Startup Myth

There’s a train of thought that people get into banking because they want to run their own startup, and these days that often means something in tech. I’m writing this post to dispel a few myths. I can’t count the number of people who have pitched me on their idea about “disrupting” one industry or another, often with very little thought for what already exists in that space, or if they are solving a real problem. Hell, most of them don’t even know that much about the industry they want to enter. Two years as an analyst in a BB Retail group doesn’t exactly prepare you to launch (or operate) a B2B retail software startup that provides a better XYZ. My favorite expression once I ask them what their strategy is: “You hire some coders and they build your app, then you scale!” Lesson #1: Building an app and then scaling is not a business plan. At all.

One reason I’ve heard so many of these pitches is that I’m someone who can build your app. When I politely decline to build my new best friend’s social-dog-lovers-apartment app they often say that they can hire an overseas team. And it will be cheap! “Great plan!” I tell them. Except that while you can theoretically hire a dev team in the developing world on the cheap, the reality is the best engineers in India and China are already working for Flipkart, Baidu, Weibo, Alibaba, or another massively successful local company. If they’re not working for a local behemoth they probably work for Microsoft, LinkedIn, Groupon, Spot Hero or another western company. The stuff coming out of Asia and Eastern Europe is really good! You’re not going to go there and convince anyone to build your Uber for Cigarettes. Their rockstar developers are doing rockstar things, not taking your $25K to build your MVP in “stealth-mode” and then turning over a code base that a team of US engineers can easily adapt to changes in strategy or the explosive user growth that will inevitably follow the launch of your disruptive idea. Chances are the code base you get back will be messy, third-rate code from developers who couldn’t get better jobs. The code will be difficult for a to read, and ultimately you will probably throw it all away start over with a local team. This may not be true 100% of the time, but you get the point. Lesson #2: You get what you pay for.

Bottom Line: If your plan is to spend 2 years in IB and then launch a startup and have a multi-million-dollar exit and you don’t have the technical skills (from a software development perspective) think long and hard. It’s probably possible if you find the right team, but you’ll probably end up disappointed and the only B2B you’ll be doing is going Back to Banking.