Forbes: What Silicon Valley Entrepreneurs Get Wrong: 7 Lessons From The Rest Of The Ecosystem

Jun 03, 2013

Article by “Michael Simmons”

Noah Kagan (31) grew up and thrived in Silicon Valley. However, his feelings about it are mixed.Noah Kagan, Founder, AppSumo.jpg

After graduating from Lynbrook High School in San Jose, CA, he got a degree from UC Berkeley. Next, he worked at some of Silicon Valley’s largest success stories; Intel, Facebook, and Mint. He then went on to found several multimillion dollar companies in the Valley including his current company, AppSumo.

Noah now lives happily in Austin, TX. He captures the pluses and minuses of the valley, “If you want to build a $1B company, the valley is a great place. The people there are ridiculously smart. They push you to be better.

“However, I now love not being in the valley. I don’t want to talk about startups all day. I can have a life and enjoy it here in Austin. The thing that’s missed in the valley is solving basic problems that people outside of the Valley experience. Many just create another site like Pinterest, Vine, or whatever the fad is at that given time.”

On one hand, some of the fastest growing, impactful companies in human history including Google, Apple, Intel, Facebook, and Oracle have been built in Silicon Valley.

On the other hand, new research from the Kauffman Foundation suggests that Silicon Valley might be recognized too much for its positive impact in the ecosystem.

The Silicon Valley Overexposure Problem

Silicon Valley entrepreneurship is glorified above other forms of entrepreneurship. As a result, it is many people’s first exposure. Through speaking at entrepreneurship events in 100+ communities, I’ve seen the consequences of this firsthand.

If people don’t fit the mold, they often feel disconnected or inadequate. Symptoms I’ve commonly seen are:

  •     Founders of bootstrapped companies with double-digit yearly revenue growth feeling like they’re growing too slowly.
  •     Founders of very profitable businesses not being considered sexy if they aren’t in the right space or don’t have the right  market potential.
  •     Founders who feel guilty taking any time for themselves outside of their business.
  •     Potential entrepreneurs coming to the conclusion that entrepreneurship isn’t for them because they don’t resonate with the images they see.

Instead of individuals being proud of and leveraging their unique strengths and passions based on self-knowledge, many are trying to unsuccessfully copy Silicon Valley.

There Is Not One Right Reason To Start A Business

  •     Lifestyle. Entrepreneurs with a lifestyle that allows them to spend time with their family are critical to raising a healthy future generation.
  •     Creating a Job. Unemployed people having the ability to create a job, even if it’s just for themselves, have the potential to reduce terrorism globally.
  •     Expression. Artistic entrepreneurs help us experience and see our lives in new ways.
  •     Local Community. Main street small businesses form the fabric of local communities.
  •     Social Impact. Social entrepreneurs are solving some of the world’s largest social problems that markets and governments alone are not able to as effectively.

Cumulatively each form of entrepreneurship has a tremendous positive impact on the world and plays a crucial role in the ecosystem. It is a subjective judgement to say whether one type is better than another.

This article celebrates other styles of entrepreneurship in other regions of the country.

The Lessons

It shares lessons from some of the country’s top entrepreneurs on how to build an impactful company and meaningful life in ways that are non-traditional in Silicon Valley:

Lesson 1: Start a High-Growth, Lifestyle Business

Ray Dalton, Founder & CEO, PartsSource.jpg

Ray Dalton (57) has sold 7 companies for a combined $1B+. Over the last 20+ years, he has worked an average of 40 hours per week. He is a world-class father of five children and a committed husband.

“It’s a really big problem in our society that you think you have to choose. You don’t have to. Personal and business are life better when they’re aligned. You can have both, but you have to make investments in both. A lot of people are willing to risk their personal life for a chance at business success, and I think that’s a bad bet.”






Lesson 2: Do Smart Growth For Mission’s Sake, Not Fast Growth for Growth’s Sake

Aaron Steed, Co-Founder, Meathead Movers.jpg

Aaron Steed (33) is the co-founder of Meathead Movers, a regional, company-owned, moving company with a great reputation, and a 44% growth rate. In 2012, Meathead Movers had $5.7M in revenue, and it projects $8.5M in 2013.

Recently, he got the advice, “Stop being a pansy and franchise the hell out of this thing.” At first, the advice made him question his thinking, but he is happy about his current approach.

“We have been offered millions in capital for rapid expansion. It is tempting, but we haven’t done it yet. We already have an awesome growth rate and more importantly, our quality is as high as it’s ever been. I view this as insurance that our business will sustain for years to come. When a business is tempted to grow too quickly, it can often be a quick flame out. We’ve always been careful to not get caught up in that. When exploring expansion options, I also definitely think about what it will entail for me personally and the toll it will take on my personal relationships.”



Lesson 3: Think Long-Term, Not Short-Term

Mark Zuckerberg, Co-Founder & CEO, Facebook


Many of the most successful founders in the valley have a very long-term focus. In a popular 2011 Startup School interview at YCombinator, Mark Zuckerberg shared, “In Silicon Valley, you get this feeling that you have to be out here. But it’s not the only place to be. If I were starting now, I would have stayed in Boston. [Silicon Valley] is a little short-term focused and that bothers me.

“There’s a culture out here where people don’t commit to doing things, I feel like a lot of companies built outside of Silicon Valley seem to be focused on a longer-term,” he explains. “You don’t have to move out here to do this.”





Lesson 4: Have a Personal Life

Allie Siarto, Co-Founder, Loudpixel.jpg

Allie Siarto (28) is the co-founder of Loudpixel, a digital market research firm that focuses social media monitoring, measurement and insights. Her company has worked with major companies such as New Balance, Coca-Cola, and Cargill.

Their company has been growing 30-40% per year and has a team of six people.

In the beginning, Allie and her team worked long hours to get the company off the ground.

At some point, she wasn’t willing to risk her lifestyle for a future payday, “You have to figure out how long you do it for. It shouldn’t be arbitrary (i.e., $1M in revenue). Is $1M really what you want? If you do it forever, life will pass you by.”

Today, she works 40 hours per week, relocated outside of a major city, has built friendships with non-entrepreneur friends, and has developed hobbies such as photography, screen-printing, and piano.

“We still want to grow, but we just don’t want to kill ourselves in the process. We’re running a marathon. If we run too fast for too long, we run the risk of burning out.”


Lesson 5: Don’t Overvalue the Impact of Money On Your Life

Graham Hill, Founder, LifeEdited.jpg

Graham Hill (42), a successful serial entrepreneur, started and sold a tech company in the 90s. In his words, “I didn’t spend time with my family. Life was work. I wasn’t present because of the stress.”

After selling his company, Graham was flush with cash. In a recent New York Times op-ed, he shares, “I had a giant house crammed with stuff — electronics and cars and appliances and gadgets. However, somehow this stuff ended up Wil Schroter, Co-Founder & CEO, Fundable.jpg running my life, or a lot of it; the things I consumed ended up consuming me.” Today, Graham lives in a 420-square-foot studio and is the co-founder of LifeEdited, a company that promotes living in small spaces.

Wil Schroter is a successful serial entrepreneur and CEO of “Fundable,” a crowd-funding platform that has grown to 23-employees less than a year after launching. He has mentored dozens of entrepreneurs on setting personal financial goals.

“When you don’t have stuff, like a house, a car, and nice furniture, the perception of their cost is very inflated. What you’ll likely find is that the gap between you being ‘rich’ and where you’re at now is less than a million dollars.  What blows up people’s inflated perceptions is that they have never actually taken home a million dollars, spent it, and realized that covered most of what they ever wanted.”


Lesson 6: Build a Profitable, Bootstrapped Business

Laura Roeder, Founder, LKR Social Media.jpg

Laura Roeder (28), founder of LKR Social Media, made the choice to sacrifice growth in return for investing in herself, and she couldn’t be happier. “My business went from starting out to a million dollars in revenue with very health profits (all bootstrapped) in three years. Last year, I took a lot of time off work (traveled, got married, went on a month long honeymoon). My business plateaued, but I still had high revenue and high profit. I’m happy to work less and make the same money.”


In many cases in Silicon Valley in large, winner-take-all markets, it does make a lot of sense to put off revenue in return for growth. However, this can be a big risk in other markets. Prominent entrepreneur, Jason Fried, Founder of 37 Signals, makes the point the point on Inc.:

“Making money takes practice like playing the piano takes practice. No one expects anyone to be any good at the piano unless they’ve put in lots practice.”

“This is one of the reasons I encourage entrepreneurs to bootstrap instead of taking outside money. On day one, a bootstrapped company sets out to make money. They have no choice, really. On day one a funded company sets out to spend money. They hire, they buy, they invest, they spend. Making money isn’t important yet. They practice spending, not making.”


Lesson 7: Follow Yourself, Not the Herd

Brian Scudamore, Founder & CEO, 1-800-GOT-Junk?.jpg

Brian Scudamore (43), founder of 1-800-GOT-JUNK?, used to work 16-18 hour days in his twenties in order to grow his company as quickly as possible. “It was just grow, grow, grow!”

“I would read magazines, and I would compare myself to other people. I thought, ‘If only I could be like them.’

“I got beyond this way of thinking in my thirties by understanding what was important to and motivates me.  I started to realize that there was more to life than work.

Today, 1-800-GOT-JUNK? is doing over $100M in revenue and on track to do $200M by 2016. Brian drives a Volvo and has a “decent home, but not a mansion.”

Brian strongly encourages reflecting as early and deeply as possible.

“Too many people make decisions without clear goals and clarity.”

“Entrepreneurs should ask themselves, ‘Growth for what reason? Growth because I’m competitive? To make money? Because of the challenge of seeing something get bigger? Employees growing in the company?’”


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