The author is criticizing a genre of narrative that I like to call "career porn." Consider the similarities between "how I started this company" type stories and actual porn:
* It depicts something everyone fantasizes about and offers a quick if ultimately unsatisfying release. Who doesn't imagine themselves building something amazing and being idolized by magazines and the general public?
* It happens in an unrealistic sort of magical fairy land, often in the founder's own hazy, romanticized recollections of their past.
* It only shows beautiful companies/people. You don't need to found a space exploration company to be happy just like you don't need to be with a model.
* It offers no real guidance for how to achieve what it's depicting, leaving viewers confused at best and frustrated at worst. This article touches on the fact that people seem to think all they need is an idea, when that's not what it takes.
* It's most popular with those who are either frustrated with their careers/romantic lives, or are otherwise trying to satisfy a need they feel isn't being met. This one is a little shaky because plenty of people enjoy actual porn in healthy ways, so forgive me for the stretch.
The comparisons go on and on. How healthy your relationship with each is depends on how much exposure to the realities of each field you have had and how mature you are as a person/profession.
>It only shows beautiful companies/people. You don't need to found a space exploration company to be happy just like you don't need to be with a model.
We certainly don't hear much about efforts or successes in anyone's effort to "disrupt" the toilet paper industry, yet it's something most people use daily. It's not sexy, but we all care a lot when it sucks.
I'll be honest with you: almost every single "SV success story" I can think of is boring. Advertisement, book shops, groceries, taxis, food delivery, none of this is particularly glamorous.
I don't know where people get this apocryphal wave of "nobody ever talks about boring things". Space X is pretty much the only non-boring "hip" company I can think of!
How much disruption has really happened in most of those cases though? And I'm not sure people on here are a reliable sample.
Mind you some of these (e.g. Warby Parker) have had a lot of success. It's just not clear to what degree they've really disrupted the mainstream of their industries.
And the beautiful myths then contribute to the ways that other (perhaps less experienced) entrepreneurs engage in self-sabotage. See “self-sabotage via avoiding a boring success”:
Maybe true, but the article is pretty much replacing what you'd call "career porn" with what I'd call "persistence porn." About the kid who walked in the snow wearing nothing but a t shirt every day to get his degree, yadda yadda.. ignore the fact that Sam Walton he had a rich stepdad who financed his businesses, that he was in a prestigious fraternity and secret society at UoM, and had a number of other benefits that are simply not available to your average hard-working chump.
> benefits that are simply not available to your average hard-working chump
What smart investor seeks out "average chumps" exactly? That's an excellent way to lose money. Your setup is a rather amusing contradiction.
You think the $200,000 (Walton put in $50,000) - inflation adjusted - that his step-father put in, was unavailable to everyone else and it made all the difference in Walton's success?
I grew up in an extremely poor part of the country, financing like that was available to a lot of business people. It's typically how most new small businesses that required any meaningful capital got started: other people in the community with money would invest, as banks would never risk their capital without collateral.
$250,000 is about what it costs to open a small convenience store.
The Ben Franklin store Walton opened and operated, was a very successful venture. His father-in-law made an extraordinarily smart investment. As it turns out, Walton wasn't an average chump.
That's all fine, and you're right: Sam Walton was talented and it was a smart investment. You've interpreted my "average hard-working chump" to mean "not a talented businessman" which is not what I meant. I just think that if you got a bunch of money from your father in law and were part of prestigious society that needs to be part of the story. If it's omitted, I have to think that the author is intentionally pushing an alternate but equally-inaccurate view of how success happens.
If someone builds their life and aspirations around what they read about in obvious works of fiction, we call them crazy.
If someone builds their career expectations and aspirations around what they gathered from Forbes, Techcrunch, or a TED talk, we call them entrepreneurs.
This is how most myths are born - by winners retro-actively rewriting history and including things like predestination, God's vision in their dreams (see https://en.wikipedia.org/wiki/Battle_of_the_Milvian_Bridge), being The Chosen One, etc as the reason for their success.
Today of course those are not appealing, and just sound crazy, so it is something like "I was just returning a late movie", "I was coming back from my yoga massage and had this idea...", etc.
The important part is that only after winning and looking back the history is rewritten. The boring things like plain luck, or maybe persistence, or enough resources (say because of inheriting money for example) to try some business idea multiple times, failing and try again until one sticks is just not a cool story.
Even more interesting is that not just the myth is born but anything the company did, all practices, rituals etc end up promoted as the cause of success. Anyone notice this? It's the cargo-culting of methodologies. Successful startup did some crazy development practice, but as soon as they become popular everyone starts copying that thinking "surely that is the main cause of their success". What if the successful startup could be have been even more successful without that practice, or maybe it had no impact at all.
How about copying personality traits. There was once a CTO I knew. He fancies himself to be like Steve Jobs. Except instead of copying persistence, intelligence, attention to details and design, understanding what would work and what won't for users, he just copied the part of being an asshole. The idea was that Jobs was an asshole, and look at Apple, that's how I'll have to act to make my company have the same success. It ended as well as you'd expect. Developers who didn't want to deal with that simply left and projects started tanking.
Having worked in a startup which eventually went on to become an unicorn (I left very early), I can attest to this personally. As a company becomes more successful, the narrative portrayed in media changes to present a good inspirational story - it never presents the countless challenges which eventually leads to its success.
Not to mention that you rarely hear some version of the, “We had the same good idea as some others, but we got lucky in a number of ways, including timing” truth. It just sounds better, and makes for a better book deal, to claim immense powers of foresight coupled with devastatingly effective business acumen.
It doesn't just stop at the successful startup stories. It's the same style of stories we face in products successful stories, job offers and love stories.
examples:
REGAINE (hair loss treatment) only works for some people, not everyone and if you use it consistently twice a day for the rest of your life.
A job at Google/Facebook/haskell job requires you to study day and night for algorithms/functional programming/implement a lot of random programs to get a hold of all of that.
This couple is in love for 50 years, and they ignore how they had lots of fights and had to have lots of compromises from each of them, with a lot of discipline to show care for each other to maintain this love over the years.
These folks got amazing new houses/entered StanfordU because they worked non stop for the past few years while not spending on other luxury items or they will work tirelessly for the rest of their live to pay the debt.
Well, he didn't exactly have the money. He borrowed $20k from his father in law and used $5k from his own military savings.
No small sum I suppose. (around $300k adjusted for inflation). But also not a "small million dollar loan". ($4 million inflation adjusted even IF it were true.)
But Sam's real story is not the rags to riches. It the brilliant and hard work that took him from riches to extraordinary success.
As did absolutely anyone and everyone who had money invested in Manhattan Real estate at the time. Trumps real business record is abysmal with a few gambles that paid off and it appears purely due to luck.
Additionally, when his father died, all that money was passed down. Had that amount of money been put in the S&P 500 at the time, trump would be far richer today.
When you turn a few million dollars into $4.5B you can come here and talk about “abysmal” records and stuff. With very few exceptions, any businessman would give their first born to have an abysmal record of this kind, and _then_ top it off by becoming POTUS.
0.001% of the country can multiply it hundred fold over the course of a few years. I have a million just sitting around in equities. I don’t know how to do it.
> Let's not ignore the fact that Sam Walton had enough cash to buy a department store at the age of 27. That helps too.
So poor people should never try to be an entrepreneur because the world is rigged against them? Well that surely will help reduce the wealth inequality.
OP didn't suggest that though. Many people have a black-and-white ideal in which entrepreneurship means making the next Facebook or Amazon and end up aiming too high for their own means.
This is why I love the How I Built This podcast. It tells the story of a successful founder from childhood to present day. It discusses early successes and failures that ultimately led to that person becoming an "overnight success" decades later. It doesn't try to build this narrative of them being one-hit wonders, it tells the truth. The truth, which isn't nearly as sexy as people would like, is that building a business takes time, hard work, and resilience.
I don't think it's fair to use that one small piece of Netflix lore as the counter example to the point of the article. I'd categorize Reed Hastings as having one of the more long-term views/strategies in tech and business in general, and he would be the first to say that Netflix became what it has become not because of the lightbulb moment, but because of the long slog they've endured to get where they are. Using that Netflix example comes across as clickbaity.
Not to mention, that particular Netflix myth has nothing to do with the importance of having a lightbulb moment. The point is to provide a north star for the company about the importance of always keeping the customer/user experience top of mind. By charging late fees that exceeded the value of a video, Blockbuster had lost sight of the customer experience, which contributed to Blockbuster's downfall. Meanwhile, maintaining its intense focus on the customer experience helped Netflix navigate what was an impressive shift from mailing DVDs to streaming video online.
I could be wrong, but I think the article is saying that the Netflix myth never happened and it is trying to posit that instead of looking at the instance of breakthrough as the beginning, look at the less sexy work and experience that got them to that point.
Granted, while Walton's was certainly successful, I think they'd be better served highlighting someone that had to cut bait on something professionally in the past and succeeded after adjusting because Walton's story reads like "bad thing happened -> keep trudging" infinitely.
Walmart gets a lot of flack for moving into small towns and ruining the existing stores. But the 1969 New York Times excerpt in the article mentions how Walmart was dominant in small, rural towns but was facing competition as "the industry's big guns are moving in". ("Big guns" being K-Mart, Gibson and Arlans. K-Mart declared bankruptcy in 2002, Gibson in 1996, and Arlan's in 1973.)
It's kind of mind-blowing to think that in 1969 Walmart was the local store needing to fight off the big chains. But now it's the exact opposite.
There has only ever been one serious problem with Walmart: it historically hasn't paid very well.
It's just starting to kinda-sorta catch up with Target and Costco in pay and benefits.
There's a pay trade-off that the Walmart critics go dramatically out of their way to avoid however. Costco can pay what they do, because their employee to sales ratio is extremely different from Walmart. Walmart employs a lot more people per dollar of sales, and operates a very different style of retail business. To match Costco's employee count to sales ratio, Walmart would have to fire a million people. If you ask the critics if they would like to see Walmart fire a million people so they can raise the wages for the other million, you'll get an immediate evasion in response.
Walmart's net income margin for 2016 was 2.8%, and that's typical for them. They get by on a razors edge. They do $485 billion in sales, and only have a $7 billion cash buffer (Twitter has $4.3 billion), while operating on that comically tiny margin. One bad slip, the entire thing collapses in a giant heap of red ink, and a million people lose their jobs instantly. Walmart's ability to survive long-term at such thin margins, is one of the great business stories of the last century.
The notion that Walmart destroys small towns is a crock. I believe only someone that has never actually lived in a poor small town, could claim that. This is what it's like working for a small town retailer: minimum wage, zero benefits, high likelihood of losing the job because the business goes under (pre-Walmart), zero upside potential at all for the employees. That's what small town retailers overwhelmingly looked like in the US from the 1950s through the 1990s, when Walmart reached saturation.
Oh, and Walmart raises the standard of living by drastically improving product selection and access in small towns. Small town retailers have horrible selection and pricing. Critics will claim Walmart's pricing power is a negative, when in fact it's a massive positive for the actual humans that live in small towns (versus the people on the outside that have never lived in a poor small town, that like to write articles from a million miles away and talk about small town retail poverty culture as though it's glorious and should be preserved).
So let's recap: Walmart raised wages, it improved selection, it lowered prices, it absorbed labor slack, it provided benefits, it provided a consistent and large base of employment.
Growing up I watched Walmart move into every corner of Appalachia. It was a vast improvement everywhere it went and it absorbed immense labor slack among low skilled workers. The notion that there was a paradise beforehand, is blatantly false.
Uh..i live in a relatively small town, and a lot of the local stores were better than walmart at wages and service, and had good selection. They just couldn't beat price due to being regional instead of nationwide chains. Stores like Benny's for example:
Wal-mart killed toy stores, I think too; better selection, but you can't beat them on price.
You can't compete with someone who can price things maybe even half of what you can because of scale. That means they replace the two or three retail department stores and many small specialist shops or niche stores in your region with one or two walmarts
It easier to survive on a 2.8% margin in that business, because it works by rapidly getting that 2.8% return on capital - and reusing that money to buy new product. They actually do that 8 times per year.
So than their real yearly returns on capital are close to 11.5%.
Local stores can't compete on price in areas where it moves it (usually rural areas where consumers are super price sensitive). So most of the local retailers go out of business, taking away a towns retail base and often hollowing out its downtown areas. Wal-Mart siphons all the profits to its corporate HQ, furthering weakening monetary flows in areas where inflows are already weak due to stagnating industry.
This leaves the small town dependent on Wal-Mart, and when Wal-Mart decides to close a town, the whole town is screwed because they don't have any retail left and no one has the means to rebuild it. The cherry on top is that Wal-Mart's square footage is almost always too big for anyone to take over, so the buildings generally sit there rotting until they're demolished
tl;dr walmart hollows out the retail base of small towns, leaving them super dependent and screwed if they ever leave
I always like the EDS founding story. Ross Perot started EDS with $1,000. They never mention he was a multimillionaire from being a top salesman for IBM. Big deal that he opened a bank account with $1,000.
Great point that these narratives are usually self-mythologizing and mostly untrue. Success is more than just a “eureka” moment where it all comes together. It is also more than the alternative that you present here, wherein the person succeeds purely by outworking the competition. A much more complete — and frankly, more interesting — picture of success would include the ideas, the hard work, and also explain how Walton’s early stores were financed by his father in law Leland Stanford Robson (who often paid his son-in-law’s bills, sometimes even without Walton’s knowledge), that he was active in Missouri’s fraternity communities, was a member of QEBH, the UoM secret society that also includes several past and current state governors as well as one of the founders of Kinder Morgan. If your aim is to demythologize success and present a more accurate view of the the path one must walk to become massively successful, isn’t it kind of misleading to omit Walton’s network of powerful family, friends, and benefactors?
I think it is a bit unfair to call them myths; they are narratives. All stories are narratives, you can't simply dump EVERY fact about a situation. There are infinite facts and details about how a company came to be, and telling the full story is impossible. Instead, we look at the story, pick a narrative we want to tell, and tell it.
You HAVE to do this when telling a story, and all stories do this. While it is true that believing the narrative tells the full story is incorrect, it is also incorrect to say these stories are 'myths'. They are just one part of the full story.
I don't know the truth of the matter, but the author of this article seems to be saying that the core idea at the heart of the Netflix founding narrative is, in fact, a myth. Whether that is the case or not, I don't know.
Either someone told me, or I read somewhere in a book, about how these things are called "business lies" and that it is supposedly OK to do in the name of making money
No harm no foul if everyone feels better about themselves right?
Having worked in a lot of shady businesses. I'd like to see the book that shows how most every company is pulling some really borderline (if not completely) illegal and unethical dealings to get ahead.
My first job as an auditor really opened my eyes (did some M&A work that blew my mind at the shit companies would try). Funny thing is the company I worked for (Andersen) got killed by their own shady dealings!
Is it? Perhaps the headline should be "Why You Should Ignore THIS Founder’s Story About How They Started Their Company"
I feel like if the author is going to make a broad generalization about founding stories, he should use more than 1 example. I don't count Netflix as one of his examples because he simply says "That didn’t actually happen." So to combat Reed saying this is how I started Netflix... the author just says "no" without any proof. Who am I going to believe? The founder or a blogger?
I guess that's subjective. I would have like to seen more proof to back up the argument.
The author provides proof that the Netflix startup story is about "rental fees" a long time ago. But then fails to provide any evidence that is not true.
The author then switches to Walmart to prove that founder stories are not true, but doesn't provide any evidence that people claim Walmart was an overnight success. Overall it's a bad article in my opinion.
The title is actually incredibly descriptive. The word myth has a fairly specific and precise meaning, which the author argues is a good match for typical founding stories. The title is a matter of fact and insightful observation.
One of my bosses had a chance to buy 25k in Wal-Mart stock or bonds. He chose the bonds because they were less risky.
He sold his company for ~17m in the late 90s (so he did fine). In the early 2000s he asked me for stock advice since he kept blowing 60k on penny stocks. I said put 10% of your money on Apple. I'm not 100% sure what's going on but it seems to be a pretty good bet.
Wish I'd followed my own advice instead of doing my first self funded startup (2003). I made about 4-5x my investment. Didn't realize how paltry that would look compared to my Apple advice :-)
As someone that's on startup #8 (about to fire my partner). They're never easy, they are fun (and stressful at times).
* It depicts something everyone fantasizes about and offers a quick if ultimately unsatisfying release. Who doesn't imagine themselves building something amazing and being idolized by magazines and the general public?
* It happens in an unrealistic sort of magical fairy land, often in the founder's own hazy, romanticized recollections of their past.
* It only shows beautiful companies/people. You don't need to found a space exploration company to be happy just like you don't need to be with a model.
* It offers no real guidance for how to achieve what it's depicting, leaving viewers confused at best and frustrated at worst. This article touches on the fact that people seem to think all they need is an idea, when that's not what it takes.
* It's most popular with those who are either frustrated with their careers/romantic lives, or are otherwise trying to satisfy a need they feel isn't being met. This one is a little shaky because plenty of people enjoy actual porn in healthy ways, so forgive me for the stretch.
The comparisons go on and on. How healthy your relationship with each is depends on how much exposure to the realities of each field you have had and how mature you are as a person/profession.