The goal of a business is to build a sustainable enterprise that will create value for customers, the entrepreneurs or the visionary leading the business, and the investors backing the business. Making money is one of the types of value captured by the founders. While people start businesses for various reasons, it is undeniable that a business needs revenue and profits to survive and thrive, and investors need a return on their investments to make their investments worth their while. However, most modern-day (pun intended) entrepreneurs, have lost the very essence of business building and have replaced sustainability and value for fundraising numbers and clout-chasing.
Back to the title of this article. Richard Hendricks is a popular character in the HBO series “Silicon Valley”, where he was the brains behind the Pied Piper startup. His work focused on applied information theory, mostly optimizing lossless compression schema of both the length-limited and adaptive variants. Do you even understand what that means and the scenario in which you could apply that in your everyday life activities? Well, neither do most people. The tech is cool and could be useful in so many areas especially if its application towards starting a new internet from the bottom-up using the compression technology worked…only that it didn’t!
The Pied Piper startup represents the majority of the type of companies we see around today. Something one of my techie pals loves to call a “beautiful high-sounding pile of rubbish” They set out to build a complicated product that only a small circle of friends understand due to the niche or sometimes, the technicalities involved.
They build some shiny armor that captivates the attention of investors, thrills the general public for a few weeks, captures the curiosity of the media and tech bloggers, and results in a bunch of cash being thrown at them from investors. The reality though is that they end up building a solution that does not have a problem.
Such products are overhyped but have little to no substance behind the entire product and business model. Then the tweaking, pivoting, rebranding, and reselling, begins as they struggle to find product-market fit. Strangely, investors love shiny armors and high-sounding so-called revolutionary products that simply don’t work but have a chance of being forced down the throats of unsuspecting consumers who have zero need for that product nor understand how it works. It is no surprise that we have lots of tech whizzes who alongside their companies, were valued at billions of dollars yet they ended up broke, convicted for fraud, and locked up with the keys thrown away.
Back to the story. Richard is a great guy. His brilliance is astounding and his coding abilities are second to none. I loved his character (in fact I love the entire team. They were all brilliant and put in a lot of work towards building Pied Piper, Pipernet, and even Piperchat) so it is possible to be a likable and hardworking entrepreneur and still build an unusable product. Richard Hendricks finally found a way to inject his file-shrinking tech into smartphones to build a peer-to-peer new internet void of gatekeepers like Hooli, and the result was.........
Yes! That’s right. Rats. The technology was music to the ears of rats as the ultrasound attracted rats from all over the city to the launch venue of the product. The faulty code did not disrupt satellite signals but instead caused thousands of rats to emerge onto the streets of major cities across the country. Shortly afterward, Richard was forced to shut down Pied Piper shamefully. While satirical and inspiringly depicting the amazing tech hub and center of innovation and creativity called "Silicon Valley", the scenario in this TV series is not far-fetched from the realities of today where we have many such startups that need to shut down. unregulated AI will bring rats into our cities if left unchecked. Before you build the next Pied Piper, you may want to check your AI LLMs and Chatbots for compliance at Prompt Biz Inc.
Back to the story once again. Such startups make noise, attract news, and become a nuisance. As you set out on your entrepreneurial journey as a new founder or a first-time entrepreneur, be sure to find a genuine problem that people face and create a simple solution to that problem. How simple? Such that a five-year-old can get it without much external supervision or intervention. Your focus should be growth, sustainability, generating steady revenue, learning along the way, satisfying customer needs, and making profits-even if it takes a while to get there. Your business should be built in such a way that it could be passed down to the next four generations after you. That is success!
I do not want to sound stereotypical, but the statistics show that a greater number of companies built in the decades before now, survived for generations, while most shiny new startups die before 3 years despite the disparity in funding. Many brands from the past still exist today in comparison to some newer companies that raised 10X more funds but died prematurely. Sometimes it is not the fault of the founders or the product, but the market was not just ready. However, most times, the product was simply unusable to the majority of consumers. Why investors throw cash at such startups is a discussion for another day. I would tell you all about it if subscribers enquire to know. 'smiles'
To sum it all up!
It is easy to feel let down as an entrepreneur grinding daily to grow a business that adds value to the lives of people yet see no interest from investors, while startups with shiny cliché names playing along with the trend of the day (Blockchain-empowered, Crypto-based, AI-energised, AI-powered, Fully automated, Metaverse tested, etc) with products that 99% of humans do not understand or have any use for, yet raise multiple millions in funding, while you are bootstrapping and working 3 jobs to keep the lights of your business on.
The question you should ask yourself is…will this business be around next year? In five years? what about in ten years? Will they crash like Wework and Convoy? Will they become fraudulent like Theranos or FTX? Or will they be around for decades like Coca-Cola, Nike, Adidas, Walmart, Apple, IBM, Microsoft, Google, Facebook, etc? The later-mentioned companies had similar characteristics of steady growth, minimal initial funding (as many did not even believe in their potential to be sustainable when they first launched), and tenacious founders who had a long-term vision. Having a shiny armor-type meaningless company being acquired is not the norm but an offshoot, so do not get discouraged…keep going! Always remember that the goal is to build a successful and long-lasting business empire not a Ponzi-scheme type come-easy-go-easy shiny startup void of substance.
The infographic below will guide you toward your goal. Best of luck
Thinking about starting a business? Don’t be like Richard Hendricks
Are you thinking about starting a business? Don’t be like Richard Hendricks. Do it the right way. Build a product or a company that creates value for society, then capture a part of that value for yourself.
Do you have a business you want to make official? Prompt Biz can help.
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