FF Insights #603: A fairy tale called startup

March 4, 2022: The state of nuclear fusion; Putin’s inner circle; Hooked

Founding Fuel

[From Unsplash]

Good morning,

Jason Fried and David Hansson, the founders of Basecamp, run a tight ship and make profits. Their lessons from the road are worth visiting and re-visiting. Much of it is documented in their book ReWork: Change the Way You Work Forever. And their notes on startups had us chuckling the other day—it’s full of pithy wisdom.     

“Ah, the startup. It’s a special breed of company that gets a lot of attention (especially in the tech world). 

“The startup is a magical place. It’s a place where expenses are someone else’s problem. It’s a place where that pesky thing called revenue is never an issue. It’s a place where you can spend other people’s money until you figure out a way to make your own. It’s a place where the laws of business physics don’t apply. 

“The problem with this magical place is it’s a fairy tale. The truth is every business, new or old, is governed by the same set of market forces and economic rules. Revenue in, expenses out. Turn a profit or wind up gone.

“Startups try to ignore this reality. They are run by people trying to postpone the inevitable, i.e., that moment when their business has to grow up, turn a profit, and be a real, sustainable business. Anyone who takes a ‘we’ll figure out how to profit in the future’ attitude to business is being ridiculous. That’s like building a rocket ship but starting off by saying, ‘Let’s pretend gravity doesn’t exist.’ A business without a path to profit isn’t a business, it’s a hobby.

“So don’t use the idea of a startup as a crutch. Instead, start an actual business. Actual businesses have to deal with actual things like bills and payroll. Actual businesses worry about profit from day one. Actual businesses don’t mask deep problems by saying, ‘It’s OK, we’re a startup.’ Act like an actual business and you’ll have a much better shot at succeeding.

“Another thing you hear a lot: ‘What’s your exit strategy?’ You hear it even when you’re just beginning. What is it with people who can’t even start building something without knowing how they’re going to leave it? What’s the hurry? Your priorities are out of whack if you’re thinking about getting out before you even dive in.

“Would you go into a relationship planning the breakup? Would you write the prenup on a first date? Would you meet with a divorce lawyer the morning of your wedding? That would be ridiculous, right?

“You need a commitment strategy, not an exit strategy. You should be thinking about how to make your project grow and succeed, not how you’re going to jump ship. If your whole strategy is based on leaving, chances are you won’t get far in the first place.”

The state of nuclear fusion [FF Exclusive]

In his latest Letter from London, our strategic analyst, who writes under the pen name, Samuel Pepys, explains the importance of the recent big news on nuclear fusion: “EuroFusion, the Oxfordshire research programme, had generated the most amount of energy that ever came from a nuclear-fusion machine. It was a breakthrough, the experts said, one that took humanity one baby step closer to building a commercial fusion power plant.” 

Following a must-read explainer, Pepys cautions us not to get too excited. He writes, “Nuclear scientists don’t tell many jokes, but there’s one that cracks them up interminably. You can hear it in seminars and workshops, in press interviews and YouTube videos. You can read it in almost every article on the subject. It goes like this: ‘Nuclear-fusion power is just 30 years away, and always will be.’

“It’s not a great joke, but is quite descriptive of a field of science notorious for its failed promises and missed deadlines. Fusion is where the careers of three generations of scientists have gone to die. Billions of dollars spent on research have gone down the drain without producing even a functional prototype of a power plant, piling pressure on governments from the US to Europe to channel funds into other areas where results are more forthcoming. Fusion project managers, themselves, are guilty of overpromising and underdelivering. They are typically flashy characters, overly optimistic and constantly fund-seeking. They pledge unrealistically tight timelines and invariably disappoint when the results are due. Media hysteria over fusion erupts once a decade or so, mostly whipped up by these project managers, and then falls silent under the weight of failures.”

That again should not keep us from appreciating the significance of the technology itself. He writes, “It can save the planet from climate change and energy crises. And it can do so in a safe, cheap and sustainable manner. A world where not a drop of oil is burned and no corner goes unlit is a prize so big that we can’t afford not to take this gamble. The latest breakthroughs are evidence that fusion is not fiction but a reality waiting to happen.”

Dig deeper

Putin’s inner circle

Most of us would have seen the clipping from the Russian security council meeting, where Putin reprimands its spy chief Sergei Naryshkin. BBC covers that episode in a piece that gives us a glimpse of the people who are running the war against Ukraine. 

“Completing the trio of old Leningrad spooks, Sergei Naryshkin has remained alongside the president for much of his career.

“What, then, should we make of a remarkable dressing down he was subjected to when he went off-message during the security council meeting?

“When asked for his assessment of the situation, the intelligence chief became flustered and fluffed his lines, only to be told by the president: ‘That's not what we're discussing.’

“The lengthy session was edited so the Kremlin had clearly decided to show his discomfort in front of a big television audience.

“‘It was shocking. He's incredibly cool and collected so people will have asked what's going on here,’ Ben Noble told the BBC. Mark Galeotti was struck by the toxic atmosphere of the whole occasion.

“But Andrei Soldatov thinks he was simply enjoying the moment: ‘Putin loves playing games with his inner circle, making him [Naryshkin] look a fool.’”

Dig deeper


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Warm regards,

Team Founding Fuel

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Founding Fuel

Founding Fuel aims to create the new playbook of entrepreneurship. Think of us as a hub for entrepreneurs- the go-to place for ideas, insights, practices and wisdom essential to build the enterprise of tomorrow. It is co-founded by veteran journalists Indrajit Gupta and Charles Assisi, along with CS Swaminathan, the former president of Pearson's online learning venture.

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