The silicon valley Startup Kool-aid has a false dichotomy: You're either patio11[1], a "nobody" building a "lifestyle business" or you're making the next Insta

The silicon valley Startup Kool-aid has a false dichotomy: You're either patio11[1], a "nobody" building a "lifestyle business" or you're making the next Instagram. Consequently we have a cargo cult mentality that has evolved. Lets compare these two: Location: "Obviously you need to be in Silicon Valley. This is where all the wannabe startup hipsters move to!" I mean, you can't go to a coffeeshop without hearing a harvard MBA who think's he's a programmer because he made an excel macro work once, talking about how he's going to disrupt multiple paradigms with his massive SoLoMo app they're building. "This is where it's all happening, man!"[5] "Japan? There's no startup scene in Japan. Hell, that's a 12 hour flight. You think VCs are going to fly 12 hours for a board meeting?" Business model: "Dude, if you charge money, like %90 of the people aren't going to use your product! But if you're free, and you've gamified your appointment calendar, people will share it! If you can get your virality factor to 2, you'll have a billion customers in 5 months!" "Oh, there will be a way to make money later, somehow, just look at google, twitter and Facebook!" [2] Funding: "If you're going to be scalable, you need bank, man! The VCS are in silicon valley, the VCs are critical to having a business. They'll give you great advice, connect you up with the other movers and shakers so you can have Cock-Tails Man!" (Yeah, I can't make myself sound like a startup hipster, I know.) "Without money, how are you going to build anything? How could you ever scale it? You have to start with money!" Company culture: "IF you see the CEO writing code, you've failed. You gotta delegate. I mean, never invest in a company run by a programmer, they'll spend all their time delighting in some technical solution that's super elegant but nobody at any cocktail party is going to give a damn about! I mean, what do customers care about how good you did something? They company has to be run by a people person-- so at the cocktail parties he[3] can network with other people! People's what drives business, and this is what gets business done!" Do they even have cocktail parties in Japan? Isn't liqueur outlawed or something there?[4] Advice: "You see with VCs, its not the money that's valuable, its the advice! They're going to be able to tell you the right moves and you'll be able to grow so much faster!" I can't contrast this with patio, because I don't know where he gets advice. But in my experience, VCs [can be] beyond clueless[6]. I've seen them force companies to shut down profitable businesses and focus on long shots (which had the nice side effect of making the company more desperate for the investment, and by drawing it all out the VC was able to get much better terms and take the whole thing when the company later sold, shutting out the founders and employees who got nothing.) I've seen VCs force product direction based on fads, and force the use of inappropriate technologies (provided by a company they had a relationship with, naturally) which caused product delay and ultimately a significant reduction in the value of the company on exit. Much of the investment process seems to be spending time getting investors up to speed so that they even understand what it is you're doing-- which maybe is one of the reasons they'd rather fund instagram than patio11. I mean, they don't know anything about the hair salon industry (his only clients as far as they can tell) but everyone likes to take instamatic pictures! And if you don't have a business model, you don't have to worry about the business model! [1] All respect to patio11. I think he's on the right track here, and he seemed to be the best example to use. Nothing derogatory said here about him or his business is meant that way, merely to characterize the people who would see him in a derogatory light. [2] Here's a bonus: Why is google's monetezation strategy significantly better than twitter an facebooks? It might turn out not to be if the latter two find a way to make it work, but right now, it works much better. [3] Always. No such thing as a She CEO, I mean, women just don't have the ruthlessness needed, amirite? [4] I don't think people are this naive about Japan in particular, but I hear them say the strangest stuff. [5] Somehow startup hipsters in the bay area speak with a style that's a cross between "Brah" and San Fran hippy from the 1970s. In my head. [6] This is why YC has had so much success, in part, as PG is not clueless and his vetting and blessing lets VCs outsource dealflow. I think angels are probably a lot less clueless, though I have less experience with them. Looking at Gabriel Weinbergs recent summary of his angel experience you see a very different approach than the mentality I'm laying out here.