4 ways to spot startups too focused on Big Problems

Do high-tech startups understand -- and have a solution to fix -- your real problems? Here are four ways to find out.

Navigating a field of uncertainty and doubt questions
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There’s a scene in the first season of the HBO sitcom Silicon Valley that captures the problem with Big Problems with the kind of accuracy only biting satire can deliver. Spoofing TechCrunch Disrupt, startup after startup pitches the audience on how they’re going to “revolutionize their space” and “change the world.”

The number-one problem with Big Problems is that every startup thinks they have to solve one. . . a BIG one. Incremental change doesn’t lead to billion-dollar valuations – or so this very flawed line of thinking goes – so the bigger you go with your bets, the better off you are, even if that strategy practically dooms you to failure.

Go to any tech conference that features a startup “zone,” “village,” or “habitat,” and you’ll encounter aisle after aisle of vaporware, shelfware and science project fever dreams claiming they’ll be the next unicorn startups.

There’s a scene in the first season of the HBO sitcom Silicon Valley that captures the problem with Big Problems with the kind of accuracy only biting satire can deliver. Spoofing TechCrunch Disrupt, startup after startup pitches the audience on how they’re going to “revolutionize their space” and “change the world.”

The number-one problem with Big Problems is that every startup thinks they have to solve one. . . a BIG one. Incremental change doesn’t lead to billion-dollar valuations – or so this very flawed line of thinking goes – so the bigger you go with your bets, the better off you are, even if that strategy practically dooms you to failure.

Go to any tech conference that features a startup “zone,” “village,” or “habitat,” and you’ll encounter aisle after aisle of vaporware, shelfware and science project fever dreams claiming they’ll be the next unicorn startups.

It’s exhausting.

The problem with Big Problems is more than nuisance messaging and overblown rhetoric, however. The need to turn everything into a Big Problem is a fever that, if a startup isn’t careful, can metastasize into magical thinking, creating an almost cult-like mindset.

In a previous article I shared five tools I use when I evaluate startups that help me see through the fog of noise and hype. I showed you how to build a startup evaluation toolkit, revealing tactics you can deploy to keep your attention focused on the too-rare signal within all of the buzzy startup noise.

In this article, I’m going to share four symptoms of Big Problem Fever and discuss why this fever is so risky for emerging startups and even, on occasion, for successful serial entrepreneurs (who should have already been vaccinated against it).

4 symptoms of Big Problem fever

1. Narcissism that would make a Narcissus blush

Startups love to talk about themselves. In part, this is a natural outgrowth of being an early-stage company. You have to spend countless hours selling yourself up to investors, potential employees, the media and potential customers, all of whom know that you face long odds.

Now, I’m not talking about the kind of healthy confidence you need to launch a startup. After all, if you don’t believe in yourself and your startup, no one else will. Rather, what I’m talking about is when the confidence bleeds into an overblown arrogance that starts morphing into something far less healthy.

When you add a faux Big Problem to the mix, watch out.

In Greek mythology, Narcissus was the hunter who fell in love with himself. Narcissus, already saddled with an oversized ego, had earlier spurned the mountain nymph Echo so harshly that, heartbroken, she faded away into. . . well, an echo. 

The goddess of revenge, Nemesis was so appalled by Narcissus’ behavior that she tricked him into falling in love with a reflection of himself, which, depending on the version of the myth, eventually led him to either commit suicide or to spontaneously combust and transform into a flower.

[ Related: CIO Quick Takes: How to evaluate startups ]

Whatever the case, when added to startup overconfidence, the curse of the Big Problem is much like Nemesis’ revenge. Overconfident startups that buy into a Big Problem that is really more of an incremental nuisance become inward-focused, self-obsessed and foolish in their decision-making.

2. Cheerleader cultures that educate through faith

As work-life boundaries have eroded, the workplace has become not just a substitute home, where you can put your kids in daycare, eat, nap and even party on a Friday night (between writing lines of code), but especially in Silicon Valley, the workplace is the center of the employee’s world. But it’s not just the center of work and social life, it’s also where people get a sense of belonging, of meaning.

This is a dangerous trend.

Of course, plenty of startups do not treat winning market share as the equivalent of a religious crusade, thankfully. The majority of startups believe in what they are selling, but when the sales aren’t coming in, the friction created when the utopian vision confronts a stubbornly resistant reality breeds cognitive dissonance.

The way many startups try to remedy the cognitive dissonance is to attempt to change not themselves, but others. In other words, they set out to “educate the market.” Here’s the thing, if the change a startup ushers in is one for which there is already pent-up demand, there’s no need to educate the market. The change will feel inevitable, even overdue.

However, in an entrenched market that is resistant to change, startups face an uphill battle. Educating the market is costly and tricky to pull off. If the learning curve is steep, startups often end up regarding the market dismissively, believing it is too stupid to “get it.”

3. The cult of the charismatic CEO

When startups encounter resistance in the market, rather than pivoting, many double down on belief. Slowly, their educational mission transforms into something more like a religious crusade. This is especially true when the startup is headed by a charismatic, can-do-no-wrong leader.

In The Big Con, David W. Maurer’s classic book about confidence men, Maurer describes the difference between a con and a common criminal: “Confidence men are not ‘crooks’ in the ordinary sense of the word. They are suave, slick and capable. Their depredations are very much on the genteel side.”

Maurer was talking about actual confidence games, such as wire and stock fraud. He wasn’t talking about business boondoggles like Enron, WorldCom and Theranos, but he could have been. In each of those cases, charismatic leaders peddled too-good-to-be-true business models that eventually blew up in their – and their customers’ and shareholders’ – faces.

The Big Problem fever is so contagious that even successful serial entrepreneurs succumb to it on occasion. Richard Branson’s wobbly Virgin Galactic is a case in point.

A few years ago, I attended a tech company’s user conference that featured Branson as a keynote speaker. His speech was the typical mix of autobiography and entrepreneurial derring-do. Branson ended (and I paraphrase) with this bit of wisdom: No one ever built a successful business on government largesse.

For someone in the heavily subsidized airline business, this is a remarkable statement. Even more so, since a couple of years prior, I had personally joined in the unsuccessful effort to fight off Branson’s efforts to tax the Southern New Mexico county where I used to live. The taxes would subsidize Spaceport America – a linchpin of Virgin Galactic – on a remote site in the Chihuahua Desert.

The way Branson sees it, public funding for a spaceport that would serve only billionaires, if anyone at all, apparently, doesn’t count as “corporate welfare,” however, and asking that contradiction during the press reception after the speech won’t get you invited back to future user conferences. Oh well.

My point isn’t to ridicule Branson but to show how pervasive Big Problem fever is. Branson believes in his bones that the world needs a Spaceport. New Mexicans should feel lucky to pay for it. In fact, humanity’s very existence could depend on space exploration.

Talk about Big Problem fever. 

Branson has a string of successes to his name, at least a couple of which came from bold moves, but that doesn’t mean every one of his risky ventures will be a winner. From Spaceports to asteroid mines to underground highways, serial entrepreneurs all too often believe that their past successes have paved the way for more audacious adventures.

Related: How the earliest of tech startups are surviving

At least serial entrepreneurs have earned their quirky adventures. All too often, though, first-time startup leaders try to create whacky cultures based solely on their unvetted ideas and audacious personalities of their founders.  

These vision-preneurs treat the solving of any little thing as a borderline religious experience. We’re passionate about moving packets faster!!! – creating a culture around them where everyone gets a trophy, every idea is a billion-dollar one, and every executive is an “Evangelist.”

4. Déjà vu customer service

Arguably, the biggest problem with Big Problem fever is that it eliminates one of the best tactics startups can use to beat incumbents: superior customer service. I’ve worked with a number of networking startups that have prioritized superior customer service because the incumbent telcos are so terrible at it.

However, you must deeply understand customers and their frustrations to beat an incumbent through service. Otherwise, the switching costs are too high.

Customized, personalized service is often why businesses choose startups in the first place. In order to build out that use case, startups will often purpose-build plug-ins, add-ons and new features – on the cheap – that you can’t find anywhere else in the market.

Time and again, successful enterprise networking startups – from Airespace to Aryaka Networks to Nicira – have found their footing by delivering superior service, rather than treating customers as cash-cow nuisances to be handled through endless automated menus, interminable wait times and undertrained frontline service reps who can’t solve anything but the most basic issues.

On the other hand, if your startup behaves like an incumbent before it has grown big, the allure of dumping an adversarial relationship for a fresh start evaporates.