Don’t let your Children do a Startup, Mrs Worthington…

Noel Coward, the English playwright and actor, described the motivation behind writing his most famous song as: “Some years ago when I was returning from the Far East on a very large ship, I was pursued around the decks every day by a very large lady. She showed me some photographs of her daughter – a repellent-looking girl, and seemed convinced that she was destined for a great stage career.  Finally, in sheer self-preservation, I locked myself in my cabin and wrote this song – “Don’t Put Your Daughter On The Stage, Mrs. Worthington”. 

I know how he felt. As I spend more and more time in meetups, startup conferences, incubators, co-working spaces and accelerators, it feels that our industry has adopted the same rose-tinted spectacles in the belief that every Tom, Dick and Harriet can be trained to be an entrepreneur.  Hence the following update:

Don’t let your Children do a Startup, Mrs Worthington.

Don’t let your children do a startup, Mrs Worthington,
Don’t fund their crazy, young ideas.
Though they may have shown some promise
At their expensive schools.
When they stand up to pitch and it’s glitch after glitch
You’ll see they’re simply fools.
They’ve got good teeth.
And know the worth of dental floss, but past the smile it’s mental dross
Which amplifies my fears.
Consider these, Mrs Worthington.
Please, Mrs Worthington,
Don’t fund your children’s mad ideas.

Don’t let your children do a startup, Mrs Worthington,
Please stop this madness if you can.
They’re not a Jobs or Zuckerberg, a Musk, a Gates or Dell.
But they’re making a dash which will burn all your cash
With a business plan from hell.
They’re good with fonts.
And the VCs said their latest pack looked nice; until they saw the lack
Of any Exit Plan.
Which makes it clear, Mrs Worthington.
Dear Mrs Worthington,
Please stop this madness if you can.

Don’t let your children do a startup, Mrs Worthington,
Don’t get seduced by all those trends.
They’ve been incubated, fast-tracked, accelerated on.
Now they’ve no common sense, but their ego’s immense
And they think they can’t do wrong.
They’re on LinkedIn.
And they almost hit their target on Kickstarter, but their market
Was just their Facebook friends.
It’s a fact, Mrs Worthington.
Act, Mrs Worthington.
Don’t get seduced by all these trends.

Don’t let your children do a startup, Mrs Worthington,
Don’t back your vapid little dears.
In San Francisco coffee shops, in Shoreditch and Berlin,
With their iPhones and Macs, and their meetups and hacks
They’re ready to begin.
They know no fear.
They’ve learnt no wider business view because, I’m sad it say it, you
Have spoilt them all these years.
It’s a crime, Mrs Worthington.
Time, Mrs Worthington,
Don’t let your future disappear.

Don’t let your children do a startup, Mrs Worthington,
Don’t let them fool you any more.
Once they’ve found there’s not an iPhone app which makes their startup grow,
That they can’t sit and shirk, that they have to do work –
A concept they don’t know,
They’ll come back home.
And your dreams of quiet retirement will be killed by the requirement
To look after them once more.
Have some sense, Mrs Worthington.
Hence, Mrs Worthington.
Please show their startup plans the door.

(If you don’t know the original, you can hear it here.)

I have to admit that it has become rather easy to parody the excesses of today’s startup culture and for an excellent example, you really need to read Bob Vulfov’s absolutely brilliant rant “Welcome to our startup where everyone is 23 years old because we believe old people are visually displeasing and out of ideas”.

However, there is a more serious point, which is why we’re putting so much effort into supporting young startups.  It’s easy to see why the VC community likes this approach, as they’re basically gambling on odds.  They look at the few unicorns which were established by founders in their twenties, such as Facebook and Snap, generating billions of dollars for their investors and hope that by throwing peanuts to the many, there will be one or two that succeed and make them a stupendous profit.  But there are some problems here.  Firstly, there are precious few that do succeed.  Back in 2012, the Kaufmann Institute analysed the success rate of Venture Capital funds in their report “We have met the enemy and he is us”.  Looking back over twenty years of VC investment, they found that only 13% of the larger VC funds delivered a return that was better than that of a publicly traded small cap index.  If you dig down into the unicorns you’ll also see a very small number of successful VC funds which funded the successes, mostly by backing serial entrepreneurs.  The number of unicorns that have emerged from inexperienced founders is vanishingly small.

The second problem is that a few unicorns don’t do that much for the economy.  We need startups, as they provide future employment and tax revenue.  Every country needs a steady supply of decently paid jobs from companies which last more than a few years.  It doesn’t matter whether they’re in the high tech sector or not – a Government just needs to reliably be able to collect tax from companies, their employees and the ecosystem that grows up to service those companies.  Unicorns don’t have a great track record in doing that.  So Governments should be asking what sort of startups they really need to be supporting.

Freddy Mercury famously made the comment that “talent will out”, and that tends to be the case in successful startups.  But the talent generally comes from experience or hard graft.  Precious few of the entrepreneurs that our startups aspire to be were nurtured in the way the current crop are.  Those successful founders left university, school or their jobs to pursue their vision and kept on until they succeeded.  Which brings me to the third issue, which is that we are bringing up a generation who have never been allowed to fail.  There’s a great article by Tim Urban on “Why Generation Y Yuppies are Unhappy”, pointing out that the baby boomer generation has produced a cohort of children who think they’re special and deserve instant success.  They’ve been nurtured for all of their life, loaded with debt and provided with very few of the tools they need to achieve anything.  If I look around the startup culture, working spaces and incubators, I don’t see the seeds of the next generation of business.  Many of the pitches I’ve heard from events like FYFN – Four Years from Now (or should it be Never?), sound rather reminiscent of the ‘60s and ‘70s Miss World contests, where there’s a vague idea that they need to save the world.  Looking at the money being heaped on this – Paris’ new Station F is a prime example, makes it feel like an attempt from their elders to further insulate them from reality and keep them off the unemployment register.  And you have to ask whether anyone who sees no issue with paying $4 for a coffee and $10 for a slice of artisan pizza really has the financial acumen to run a company?

What started with a satirical poke has a serious message.  VCs can play this game – venture capital is just another form of gambling.  But Governments should not.  We need startups, but we need to look at a more efficient way of generating real companies that produce jobs and tax revenue.  There’s not an app for that – it involves hard work.  And the longer we continue to celebrate and support inexperience, the longer it will take us to get there.