# 16: Blitzscaling Is Not Our Story (Part II) — Baby Steps Are
Story behind the Passage
This morning I made the decision to write a follow-up to yesterday’s story because I was not done in a way. I had talked about how the concept of blitzscaling (Reid Hoffman), i.e., super-fast company growth, does not fit into the European/German narrative of entrepreneurship. Today I want to focus on some alternatives in more detail but again based on a “real-life” example.
When I talked to my friend Michael about entrepreneurship yesterday, we both agreed that there is something wrong with the Silicon Valley ideal of startups. Yes, I know, I have actually been promoting this with my stories about startup biographies from U.S. startups! But I want to clarify that there is a difference between learning from startups in the U.S. and taking them as the ideal blueprint for entrepreneurial ventures. The latter does not work that well in Germany. And even if it did, I do not think that a few super-sized startups that turn into corporates at some point can save Europe’s role in the world economy in the long run and in a sustainable manner. Again, I would raise the simple question of why we would even want this competitive thinking to dominate? But I covered these big questions yesterday. Today it is time for a different story.
In my conversation with Michael yesterday, we reflected on our learnings and our own somewhat blind fascination with U.S. startup visionaries. Then he repeated something that he had learned from a truly inspiring professor and former entrepreneur last year. This is what she had told him:
“Forget about all these Silicon Valley stories, the visions about unicorns and huge companies. Entrepreneurship for most people is not like this. You start selling hours of teaching, or toys, or kitchen ware, or you offer advice to peers, you work on a farm, you…. It does not matter what exactly the product or service is. It matters that you start small and then grow slowly. Entrepreneurship is about taking action. It is about taking baby steps towards long-term success.” — HD
When he said that, I totally agreed. This has been my learning as well and it has taken quite a while till that bell finally rang. Especially highly-educated founders with all their intellectual ambition tend to be particularly bad when it comes to executing, especially with respect to “baby steps.” We always think big, simply because we have the intellectual capacity to do so. But then, this thinking big becomes the biggest obstacle ever. You start believing that entrepreneurship is only about big steps and about big clients and about big steps of growth. The fact is: That is bullshit.
Historically, no business would ever have evolved if entrepreneurs would always have waited for the big rocket to fly. That would mean taking the second step before the first. Every child could tell you that this does not work — at least not in every culture. Still, this is what especially U.S. startup narratives make us believe. The idea is fueled by the entire system of venture capital. As a founder who had successfully sold a startup at an early age shared among a group of young founders last year:
“Somehow, people have come to celebrate investor money more than actually winning a new client. But it should be the opposite. If you have the chance of starting or growing your business without any investors, do so. If you have no choice, then make sure that the investors do not violate your independence all the time by interfering in your decisions.”
I totally saw his point because I think the money that flows into startups is quite insane — especially in times when we are constantly debating how much money the public school system is missing to simply buy basic computer equipment for students. Yes, I do know that it takes time to develop technology and that people have to be paid properly for doing this. Still, I do think there is something wrong with the fact that startups, because of the investment-based nature, continue to exist only as stories until they might — if all goes well—actually see their first clients after having burned ridiculous amounts of money. And this practice does not even stop with the first clients because profitability is not at the center of startup philosophy. The primary goal remains: growth.
While talking and thinking about this yesterday, I suddenly remembered the story of Madam C. J. Walker (1867–1919). I had learned about her in preparation for one of my lecture courses on U.S. startup women. Walker became the first African-American female millionaire by selling haircare products. You will see how her approach to entrepreneurship is related to the idea of taking “baby steps” in my discussion below. I have to admit that I am again violating my own rules a little bit because the passage above is not from a book by or about her (there is no book about her). Still, I really wanted to use her story because it forms an antidote to the blitzscaling model of digital entrepreneurs today. But, boy, there is so much one can learn from her story.
My Learnings
“Walker was inspired to create haircare products for black women after a scalp disorder caused her to lose much of her own hair.” Well, I know, selling a fancy app or some robot that was born in a state-of-the-art co-working space sounds a lot more sexy than selling products that help one fight scalp disorder and hair loss. But stable entrepreneurship is hardly ever about being sexy. It is about solving problems with products that create value. This also means that one cannot exactly plan entrepreneurship because, after all, you would have to plan/design the problem as well. Would this ever be possible?
I think, when looking at the current hype around startups, there is this trend that people want to become entrepreneurs first and problem-solvers second. I am not saying that this is the norm but especially founders who come from the technological side naturally start with the product. They build an app that might even be based on a game that they programmed before. Then they learn about all this startup talk going on and the culture that surrounds it — cool people, anti-establishment, fast learning. All this is very intriguing, especially if one already has a “product,” i.e., some technological tool. The problem remains: the problem to be solved by that technology is still missing!
Of course, I am exaggerating a bit and I am aware of the fact that these accidental discoveries of great technology without a narrow application focus in mind are valuable. After all, this is what foundational research in universities is all about. You contribute knowledge on a level that is so elementary (in the most comprehensive sense) that nobody can guess where this knowledge might be of use later. Especially this liberty allows researchers to pursue their intrinsic motivation to discover novel phenomena. The point is: Startup founders, at least the vast majority of them, are not university researchers conducting foundational research. So, where is the “problem” — literally? What should get fixed?
This idea of problem solving as the basic motivation for entrepreneurship, however, is even more revealing for today’s entrepreneurs when looking at the latter part of the sentence above. Walker did not start by trying to help other people — she wanted to fix her own hair problem. This is a really crucial aspect that also tends to be forgotten sometimes. Yes, it is nice to take care of the problems of others. But usually, and this remains true today — at least in the case of startups that really create value — founders start with themselves and then extrapolate that others might be facing the same problem too, which is why it makes sense to turn a solo solution into a product that helps others.
What remains important is the basic message: If I fixed my problem with this solution, it can probably help others too. And that is essential for answering the fundamental question of: What the f… is this startup about and which value does it create? In the case of startup founders who start out with the idea of becoming entrepreneurs for the sake of becoming entrepreneurs, this story is more difficult. This factors into pitching and all kinds of other communication ans sales aspects as well. Or do you think that Walker had trouble pitching the value to customers? It was simple, clear, and, above all, convincing. It was convincing because, after all, Walker herself had once suffered from the pain that was caused by the lack of proper care products.
“… she differentiated hers by emphasizing its attention to the health of the women who would use it.” This is very much in line with what I am writing about problem solving and value above. But I still need to emphasize how valuable learning from this early example of women’s entrepreneurship is. Walker obviously used a “trick” that has become popular quite recently in our business world. Today we refer to it as the experience economy. So, instead of selling a weekend-trip, you sell “holidays for the soul.” Instead of selling veggies, you sell “health and inner care.” And instead of selling bus tickets, you sell “clean transportation.” It is remarkable how much Walker seemed to be aware already that it is not the details of the product’s ingredients that make the difference, it is the value that people see in the product and that, in turn, is connected to the problem that gets fixed. This is what young companies often fail to communicate simply. And I have to admit, it is easier said than done if you are in love with your own product and with all the details that appear like the most important aspects to you.
“She sold her homemade products directly to black women, using a personal approach that won her loyal customers.” This probably reminds you of the famous Tupperware sales system (will write about Brownie Wise sometime) or of guys in suits selling vacuum cleaners or insurance policies at your door. In fact, the door-to-door sales system was not known or common at the time of Walker yet. But she probably followed an inner voice that told her: “The direct path to your customers is the shortest one.” In the digital age, one might say that this indirectly also holds true because you reach people directly via online stores, for example. Still, I do think the quality of the sales relation is different. This especially refers to the knowledge the entrepreneur gains about the client. Yes, surveys and user data reveal many details, the immediate learning from the responses of the client is missing.
Even if the customer might not care about this, the “personal approach” that Walker used as her sales strategy becomes extremely difficult if there is no direct personal exchange. And again, I am coming back to the “baby steps” argument that I started out with today. Gaining “loyal customers” is the backbone of any solid business. That is as true for traditional car manufacturers as it is for marketplace platforms. But, even in the digital economy, loyalty takes trust. And trust building in turn takes time. If you are in the founder seat in this scenario, this means you need patience. Every day when no order comes in, it feels as if the baby steps are no steps at all.
This is exactly the point when the ideal of the blitzscaling story fails many founders — especially those from cultures that do not really believe in the kick-starter rocket narrative. Just accepting the slow pace and enduring with patience, discipline, and constant quality improvement is not the strength of over-ambitious young founders who are constantly told that only growth rates of 1,000% annually are acceptable for winning a ticket to the startup major league. This is the problem we need to fix. So many startups would already be successful and profitable medium-sized companies that function as employers for thousands of people if they had only done two things differently: 1) Learned and embraced that entrepreneurship is about taking baby steps, 2) Deleted the blitzscaling ideal from their mental desktop.
Reflection Questions
1) Did you ever learn about the history of women’s entrepreneurship in school/university in your home country?
2) What is a problem that you frequently encounter in your life? What would it take to solve it? Would this solution create value for others?
3) When being honest to yourself — is it attractive for you to become an entrepreneur if that means taking very small baby steps for many years until maybe achieving a breakthrough? Which support mechanisms do you have/need in order to keep up your good spirits on this journey?
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