that a scalable and successful business model necessarily implies that they are unable to create the "perfect" hamburger. They have practical limitations inherent to their process that makes it impossible. If they instead were running a two star luxury restaurant they might have a chance at making a perfect product. But that wouldn't be a scalable and sustainable business, and most like not very profitable either. Most luxury restaurants have extremely low margins and in many cases operates with considerable losses. And just to make it clear, I am not trying to criticizes capitalism per se. I'm only basically stating the same thing the article is stating; that there is an inherent paradox in capitalism that makes it more complex to deal with than is directly apparent. Everyone that goes into business or deals with business indirectly through policy-making should be as aware as possible of this paradox, simply because it will prevent us from collectively ending up in a world with great processes but awful products or with great products but awful processes. Neither of which are very tempting scenarios.
- lhnn 15y ago
  Whoa, whoa, whoa. I'd downvote you if I could, not because I disagree with you, but because this is a strawman. The author used a low margin, low sucess business example to make a point about what mindset someone should be in to successfully run a business. You took from that the message that anything enjoyable is not sustainable. "Focus on creating something inherently good --> it will not be sustainable" You also less directly imply that focusing on profit will necessitate producing an inferior product, again using a specific example to provide a generality.
  - quinndupont 15y ago
    Coffee is an insanely high margin product. You think it costs $4.00 for the 5 grams of coffee in your drink?
    - true_religion 15y ago
      Coffee itself is high margin, but the coffee business is not a high margin business. You have to employ people to make coffee manually, and quickly. You have to buy a machine to aid them in this, and keep it in good maintenance. Additionally, you have to supply perishables like milk to go in the coffee. You have to keep them in your shop buying coffee, or incite them to buy coffee here when they're hungry instead of going to go to dunkin dounuts. You can do this with nice decor, or by placing yourself in an already attractive location, or taking a margin loss on selling bake goods in order to bring in coffee customers. In any case, your high margins for coffee product have rapidly vanished.
    - icebraining 15y ago
      Coffee prices in the US are odd. 'round here (Southern European country) we pay less than a dollar for a coffee. Well, except in Starbucks, but then again, that's my point.
  - aloneinkyoto 15y ago
    That something is enjoyable does not make it inherently good (unless you ascribe to Utilitarianism). There are of course other factors beyond pure enjoyment that contribute to the inherent goodness of a thing. You don't need to enjoy a medical device in order for it to be able to do its job well, for example. Rather, the distinction I was aiming at was between "process" and "product". But I suppose that wasn't very clear. My intention was not to start a flame war on capitalism. In my opinion a process can be sustainable (and thus very likely profitable), but a product can not. In this case a business model is a process and the thing you put in your mouth (the hamburger) is the product. For the hamburger to be perfect we would need an ever escalating process. Constantly adding more complexity or work to refine the product we can create thus creating an unsustainable process. If you want to create a hamburger in a sustainable and profitable way. The McDonalds process is most likely one of the best ways to do that. But it will NEVER create a perfect hamburger. The same is of course true with the opposite. A tiny connoisseur coffee shop can conceivably create a perfect cup of coffee and push the boundaries of the state of the art. But it will NEVER be a sustainable process. You need to make compromises in order to achieve that.
- nwomack 15y ago
  McDonalds quality control is second to none. Their standard menu tastes practically the same everywhere in the world. It's the same with Starbucks. I know that no matter what part of the planet I am at, I can get exactly what I expect to get. I'm never disappointed. I can't stress how important that part is. Bad quality control can really injure restaurants.
  - mikeash 15y ago
    Perfect consistency is only useful if your perfectly consistent product is any good. Much depends on your target audience. Bad quality control can hurt a lot, but so can perfect consistency in producing a bad product. If your audience is the sort that thinks McDonald's is quality food then that's obviously where you should aim, but many audiences don't.
    - hessenwolf 15y ago
      Having worked in Quality Control in a major multinational, and studied and lecture statistics, I have seen that significant decreases in quality are accepted in exchange for increased consistency.
      - gaius 15y ago
        Quality is the measure of how closely a finished product meets its design spec. McDonald's products are insanely high quality, despite not being very good - a Big Mac was never designed to be healthy and satisfying in the first place! A relevant example of this is organizations who are CMM Level 5 certified.
- aloneinkyoto 15y ago
  Why am I being down voted for this? It is not spam and not intended as flame bait. It is not off topic and it is not pointless humor. It is a serious comment that needs to be debated and not hidden away at the bottom of the page. I am not stating anything extremely controversial, simply the same thing the article is stating, but with a slightly different wording. Don't down vote me because you disagree with me or because you think I am bashing capitalism (I am not, I love capitalism). If you think my argument is weak or lacking, please tell me so in a comment instead.
  - chc 15y ago
    You are making a much bolder claim than the article, a very specious claim to boot (that for some reason sustainable businesses can't do good work), and you are not providing any supporting evidence for this controversial claim. You may not have meant it as a troll, but the effect is very similar The article is just saying that running an X business means you spend a lot more of your time on the "running a business" part than the X part, for any value of X. It doesn't mean you can't do a good job at X — just that you get to enjoy X more as a consumer than a producer.
    - aloneinkyoto 15y ago
      I didn't claim that a sustainable businesses can't do good work. I simply claimed that sustainability is at odds with producing good things. Which is a fairly different claim. Though I can see how the distinction was not perfectly clear in my comment. But to be honest I thought I was being very careful in my wording about something that should be self evident, e.g. "...will most likely not be as inherently good as it could be." Running a business implies a trade-off. The trade-off is that if you want to be successful (i.e. sustainable) you need to focus on the business and not the product. Which is exactly what the article is stating. Maybe a better example to support my claim is Apple. They make great products. But the way they do that is by focusing on the process of creating great products. Jonathan Ive specifically talks about this in the Objectified documentary. He says that most of their time is spent on designing the manufacturing process and the tools needed to mass-produce the products, only a very small part of the time is spent on the actual design of the phone or computer and that design is almost always a direct implication of the manufacturing process rather than something they magically dream up in some creative haze.
steve8918 15y ago
Not to hijack the conversation, but the following line really struck home with me but in a different way: "Lots of people think they want to start a coffeeshop. They likely don't. That's like buying a minimum wage job for two hundred grand." This is very similar to what I said about buying a home in Silicon Valley. In the nice areas like Palo Alto, the homes around > $1.5MM. If you don't buy a house in a good school district, you need to spend $1000-2000/month on private school, which is I suppose how the price of the homes in PA got inflated. Anyway, I told my wife, "If we were to buy a $1.5MM home in PA, first off we need a downpayment, which is roughly 500k. Then, after the triumph of saving half a million, we are rewarded for all our hard work by exchanging this for a 1MM mortgage." In the same way as the coffee shop example, the economics really need to make sense, otherwise it's a terrible investment. As long as we are living in the Bay Area, we will rent.
- sabat 15y ago
  Fallacy: you don't need to live in Palo Alto to live in the Bay Area. There are much more sensical places to live, particularly if you have kids.
- pagekalisedown 15y ago
  Being house-poor is extremely common in the bay area, to this day. It totally baffles me as to why people keep doing it. My only guess is that people are more economically irrational than I'd like to believe.
brador 15y ago
This could also be called the game/app developer falacy. How many programmers started out wanting to make that perfect game/app? only to realise doing so is tedious and boring compared to dropping a $1 on a finished product.
- bendotc 15y ago
  This immediately made me think of a quote about folks wanting to get into the games business: "Thinking that 'Hey, I like playing games, so maybe I'd like making them' is sort of like saying, 'Hey, I really like taking baths, maybe I'd like to be a plumber." -- Jesse Schell To be a successful game developer, you not only have to love games, you really have to love MAKING games, too.
jasonkester 15y ago
Without taking anything away from the article, it's worth noting that running a software business absolutely can provide one with a great lifestyle. More so than pretty much any other profession I can think of. The lifestyle I wanted: pretty much as close to zero required work as possible, the ability to do said negligible work from anywhere I feel like parking myself (preferably with good rock climbing), enough money to live comfortably there. Absolutely achievable, with a couple years of effort (and achieved, by the way.) Try doing that in any other high-paid, high-prestige profession (Doctor, Lawyer, Banker, whatever). Can't do it. Too much doctoring, lawyering, etc. taking up all your time. Sure, you can set up your own practice, staff up, and eventually get the thing running on autopilot. But certainly not in your spare time after work, and definitely not for a few hundred dollars, all in. So yeah, set your goals right and you'll find you've chosen the one industry where you really can own that coffeeshop.
- jimboyoungblood 15y ago
  yes, you will be able to own that coffee shop, but you won't want to. being their landlord is a better way to go. also, i don't think software is viewed as a "high-prestige" profession.
  - bh42222 15y ago
    also, i don't think software is viewed as a "high-prestige" profession. It really depends on where in the world you are.
    - jimboyoungblood 15y ago
      i don't know about other countries, but being a software developer is not high-status anywhere in the united states. i lived many years in sf and mountain view. even there, being a "product manager" is higher status than "software developer" or "engineer".
      - aaronblohowiak 15y ago
marshray 15y ago
I've worked in restaurants and coffee shops where the owner spent about half time hanging out and "curating the bookshop". The author's point is correct though, there's a huge amount of unseen thankless work (and cashflow) needed to make that happen.
nlh 15y ago
Similar to the coffeeshop fallacy is something I described to a friend over dinner the other night as the "ambulance fallacy" ... He was telling me about his startup ambitions and about one particular business that he said sounded like a ton of fun (it was an alcoholic beverage business) - he loved the lifestyle potential of being "that guy". I told him a story about how I wanted to be an EMS worker when I was 12 years old. Why? For a single, simple reason -- I thought it was _extremely_ cool to be able to drive around with lights and sirens blaring, blasting through traffic. That was it. Then a family friend who actually was an EMS worker told me one day what the job was actually like - sure, for about 10 minutes you were driving like a madman through traffic, but the rest of the time you had to, you know, actually BE an EMS worker :) And the same goes for startup life -- you have to actually BE a startup founder for 99% of the time. Don't get caught up by the lights and sirens.
- mikeash 15y ago
  This is similar to how I talked my brother out of his brief thoughts of becoming a professional pilot. It sounds wonderful, but in reality the pay is poor (unless you're one of the lucky few able to work their way up to a good long-haul route), a lot of it is boring, a single relatively harmless medical problem can end your career, etc. etc. You have to look at the bad parts of any job when considering a career or starting a business, and it seems to be something that people are bad at doing.
  - hugh3 15y ago
    Very few jobs, I imagine, are anything like they seem from the outside. Every glamorous-looking job has many hours of painstaking drudgery involved. On the other hand, dull-looking jobs probably have great parts that outsiders never know about.
- tomcreighton 15y ago
  "Don't get caught up by the lights and sirens." - this is great. That being said, if you know about the lights and sirens and still choose that path, maybe that's the path for you after all. i.e. - you can't build a business without doing the boring stuff as well as the fun stuff.
pemullen 15y ago
Actually I'd prefer a job drinking coffee in a coffee shop.
quinndupont 15y ago
Since when does a coffee shop have a 10% success rate? According to a large study by the Speciality Coffee Association of America, independent coffee shops in the US have a 90% success rate. Perhaps the author mistakenly assumed coffee shops have the same market dynamics as a restaurant, but coffee is low-staff, low-overhead, and high-profit. So long as people are walking in the door, you'll do okay.
- mildweed 15y ago
  As a coffee blogger in Kansas City (kcperky.com) I can attest to coffee shops being a hazardous business to be in. For every two shops that open, I expect one of them will close in 6-18 months.
- genieyclo 15y ago
  That statistic is absurd, and highly suspect coming from the "Specialty Coffee Association of America". I have run a coffeeshop and restaurant both, and can attest to the high attrition rate in coffeeshop turnover. I'd be surprised if even more than 40% of coffeeshops are still open 3 years after establishment.
  - pseudonym 15y ago
    I'd be willing to be the "SCAA"'s numbers are something like "Still open 3 months after founding".
- hack_edu 15y ago
  The only café's I see around the bay area that are Speciality Coffee Association of America members are those that are long-established and shockingly up-scale. Does this study apply to newly founded coffee shops, or just the failure of existing ones? The analogy in the article is more toward newly founded businesses. Citation?
- quinndupont 15y ago
  I can't recall the details of the study, and while the methodology or scope of the study are subject to critique, it is one of those, you know, statistical studies. Not anecdotal evidence, and not "I've been in the business for so long" evidence.
jtolle 15y ago
This is an interesting article by someone who went through the actual coffeeshop version of the coffeeshop fallacy: http://www.slate.com/articles/news_and_politics/recycled/2009/08/make_that_a_double_shot.single.html http://www.slate.com/articles/news_and_politics/recycled/200...
larrys 15y ago
This is similar to what was around in the 80's with corporate people and owning a Bed and Breakfast. Many wanted to get away from the stress of corporate america and traded it for owning a B&B in the country. What they found was that running a B&B was obviously much different then staying there as a guest. "The 1980's was the ideal time when everybody wanted to own an inn, thanks to Bob Newhart," she said. referring to the popular television show that featured Mr. Newhart as a Vermont innkeeper. " http://www.nytimes.com/2005/08/19/realestate/19bandb.html?pagewanted=all http://www.nytimes.com/2005/08/19/realestate/19bandb.html?pa... Something you like doing everyday and something you like doing occasionally are two different things. As well as something you have to do as opposed to something you can decide to do (like writing comments on HN - imagine if it was your job to do it 8 hours a day 5 days a week or more..)
- cosgroveb 15y ago
  I know a guy who was a broker on Wall Street throughout the 80's and 90's... He retired to take over the family farm, the sort of thing a lot of his peers wanted to do, and after 10 years of working non-stop to almost-not-quite break-even he's almost ready to sell it. He says that he had no idea how much harder than working on Wall Street it would be. He's got to know everything about the domain, he's got to know accounting, sales, marketing, and just about every other aspect of running a business and it is exhausting for such small potential gains.
brianlash 15y ago
This is exactly the premise behind Michael Gerber's E-Myth series of books: That loving something /= running a business that sells or does that thing.
- wayneyeager 15y ago
  Indeed. Gerber went even further and says that it may be counterproductive to own a business that matches your technical expertise. That's because of the temptation to jump in and do the technical work... instead of focusing on the strategic aspects of owning the biz.
- rpwilcox 15y ago
  beat me to it :) E-Myth is totally worth it for freelancers to read, and probably startups too. (I'm the former, not the latter, so I don't know)
brohee 15y ago
And I thought I was dumb never having worked out a way to make a decent living wage out of the places I patronize. It turns out most of the owners didn't either.
MicahWedemeyer 15y ago
I have found that being personally interested in the product has a lot of benefits. First, if you're a user/consumer, it's easier to determine which features are most important as well as usability issues. It's surprising how unusable some products are because the developers never actually use them. Second, and most important, a personal connection helps to get you through the dark days at the start. It's very emotionally draining to work on something that has no traction, no supporters, and just a bunch of naysayers. If you love the product, though, it can offset this emotional drain quite a bit. In my case, I built a tabletop gaming (ie. DnD) CMS. In the beginning, nobody used it except me, and it was tough to go upstairs and hack away every night and weekend. However, I used it and that was enough to keep me moving. Now, we've got thousands of users and paying customers, and the motivation is much easier to find. But, I never would have made it this far if I didn't care so much about the domain. Unfortunately for me, I think there's probably a lot more money to be made in "boring" areas. If you can keep motivated to work on a CRM or medical billing system, you'll probably end up making way more than my DnD website. But, it will definitely be harder to keep the momentum in the beginning.
- robfitz 15y ago
  I actually completely agree with you[1]. My [intended but perhaps poorly articulated] point was that playing DnD doesn't feel the same as making tools for DnD. However, if you accept that premise and are willing to endure potentially dull work, then caring about DnD will allow you to make much better DnD tools. [1] (updated to remove irrelevant personal information)
  - MicahWedemeyer 15y ago
    playing DnD doesn't feel the same as making tools for DnD That's absolutely true, and I'd take it a step further. Playing DnD doesn't feel the same as making tools for and running a business around DnD.
    - hugh3 15y ago
      And doing that doesn't feel the same as slinking around dungeons and fighting dragons, which is probably terrifying and deadly... but on the upside holds far more social prestige than playing Dungeons and Dragons.
Shivetya 15y ago
This is not really different that trying to convince students to study and not bet it all on sports. Family friends did a good job a few years back bringing their son back to reality; he was really good at basket ball; by having him find all the people from his school, county, and state, who made it. Then asking him how many didn't. People seem to always underestimate the effort and over estimate themselves.
richcollins 15y ago
If he saw a big opening he could exploit, he'd be there regardless of whether it was drilling for oil or starting a babysitting empire. This is why most everything that we use is shit. Also see: http://thetudu.wordpress.com/2011/10/12/the-real-reason-well-miss-steve-jobs/ http://thetudu.wordpress.com/2011/10/12/the-real-reason-well...
noonespecial 15y ago
Caring about the product seems to be the most dangerous. It's how the coffeeshop fallacy pops up and it's how people end up spending years building stuff nobody wants to buy. Steve Jobs might have disagreed with that particular point.
- saraid216 15y ago
  Just because it's dangerous doesn't mean it shouldn't be done. It's risk, not ABANDON ALL HOPE ALL YE WHO ENTER.
dusklight 15y ago
Maslow [http://en.wikipedia.org/wiki/Maslows_hierarchy_of_needs http://en.wikipedia.org/wiki/Maslows_hierarchy_of_needs] would disagree with the fundamental premise of this post.
- leehnetinka 15y ago
  dusklight - thanks for being the catalyst for making us provide an instructional splash page... check out the new bubble.ly (may have to refresh)
jroseattle 15y ago
This is great advice for some people, but terrible advice for others. It seriously depends on context -- who is to say someone's maximum pleasure doesn't come from running their own coffeeshop? It's not incorrect, but it's nearly impossible to make these statements without projecting one's own biases into the conversation. The most startling thing was the Levchin quote: "You you can't be in love with a particular idea or business. You have to be in love with the idea of running a business." It's presented as an either/or dichotomy. I'm pretty sure Steve Jobs, Larry Page, Mark Zuckerberg, etc. didn't succeed because they were focused solely on resource management. Lack of passion in one's product is certainly just as important (some would say more so.)
code_duck 15y ago
Insightful article. My own experience working in restaurants teaches that one should never go work at a restaurant you love - it might ruin their food and ambiance for you permanently.
phil 15y ago
I don't think it worked this way for Levchin, either. It's obvious that they were so excited about what they were making at PayPal. The PalmPilot thing? All that encryption stuff they did early on? They were just in love with what they were making, and it worked out very well for them. On the other hand, Slide, a basically dispassionate attempt to build a company he thought would be successful, while still a success, didn't work out quite as well.
toast76 15y ago
The coffeeshop fallacy is, in fact, a fallacy. People don't open coffee shops to drink coffee all day any more than someone would open a bar because they want to drink all day. My brother is a wine maker. He is insanely passionate about wine (Pinot to be precise). When he's not working he's talking about and sharing wine. But at the end of the day, he's just a farmer. He tends his vines, picks the fruit, puts in vats, waits a while and then pours it out into bottles. It's horrible, torturous, back-breaking labour for him. But he does it because he wants to put the best damned Pinot on your table. That's why you open a coffee shop. That's why game developers build games. Anyone passionate about wine knows what it means to make wine, and anyone passionate about coffee knows what it takes to make coffee. The coffeeshop fallacy assumes our coffee drinker knows no shit-all about coffee.
- Swannie 15y ago
  "The coffeeshop fallacy assumes our coffee drinker knows no shit-all about coffee." I think you missed the point. It doesn't matter how much you know about coffee. It matters how much you know about other things, mostly unrelated, accounting, cleaning, hiring, cleaning, customer service, etc.
  - toast76 15y ago
    No I didn't :) You can learn "accounting, cleaning, hiring, cleaning, customer service". You can't learn passion about coffee.
- thenomad 15y ago
  Quite. I speak here as someone who owns a coffee shop's less profitable cousin, the independent film company. There are basically two types of people who will start a "cool" company - those who like hanging out in coffee shops, and those who would be making coffee for people whether they were getting paid or not. Those people, in fact, whose happiness is in large part directly related to the percentage of the day they've spent with their hand on the lever of a manual expresso machine. Yes, they exist. No, they're not kidding themselves - that really is what makes them happy. Discouraging the former from starting a coffee shop is an excellent plan. Speaking as one of the latter (film-making, not coffee), trying to discourage them from starting a coffee shop (or indie film company) is a) probably pointless and b) not a great idea if you actually care about them as a person. Their passion may wane. They may decide to start other businesses to help their passion business grow (as I've done). But at the end of the day, people like toast76's brother, me, and a wide variety of other people are GOING to open the damn coffee shop, and if it works, it will make them happier than anything else they could do. In those cases, you will be better STFUing about how awful an idea it is to open a coffee shop, and instead starting to talk location, accounting, and sales skills...
zach 15y ago
One time when I was working at Luxoflux, the pizza guy remarked it must be great to work as a game developer and "play games all day." I had to hold my tongue or I would have replied that it must be great to work at a pizza place and eat pizza all day.
- minikomi 15y ago
  Funnily enough, I did this in college - and it was great! Especially since you can choose the toppings.
6ren 15y ago
> ... it's how people end up spending years building stuff nobody wants to buy. Isn't that the opposite of the coffeeshop fallacy? i.e. that you enjoy producing it, not consuming it; the coffeeshop fallacy is that you enjoy consuming, not producing.
iskander 15y ago
I'm not convinced this fallacy really exists. It's not hard to observe that a coffeeshop is a hectic place that makes its meager profits one latte at a time.
bluedanieru 15y ago
This all seems at odds with the Ira Glass quote that makes its rounds here: Nobody tells this to people who are beginners, I wish someone told me. All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work. Put yourself on a deadline so that every week you will finish one story. It is only by going through a volume of work that you will close that gap, and your work will be as good as your ambitions. And I took longer to figure out how to do this than anyone I’ve ever met. It’s gonna take awhile. It’s normal to take awhile. You’ve just gotta fight your way through. You don't have taste in something you're not passionate about, and you likely won't keep it for long after that passion wanes. You won't know that you've made a good cafe unless you care about coffee. You might not like accounting or mopping but you'll tolerate the grind only to the extent you care about what you're doing.

233 points by robfitz 15y ago

This is the paradox of capitalism. Focus on creating something inherently good and it will not be sustainable. Focus on creating something sustainable and profitable and it will most likely not be as inherently good as it could be. Example: McDonalds. Brilliant business model. Awful product.

rick888 15y ago
I have to disagree with you there. If Mcdonalds had such an "awful" product, nobody would eat there and it wouldn't be as popular. There are plenty of alternatives.
- brador 15y ago
  I was going to reply with what you said but then I thought, since they're the in that "most calories per dollar" bucket, maybe poor people eat there out of necessity and not choice...
- philwelch 15y ago
  Most of the alternatives are equally awful.
- JoeAltmaier 15y ago
  Some of their food is very tasty; all of it is pretty bad for you physically. I particularly enjoy the large sweet tea for $1.06. However I have to agree that others do it better. Hardees has the best fast-food burger around. Also the best ads :)
- aloneinkyoto 15y ago
  The point I was trying to make with the McDonalds example was simply that a scalable and successful business model necessarily implies that they are unable to create the "perfect" hamburger. They have practical limitations inherent to their process that makes it impossible. If they instead were running a two star luxury restaurant they might have a chance at making a perfect product. But that wouldn't be a scalable and sustainable business, and most like not very profitable either. Most luxury restaurants have extremely low margins and in many cases operates with considerable losses. And just to make it clear, I am not trying to criticizes capitalism per se. I'm only basically stating the same thing the article is stating; that there is an inherent paradox in capitalism that makes it more complex to deal with than is directly apparent. Everyone that goes into business or deals with business indirectly through policy-making should be as aware as possible of this paradox, simply because it will prevent us from collectively ending up in a world with great processes but awful products or with great products but awful processes. Neither of which are very tempting scenarios.
lhnn 15y ago
Whoa, whoa, whoa. I'd downvote you if I could, not because I disagree with you, but because this is a strawman. The author used a low margin, low sucess business example to make a point about what mindset someone should be in to successfully run a business. You took from that the message that anything enjoyable is not sustainable. "Focus on creating something inherently good --> it will not be sustainable" You also less directly imply that focusing on profit will necessitate producing an inferior product, again using a specific example to provide a generality.
- quinndupont 15y ago
  Coffee is an insanely high margin product. You think it costs $4.00 for the 5 grams of coffee in your drink?
  - true_religion 15y ago
    Coffee itself is high margin, but the coffee business is not a high margin business. You have to employ people to make coffee manually, and quickly. You have to buy a machine to aid them in this, and keep it in good maintenance. Additionally, you have to supply perishables like milk to go in the coffee. You have to keep them in your shop buying coffee, or incite them to buy coffee here when they're hungry instead of going to go to dunkin dounuts. You can do this with nice decor, or by placing yourself in an already attractive location, or taking a margin loss on selling bake goods in order to bring in coffee customers. In any case, your high margins for coffee product have rapidly vanished.
  - icebraining 15y ago
    Coffee prices in the US are odd. 'round here (Southern European country) we pay less than a dollar for a coffee. Well, except in Starbucks, but then again, that's my point.
- aloneinkyoto 15y ago
  That something is enjoyable does not make it inherently good (unless you ascribe to Utilitarianism). There are of course other factors beyond pure enjoyment that contribute to the inherent goodness of a thing. You don't need to enjoy a medical device in order for it to be able to do its job well, for example. Rather, the distinction I was aiming at was between "process" and "product". But I suppose that wasn't very clear. My intention was not to start a flame war on capitalism. In my opinion a process can be sustainable (and thus very likely profitable), but a product can not. In this case a business model is a process and the thing you put in your mouth (the hamburger) is the product. For the hamburger to be perfect we would need an ever escalating process. Constantly adding more complexity or work to refine the product we can create thus creating an unsustainable process. If you want to create a hamburger in a sustainable and profitable way. The McDonalds process is most likely one of the best ways to do that. But it will NEVER create a perfect hamburger. The same is of course true with the opposite. A tiny connoisseur coffee shop can conceivably create a perfect cup of coffee and push the boundaries of the state of the art. But it will NEVER be a sustainable process. You need to make compromises in order to achieve that.
nwomack 15y ago
McDonalds quality control is second to none. Their standard menu tastes practically the same everywhere in the world. It's the same with Starbucks. I know that no matter what part of the planet I am at, I can get exactly what I expect to get. I'm never disappointed. I can't stress how important that part is. Bad quality control can really injure restaurants.
- mikeash 15y ago
  Perfect consistency is only useful if your perfectly consistent product is any good. Much depends on your target audience. Bad quality control can hurt a lot, but so can perfect consistency in producing a bad product. If your audience is the sort that thinks McDonald's is quality food then that's obviously where you should aim, but many audiences don't.
  - hessenwolf 15y ago
    Having worked in Quality Control in a major multinational, and studied and lecture statistics, I have seen that significant decreases in quality are accepted in exchange for increased consistency.
    - gaius 15y ago
      Quality is the measure of how closely a finished product meets its design spec. McDonald's products are insanely high quality, despite not being very good - a Big Mac was never designed to be healthy and satisfying in the first place! A relevant example of this is organizations who are CMM Level 5 certified.
aloneinkyoto 15y ago
Why am I being down voted for this? It is not spam and not intended as flame bait. It is not off topic and it is not pointless humor. It is a serious comment that needs to be debated and not hidden away at the bottom of the page. I am not stating anything extremely controversial, simply the same thing the article is stating, but with a slightly different wording. Don't down vote me because you disagree with me or because you think I am bashing capitalism (I am not, I love capitalism). If you think my argument is weak or lacking, please tell me so in a comment instead.
- chc 15y ago
  You are making a much bolder claim than the article, a very specious claim to boot (that for some reason sustainable businesses can't do good work), and you are not providing any supporting evidence for this controversial claim. You may not have meant it as a troll, but the effect is very similar The article is just saying that running an X business means you spend a lot more of your time on the "running a business" part than the X part, for any value of X. It doesn't mean you can't do a good job at X — just that you get to enjoy X more as a consumer than a producer.
  - aloneinkyoto 15y ago
    I didn't claim that a sustainable businesses can't do good work. I simply claimed that sustainability is at odds with producing good things. Which is a fairly different claim. Though I can see how the distinction was not perfectly clear in my comment. But to be honest I thought I was being very careful in my wording about something that should be self evident, e.g. "...will most likely not be as inherently good as it could be." Running a business implies a trade-off. The trade-off is that if you want to be successful (i.e. sustainable) you need to focus on the business and not the product. Which is exactly what the article is stating. Maybe a better example to support my claim is Apple. They make great products. But the way they do that is by focusing on the process of creating great products. Jonathan Ive specifically talks about this in the Objectified documentary. He says that most of their time is spent on designing the manufacturing process and the tools needed to mass-produce the products, only a very small part of the time is spent on the actual design of the phone or computer and that design is almost always a direct implication of the manufacturing process rather than something they magically dream up in some creative haze.

steve8918 15y ago

Not to hijack the conversation, but the following line really struck home with me but in a different way: "Lots of people think they want to start a coffeeshop. They likely don't. That's like buying a minimum wage job for two hundred grand." This is very similar to what I said about buying a home in Silicon Valley. In the nice areas like Palo Alto, the homes around > $1.5MM. If you don't buy a house in a good school district, you need to spend $1000-2000/month on private school, which is I suppose how the price of the homes in PA got inflated. Anyway, I told my wife, "If we were to buy a $1.5MM home in PA, first off we need a downpayment, which is roughly 500k. Then, after the triumph of saving half a million, we are rewarded for all our hard work by exchanging this for a 1MM mortgage." In the same way as the coffee shop example, the economics really need to make sense, otherwise it's a terrible investment. As long as we are living in the Bay Area, we will rent.

sabat 15y ago
Fallacy: you don't need to live in Palo Alto to live in the Bay Area. There are much more sensical places to live, particularly if you have kids.
pagekalisedown 15y ago
Being house-poor is extremely common in the bay area, to this day. It totally baffles me as to why people keep doing it. My only guess is that people are more economically irrational than I'd like to believe.

brador 15y ago

This could also be called the game/app developer falacy. How many programmers started out wanting to make that perfect game/app? only to realise doing so is tedious and boring compared to dropping a $1 on a finished product.

bendotc 15y ago
This immediately made me think of a quote about folks wanting to get into the games business: "Thinking that 'Hey, I like playing games, so maybe I'd like making them' is sort of like saying, 'Hey, I really like taking baths, maybe I'd like to be a plumber." -- Jesse Schell To be a successful game developer, you not only have to love games, you really have to love MAKING games, too.

jasonkester 15y ago

Without taking anything away from the article, it's worth noting that running a software business absolutely can provide one with a great lifestyle. More so than pretty much any other profession I can think of. The lifestyle I wanted: pretty much as close to zero required work as possible, the ability to do said negligible work from anywhere I feel like parking myself (preferably with good rock climbing), enough money to live comfortably there. Absolutely achievable, with a couple years of effort (and achieved, by the way.) Try doing that in any other high-paid, high-prestige profession (Doctor, Lawyer, Banker, whatever). Can't do it. Too much doctoring, lawyering, etc. taking up all your time. Sure, you can set up your own practice, staff up, and eventually get the thing running on autopilot. But certainly not in your spare time after work, and definitely not for a few hundred dollars, all in. So yeah, set your goals right and you'll find you've chosen the one industry where you really can own that coffeeshop.

jimboyoungblood 15y ago
yes, you will be able to own that coffee shop, but you won't want to. being their landlord is a better way to go. also, i don't think software is viewed as a "high-prestige" profession.
- bh42222 15y ago
  also, i don't think software is viewed as a "high-prestige" profession. It really depends on where in the world you are.
  - jimboyoungblood 15y ago
    i don't know about other countries, but being a software developer is not high-status anywhere in the united states. i lived many years in sf and mountain view. even there, being a "product manager" is higher status than "software developer" or "engineer".
    - aaronblohowiak 15y ago

marshray 15y ago

I've worked in restaurants and coffee shops where the owner spent about half time hanging out and "curating the bookshop". The author's point is correct though, there's a huge amount of unseen thankless work (and cashflow) needed to make that happen.

nlh 15y ago

Similar to the coffeeshop fallacy is something I described to a friend over dinner the other night as the "ambulance fallacy" ... He was telling me about his startup ambitions and about one particular business that he said sounded like a ton of fun (it was an alcoholic beverage business) - he loved the lifestyle potential of being "that guy". I told him a story about how I wanted to be an EMS worker when I was 12 years old. Why? For a single, simple reason -- I thought it was _extremely_ cool to be able to drive around with lights and sirens blaring, blasting through traffic. That was it. Then a family friend who actually was an EMS worker told me one day what the job was actually like - sure, for about 10 minutes you were driving like a madman through traffic, but the rest of the time you had to, you know, actually BE an EMS worker :) And the same goes for startup life -- you have to actually BE a startup founder for 99% of the time. Don't get caught up by the lights and sirens.

mikeash 15y ago
This is similar to how I talked my brother out of his brief thoughts of becoming a professional pilot. It sounds wonderful, but in reality the pay is poor (unless you're one of the lucky few able to work their way up to a good long-haul route), a lot of it is boring, a single relatively harmless medical problem can end your career, etc. etc. You have to look at the bad parts of any job when considering a career or starting a business, and it seems to be something that people are bad at doing.
- hugh3 15y ago
  Very few jobs, I imagine, are anything like they seem from the outside. Every glamorous-looking job has many hours of painstaking drudgery involved. On the other hand, dull-looking jobs probably have great parts that outsiders never know about.
tomcreighton 15y ago
"Don't get caught up by the lights and sirens." - this is great. That being said, if you know about the lights and sirens and still choose that path, maybe that's the path for you after all. i.e. - you can't build a business without doing the boring stuff as well as the fun stuff.

pemullen 15y ago

Actually I'd prefer a job drinking coffee in a coffee shop.

quinndupont 15y ago

Since when does a coffee shop have a 10% success rate? According to a large study by the Speciality Coffee Association of America, independent coffee shops in the US have a 90% success rate. Perhaps the author mistakenly assumed coffee shops have the same market dynamics as a restaurant, but coffee is low-staff, low-overhead, and high-profit. So long as people are walking in the door, you'll do okay.

mildweed 15y ago
As a coffee blogger in Kansas City (kcperky.com) I can attest to coffee shops being a hazardous business to be in. For every two shops that open, I expect one of them will close in 6-18 months.
genieyclo 15y ago
That statistic is absurd, and highly suspect coming from the "Specialty Coffee Association of America". I have run a coffeeshop and restaurant both, and can attest to the high attrition rate in coffeeshop turnover. I'd be surprised if even more than 40% of coffeeshops are still open 3 years after establishment.
- pseudonym 15y ago
  I'd be willing to be the "SCAA"'s numbers are something like "Still open 3 months after founding".
hack_edu 15y ago
The only café's I see around the bay area that are Speciality Coffee Association of America members are those that are long-established and shockingly up-scale. Does this study apply to newly founded coffee shops, or just the failure of existing ones? The analogy in the article is more toward newly founded businesses. Citation?
quinndupont 15y ago
I can't recall the details of the study, and while the methodology or scope of the study are subject to critique, it is one of those, you know, statistical studies. Not anecdotal evidence, and not "I've been in the business for so long" evidence.

jtolle 15y ago

This is an interesting article by someone who went through the actual coffeeshop version of the coffeeshop fallacy: http://www.slate.com/articles/news_and_politics/recycled/2009/08/make_that_a_double_shot.single.html http://www.slate.com/articles/news_and_politics/recycled/200...

larrys 15y ago

This is similar to what was around in the 80's with corporate people and owning a Bed and Breakfast. Many wanted to get away from the stress of corporate america and traded it for owning a B&B in the country. What they found was that running a B&B was obviously much different then staying there as a guest. "The 1980's was the ideal time when everybody wanted to own an inn, thanks to Bob Newhart," she said. referring to the popular television show that featured Mr. Newhart as a Vermont innkeeper. " http://www.nytimes.com/2005/08/19/realestate/19bandb.html?pagewanted=all http://www.nytimes.com/2005/08/19/realestate/19bandb.html?pa... Something you like doing everyday and something you like doing occasionally are two different things. As well as something you have to do as opposed to something you can decide to do (like writing comments on HN - imagine if it was your job to do it 8 hours a day 5 days a week or more..)

cosgroveb 15y ago
I know a guy who was a broker on Wall Street throughout the 80's and 90's... He retired to take over the family farm, the sort of thing a lot of his peers wanted to do, and after 10 years of working non-stop to almost-not-quite break-even he's almost ready to sell it. He says that he had no idea how much harder than working on Wall Street it would be. He's got to know everything about the domain, he's got to know accounting, sales, marketing, and just about every other aspect of running a business and it is exhausting for such small potential gains.

brianlash 15y ago

This is exactly the premise behind Michael Gerber's E-Myth series of books: That loving something /= running a business that sells or does that thing.

wayneyeager 15y ago
Indeed. Gerber went even further and says that it may be counterproductive to own a business that matches your technical expertise. That's because of the temptation to jump in and do the technical work... instead of focusing on the strategic aspects of owning the biz.
rpwilcox 15y ago
beat me to it :) E-Myth is totally worth it for freelancers to read, and probably startups too. (I'm the former, not the latter, so I don't know)

brohee 15y ago

And I thought I was dumb never having worked out a way to make a decent living wage out of the places I patronize. It turns out most of the owners didn't either.

MicahWedemeyer 15y ago

I have found that being personally interested in the product has a lot of benefits. First, if you're a user/consumer, it's easier to determine which features are most important as well as usability issues. It's surprising how unusable some products are because the developers never actually use them. Second, and most important, a personal connection helps to get you through the dark days at the start. It's very emotionally draining to work on something that has no traction, no supporters, and just a bunch of naysayers. If you love the product, though, it can offset this emotional drain quite a bit. In my case, I built a tabletop gaming (ie. DnD) CMS. In the beginning, nobody used it except me, and it was tough to go upstairs and hack away every night and weekend. However, I used it and that was enough to keep me moving. Now, we've got thousands of users and paying customers, and the motivation is much easier to find. But, I never would have made it this far if I didn't care so much about the domain. Unfortunately for me, I think there's probably a lot more money to be made in "boring" areas. If you can keep motivated to work on a CRM or medical billing system, you'll probably end up making way more than my DnD website. But, it will definitely be harder to keep the momentum in the beginning.

robfitz 15y ago
I actually completely agree with you[1]. My [intended but perhaps poorly articulated] point was that playing DnD doesn't feel the same as making tools for DnD. However, if you accept that premise and are willing to endure potentially dull work, then caring about DnD will allow you to make much better DnD tools. [1] (updated to remove irrelevant personal information)
- MicahWedemeyer 15y ago
  playing DnD doesn't feel the same as making tools for DnD That's absolutely true, and I'd take it a step further. Playing DnD doesn't feel the same as making tools for and running a business around DnD.
  - hugh3 15y ago
    And doing that doesn't feel the same as slinking around dungeons and fighting dragons, which is probably terrifying and deadly... but on the upside holds far more social prestige than playing Dungeons and Dragons.

Shivetya 15y ago

This is not really different that trying to convince students to study and not bet it all on sports. Family friends did a good job a few years back bringing their son back to reality; he was really good at basket ball; by having him find all the people from his school, county, and state, who made it. Then asking him how many didn't. People seem to always underestimate the effort and over estimate themselves.

richcollins 15y ago

If he saw a big opening he could exploit, he'd be there regardless of whether it was drilling for oil or starting a babysitting empire. This is why most everything that we use is shit. Also see: http://thetudu.wordpress.com/2011/10/12/the-real-reason-well-miss-steve-jobs/ http://thetudu.wordpress.com/2011/10/12/the-real-reason-well...

noonespecial 15y ago

Caring about the product seems to be the most dangerous. It's how the coffeeshop fallacy pops up and it's how people end up spending years building stuff nobody wants to buy. Steve Jobs might have disagreed with that particular point.

saraid216 15y ago
Just because it's dangerous doesn't mean it shouldn't be done. It's risk, not ABANDON ALL HOPE ALL YE WHO ENTER.

dusklight 15y ago

Maslow [http://en.wikipedia.org/wiki/Maslows_hierarchy_of_needs http://en.wikipedia.org/wiki/Maslows_hierarchy_of_needs] would disagree with the fundamental premise of this post.

leehnetinka 15y ago
dusklight - thanks for being the catalyst for making us provide an instructional splash page... check out the new bubble.ly (may have to refresh)

jroseattle 15y ago

This is great advice for some people, but terrible advice for others. It seriously depends on context -- who is to say someone's maximum pleasure doesn't come from running their own coffeeshop? It's not incorrect, but it's nearly impossible to make these statements without projecting one's own biases into the conversation. The most startling thing was the Levchin quote: "You you can't be in love with a particular idea or business. You have to be in love with the idea of running a business." It's presented as an either/or dichotomy. I'm pretty sure Steve Jobs, Larry Page, Mark Zuckerberg, etc. didn't succeed because they were focused solely on resource management. Lack of passion in one's product is certainly just as important (some would say more so.)

code_duck 15y ago

Insightful article. My own experience working in restaurants teaches that one should never go work at a restaurant you love - it might ruin their food and ambiance for you permanently.

phil 15y ago

I don't think it worked this way for Levchin, either. It's obvious that they were so excited about what they were making at PayPal. The PalmPilot thing? All that encryption stuff they did early on? They were just in love with what they were making, and it worked out very well for them. On the other hand, Slide, a basically dispassionate attempt to build a company he thought would be successful, while still a success, didn't work out quite as well.

toast76 15y ago

The coffeeshop fallacy is, in fact, a fallacy. People don't open coffee shops to drink coffee all day any more than someone would open a bar because they want to drink all day. My brother is a wine maker. He is insanely passionate about wine (Pinot to be precise). When he's not working he's talking about and sharing wine. But at the end of the day, he's just a farmer. He tends his vines, picks the fruit, puts in vats, waits a while and then pours it out into bottles. It's horrible, torturous, back-breaking labour for him. But he does it because he wants to put the best damned Pinot on your table. That's why you open a coffee shop. That's why game developers build games. Anyone passionate about wine knows what it means to make wine, and anyone passionate about coffee knows what it takes to make coffee. The coffeeshop fallacy assumes our coffee drinker knows no shit-all about coffee.

Swannie 15y ago
"The coffeeshop fallacy assumes our coffee drinker knows no shit-all about coffee." I think you missed the point. It doesn't matter how much you know about coffee. It matters how much you know about other things, mostly unrelated, accounting, cleaning, hiring, cleaning, customer service, etc.
- toast76 15y ago
  No I didn't :) You can learn "accounting, cleaning, hiring, cleaning, customer service". You can't learn passion about coffee.
thenomad 15y ago
Quite. I speak here as someone who owns a coffee shop's less profitable cousin, the independent film company. There are basically two types of people who will start a "cool" company - those who like hanging out in coffee shops, and those who would be making coffee for people whether they were getting paid or not. Those people, in fact, whose happiness is in large part directly related to the percentage of the day they've spent with their hand on the lever of a manual expresso machine. Yes, they exist. No, they're not kidding themselves - that really is what makes them happy. Discouraging the former from starting a coffee shop is an excellent plan. Speaking as one of the latter (film-making, not coffee), trying to discourage them from starting a coffee shop (or indie film company) is a) probably pointless and b) not a great idea if you actually care about them as a person. Their passion may wane. They may decide to start other businesses to help their passion business grow (as I've done). But at the end of the day, people like toast76's brother, me, and a wide variety of other people are GOING to open the damn coffee shop, and if it works, it will make them happier than anything else they could do. In those cases, you will be better STFUing about how awful an idea it is to open a coffee shop, and instead starting to talk location, accounting, and sales skills...

zach 15y ago

One time when I was working at Luxoflux, the pizza guy remarked it must be great to work as a game developer and "play games all day." I had to hold my tongue or I would have replied that it must be great to work at a pizza place and eat pizza all day.

minikomi 15y ago
Funnily enough, I did this in college - and it was great! Especially since you can choose the toppings.

6ren 15y ago

> ... it's how people end up spending years building stuff nobody wants to buy. Isn't that the opposite of the coffeeshop fallacy? i.e. that you enjoy producing it, not consuming it; the coffeeshop fallacy is that you enjoy consuming, not producing.

iskander 15y ago

I'm not convinced this fallacy really exists. It's not hard to observe that a coffeeshop is a hectic place that makes its meager profits one latte at a time.

bluedanieru 15y ago

This all seems at odds with the Ira Glass quote that makes its rounds here: Nobody tells this to people who are beginners, I wish someone told me. All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work. Put yourself on a deadline so that every week you will finish one story. It is only by going through a volume of work that you will close that gap, and your work will be as good as your ambitions. And I took longer to figure out how to do this than anyone I’ve ever met. It’s gonna take awhile. It’s normal to take awhile. You’ve just gotta fight your way through. You don't have taste in something you're not passionate about, and you likely won't keep it for long after that passion wanes. You won't know that you've made a good cafe unless you care about coffee. You might not like accounting or mopping but you'll tolerate the grind only to the extent you care about what you're doing.