Common misconceptions about startups (and pony startups)

Common misconceptions about startups (and pony startups)
Photo by redcharlie / Unsplash

I feel that people, in general, when they hear about startups, they have only one very specific image in their mind: the Silicon Valley mega startup, with an idea, team of very educated Ivy League founders with ex-Google, ex-Microsoft, ex-Facebook resumes, that are working on a state of the art unique ballsy value proposition, who just secured a 100 million funding round for their idea. And they have a team of a hundred programmers and three hundred sales people working for them, while they are putting in 20 hours days.

That definitely sounds unrealistic. And for those who have only this image attached to the "startup" word, they decide that it's not for them. Because this kind of like isn't for anyone, really. It's probably for that 0.000001% of the population that has been gifted to be born in the right place, at the right time and to have the right network.

And I think that romanticizing this kind of startup is detrimental to the overall idea of startups because it tells you that you have to fully commit all your life, sacrifice everything to it, for a slight chance to make it. And there's no other way to do it.

But there is, because I find that definition of a startup more to be a archetype of some very specific kind of startup. Maybe like 1% of the startups are like this. But how do the other 99% look like?

Let's address the most common misconceptions that steer people away from the startup life

"Does it scale?"

This question I think is among the first ones that any investor asks. And we have this in contradiction to what other big voices of the startup world tell, such as Paul Graham's Do things that don't scale.

On paper, Uber was not scalable. They have an app, in which they have to onboard drivers, instruct them to use the app, and then they would match them with clients. Their business would scale with the number of drivers added, which have to be added one city at a time. Of course, with a lot of resources, they can speed this a little bit, but it's still not as scalabele on paper as a traditional software based company. They needed human and physical resources. But they were a startup, the got funding, they grew.

A startup doesn't have to be inherently scalable. A good startup can also be more localized, target a smaller market, onboard clients over a longer period of time (but they have to be bigger).

The scale you have to think about is the scale of the problem, not the scale of the solution. At least not at the beginning. You just want to avoid problems that are specific to 10-20 businesses. You want problems that affect a big chunk of the population, so you have space to grow.

"What differentiates you?"

I honestly think this is the most detrimental question to ask a startup founder, because, left at that, they make them think that they have to be unique, they have to offer something more than the big players are doing, which is impossible. And in consequence, demotivates a lot.

When you want to start something, you'll inevitably have some competition among the "big players" such as Google, Microsoft or other companies more specific to your target market.

And you can't really out-feature them. They have the power to implement anything, have more resources, more marketing power and more funds.

In a lot of cases, the right answer to this could be "simplicity". Think about it. Nowadays, all these big players have overly complex software, because they have to cater to a very broad market. And with this broadness comes the loss of specificity.

They end up offering a very complex, ultra configurable platform everybody in every industry can use. But that ends up needing specialized people or companies just to set up that software in a way that caters to specific needs.

So you have some big extra costs attached to the usage of that platform for almost any company.

Just think about how complicated it is to use Google Analytics to it's full power. Most people just use it to collect some visitor and page stats, and plot some things with it, so they make sense of that data. But that software is so overly complex and has so many features and ways to use it, it becomes very cumbersome for the common small retailer or the mom-and-pop shops that just want to sell candles online and understand where their website traffic comes from.

That offers a lot of opportunities for new software that caters to the segments that have more specific and simpler needs. And these clients can be drawn to "not so unique on paper", but simpler software.

Of course, other not so obvious things that you can distinguish yourself from the big companies:

  • support 👉 this is a very big one for most smaller companies. Nowadays, when dealing with the big players it became almost impossible to get somebody real on the phone or somebody useful in the chat.
  • straight to the point 👉 with the big software, it is very hard to do something directly, due to them being "for everybody". So you can scope it down to cater to a very narrow market. For example, what about an website analytics software for real estate agents, so they understand what people are looking for, what kind of pictures draws the more attention, and what property characteristics see the most demand?
  • integrations 👉 the big software usually doesn't integrate with anything, because everything tends to integrate to them. But in some cases, these integrations are not very good or are very limited, so I think there is a pretty big opportunity for the integrations market, to move data from one place to another to make the most of it.

Of course, there are others "unique selling points" as well, not just these three. These are just the ones that came to my mind first.

How much do you need? 100M or 200M?

This is a big one, as it is the one things that I think scares a lot of people away. Not many people are used to seeing or discussing that kind of money, so managing that kind of cash is really mind boggling. Almost sureal.

The startup idea often comes with the idea of "raising capital", "investors" or "VCs". And these ideas add a lot of pressure for the people who might have a spark to try something new and see where it goes, but the only scenario that is presented to them is this path of "mega aggressive take over the world" growth.

But not many people want that. And that's fine.

That's why, for starters, the cost of bringing an idea up should be minimal: there are plenty of free solutions out there that can help you get started. Most startups founded by non-technical people can use no-code solutions to get the ball rolling, or just even plain old Excel sheets. Then when the ball is rolling, there will be enough money coming in to start automating and scaling the solution, once you figured out what the clients need.

If you are a technical founder, then you can put together an MVP fast, get out there, validate or invalidate. But the risk here is to get lost in doing that MVP, and a one week endeavor becomes a polished one year project with a lot of features that are outside the original MVP scope such as email validation, password change, etc. Fun fact: at Vuuh we added the password change and reset flows like two years in, when we were getting too many emails from people asking us to reset their password manually.

Everything less than being an unicorn is a failure

Another misconception I often hear is that there are expectations to grow and exit really big. Everything less than that is a failure and you have to shoot there.

But this kind of aspirations are not for everyone. As I said before, not many people want that kind of lifestyle, and shooting so high often comes with it.

Another, more healthy way to go about it, is to just start and see where it goes from there. When you start, you have zero clients and zero money. Your target should be to go to 10 clients and some money. Then to 20 clients, then to 50, then to 100, and so on.

Starting from zero and growing that idea into something is a whole journey, and the way your life looks when you serve 20 clients will be completely different from how your life will look like when serving 100. And completely different from when you'll be dealing with 1000.

You will see these increments, and then, can decide where to stop. If you started it on your own terms, and maybe got some angel investors in you were upfront with that it's not guaranteed you'll get to that unicorn status, and you might want to exit earlier, than you can do just that.

I read about plenty of stories of smaller scale startups that exit for a six digit sum (under a million), and since they are earlier in their life-cycle and the founders didn't see a lot of dilution, they get a bigger chunk of the pie. Sure, it's not life changing in the sense that it will get you one yacht for each day of the week, but it will pay off your mortgage and will get you some cash for other opportunities or to invest them into some index funds for some passive income, taking you some steps closer to financial independence. You can read more about these stories on which is a marketplace for such smaller tech startups. Not unicorn, but ponies that have a good enough return for the founders so that it makes an impact.


I think that these 4 misconceptions are the most common ones that really distorts the idea of a "startup" which, as a consequence, steers people away from this world I am very attached to.

In general, startups don't have to be big, unique, disruptive, creating a new "blue ocean" or have high stakes. It can also be a smaller project that doesn't really have a innovative idea, but is a simpler version of a bigger more established product, that is more straight to the point, thus creating more value for the buck for a narrower set of people and businesses.

And these startups can grow enough to offer the founders a nice payout day. We should stop trying to create unicorns all the time from zero, because that's impossible. I believe a unicorn is born as a "pony startup" that keeps on growing. But for all other "pony" startups.

Let's put it like this, in numbers: we can't create a unicorn from scratch. We have to create like 100 ponies, feed and encourage them, and from those 100 ponies, 50 will probably die, and from the surviving 50, one will grow into a unicorn. But the other 49 will be sold to an auction of pony houses that will ensure a nice payout for those 49 owners.

If you didn't already subscribe to "The Tech Bubble", I invite you to do! It is a media project about the startup world, the startup life and technology. I will post two articles per week (on Mondays and Tuesdays) and will also publish a video on my YouTube Channel.