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The San Francisco Fallacy: The Ten Fallacies That Make Founders Fail
THE SAN FRANCISCO FALLACY IS NOT ABOUT SAN FRANCISCO.
Rather, it’s about the herd instincts that drive tech companies to set up shop there, and the mistakes these herd instincts lead to. Most importantly, it’s about how to avoid making these same mistakes yourself.
In The San Francisco Fallacy , serial entrepreneur and venture capitalist Jonathan Siegel looks at the 10 biggest fallacies that run through startup culture. Over his many years launching companies, he’s fallen victim to what he now recognizes as a series of common errors, misconceptions that bedevil startups to this day. But he also learned how to sidestep and surmount many of these challenges.
After multiple eight-figure exits and other startup successes, Jonathan began to see the deeper fallacies in which his failures took root. His biggest career successes, on the other hand, seemed to come when he and his teams went against the tide and did everything “wrong.”
This book is an examination of the popular belief system about startups. At its heart is a series of challenges to years of accumulated startup orthodoxy. What emerges is not just a critique but an inspiring call—to anyone trying to build a successful business—for a broader kind of critical thinking.
Rather, it’s about the herd instincts that drive tech companies to set up shop there, and the mistakes these herd instincts lead to. Most importantly, it’s about how to avoid making these same mistakes yourself.
In The San Francisco Fallacy , serial entrepreneur and venture capitalist Jonathan Siegel looks at the 10 biggest fallacies that run through startup culture. Over his many years launching companies, he’s fallen victim to what he now recognizes as a series of common errors, misconceptions that bedevil startups to this day. But he also learned how to sidestep and surmount many of these challenges.
After multiple eight-figure exits and other startup successes, Jonathan began to see the deeper fallacies in which his failures took root. His biggest career successes, on the other hand, seemed to come when he and his teams went against the tide and did everything “wrong.”
This book is an examination of the popular belief system about startups. At its heart is a series of challenges to years of accumulated startup orthodoxy. What emerges is not just a critique but an inspiring call—to anyone trying to build a successful business—for a broader kind of critical thinking.
146 pages, Kindle Edition
Published May 7, 2017
68 people are currently reading
332 people want to read
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Displaying 1 - 23 of 23 reviews
April 29, 2022
I currently work for a startup, we're launching in a few days and it's terrifying. This book is just what I needed to get me going. It has plenty of personal examples and heart, as well as very useful advice for people in my position. So maybe you mess up, so maybe you let your ego take over, so maybe you're afraid to say No to your cofounder, so maybe no one wants to pay for what you provide. It's ok, it's not the end of the world. Learn and move on. It does not have to be perfect, it has to get going.
June 25, 2017
Great book. Required reading for every startup founder.
December 14, 2017
great short book for entrepreneurs
great short book for entrepreneurs and new investors about startups and about lessons author learned based on his experiences as entrepreneurs and business angel later. and nice illustrations!
great short book for entrepreneurs and new investors about startups and about lessons author learned based on his experiences as entrepreneurs and business angel later. and nice illustrations!
May 21, 2017
Favorite quote "...the American dream isn't a fantasy of steady, incremental growth --it's a dream of celebrity, stardom, and riches."
What a great lens to look at our own beliefs and patterns of behavior.
What a great lens to look at our own beliefs and patterns of behavior.
May 17, 2017
Applied to so much more than San Fransisco
Great points, just enough details and story to support them with out dragging on. Worth a read for anyone one considering or running a tech startup and not just in SF
Great points, just enough details and story to support them with out dragging on. Worth a read for anyone one considering or running a tech startup and not just in SF
September 12, 2017
"The San Francisco fallacy is not about San Francisco"
The back cover says it all. This is a nice short 129 page read with comics and wide double spaced print that you can easily finish on half a Trans-Atlantic flight. Siegel takes you through the 10 fallacies he's uncovered over his career in consulting, failed startups, successful startups, and investing. I really enjoyed the comics and quotes starting every chapter. The following fallacies are illuminated with personal anecdotes and advice for seasoned and beginning entrepreneurs:
(1) The Tech Fallacy - The belief that your technology is all important.
(2) The Democracy Fallacy - The belief that good teams - and therefore startup companies - should share leadership and equity.
(3) The Investment Fallacy - The belief that securing investment is a mark of achievement.
(4) The "Failure Is Not an Option" Fallacy - The idea that success comes to those that don't consider failure.
(5) The Expert Fallacy - The belief that experts know best.
(6) The Idea Fallacy - The idea that inspiration counts more than perspiration
(7) The Scale Fallacy - The belief that the only thing that counts in the tech startup world is a product that can scale.
(8) The L'Oreal Fallacy - The belief that you shouldn't accept anything less than you're "worth".
(9) The Quality Fallacy - The idea that quality is a higher moral goal, that you should focus on quality first.
(10) The Passion Fallacy - The belief that passion is the key ingredient behind an idea and a product
(Bonus) The San Francisco Fallacy - Don't move to San Francisco (it's not even relevant compared to the other ones, just two pages, an "obviously" if you've gotten this far in the book)
All the fallacies extend from groupthink (*cough* TechCrunch *cough*) of our wild and wacky media driven startup company world. It's a fun book to read. Lot's of thinking and advice for very few words. Even for "startup veterans" it's so easy to fall for the fallacies in side projects and outside of core business.
The biggest takeways:
- freaking do everything you can to test your market before building a product, google adwords, landing pages, pricing tests, etc...
- remove the emotion between you and your business
- plan for failure so you can avoid it
- equality slows down decision making
- consulting is an unsexy but beneficial sustainability in life
Again, it's all about the market. Startup entrepreneurs are market scientists more than anything else.
Which makes you wonder. What about Blockchain companies? Tech Fallacy? Passion Fallacy? Idea Fallacy? This will be a fun one to watch play out. :)
The back cover says it all. This is a nice short 129 page read with comics and wide double spaced print that you can easily finish on half a Trans-Atlantic flight. Siegel takes you through the 10 fallacies he's uncovered over his career in consulting, failed startups, successful startups, and investing. I really enjoyed the comics and quotes starting every chapter. The following fallacies are illuminated with personal anecdotes and advice for seasoned and beginning entrepreneurs:
(1) The Tech Fallacy - The belief that your technology is all important.
(2) The Democracy Fallacy - The belief that good teams - and therefore startup companies - should share leadership and equity.
(3) The Investment Fallacy - The belief that securing investment is a mark of achievement.
(4) The "Failure Is Not an Option" Fallacy - The idea that success comes to those that don't consider failure.
(5) The Expert Fallacy - The belief that experts know best.
(6) The Idea Fallacy - The idea that inspiration counts more than perspiration
(7) The Scale Fallacy - The belief that the only thing that counts in the tech startup world is a product that can scale.
(8) The L'Oreal Fallacy - The belief that you shouldn't accept anything less than you're "worth".
(9) The Quality Fallacy - The idea that quality is a higher moral goal, that you should focus on quality first.
(10) The Passion Fallacy - The belief that passion is the key ingredient behind an idea and a product
(Bonus) The San Francisco Fallacy - Don't move to San Francisco (it's not even relevant compared to the other ones, just two pages, an "obviously" if you've gotten this far in the book)
All the fallacies extend from groupthink (*cough* TechCrunch *cough*) of our wild and wacky media driven startup company world. It's a fun book to read. Lot's of thinking and advice for very few words. Even for "startup veterans" it's so easy to fall for the fallacies in side projects and outside of core business.
The biggest takeways:
- freaking do everything you can to test your market before building a product, google adwords, landing pages, pricing tests, etc...
- remove the emotion between you and your business
- plan for failure so you can avoid it
- equality slows down decision making
- consulting is an unsexy but beneficial sustainability in life
Again, it's all about the market. Startup entrepreneurs are market scientists more than anything else.
Which makes you wonder. What about Blockchain companies? Tech Fallacy? Passion Fallacy? Idea Fallacy? This will be a fun one to watch play out. :)
December 31, 2017
‘Failure is not a choice: it is an outcome.’
I recommend this book to all Entrepreneurs. Jonathan is one of the most fascinating and sharpest people I’ve met since becoming a Founder. He has that rare mix of deep technical, product and commercial experience and the lessons in this book are something I wish I’d access to when starting out.
I recommend this book to all Entrepreneurs. Jonathan is one of the most fascinating and sharpest people I’ve met since becoming a Founder. He has that rare mix of deep technical, product and commercial experience and the lessons in this book are something I wish I’d access to when starting out.
January 11, 2023
Here's a summary of the content. I initially wrote it for my own notes, so I didn't capitalize things properly:
short and sweet, more like a long blog post than a book. very practical sounding, simple advice, in the form of 11 fallacies (here phrased in terms of the refutation):
- sf fallacy: don't assume you need to be in sf with everyone else. starting your company somewhere else will be cheaper, and you'll have less competition for hiring talent. in general, avoid herd mentality.
- idea fallacy: idea's aren't very important, execution is what matters. indeed, the fact that other people already have your idea / there are already established competitors actually validates your idea by proving the existence of market demand.
- expert fallacy: experts can't tell you how to innovate in a new market, they can only tell you how an existing market works. they're invested in the status quo, and favor complexity.
- l'oreal fallacy [no idea why it's called this??]: your company is not worth what you think it's worth, it's worth what buyers will pay you for it. often, especially if you're not already financially independent and established, you should take any exit you can get. having a successful exit brands you as a successful founder, and can help open doors for you in the future. it also gives you capital to start your next company.
- investment fallacy: outside investment is not a sign of success, and it changes the incentives and strategy of your company. if you don't have vc money you can aim for low level success, but vc's would rather aim for a home run, at the cost of failure being the most likely outcome. the vc's will also block early acquisitions, that could be life changing to you as an individual.
- quality fallacy: quality is not an end in itself, and instead you should create an mvp (minimum viable product) and go to market as soon as possible. it doesn't matter how good your product is if no one wants it.
- tech fallacy: good tech is not an end in itself, you need to create what the market wants, not what's the "best" design in some pure sense. rather, create an mvp as quickly as possible and bring it to market. if the markets validates your idea, then you can improve it as needed. [maybe: the "fail whale" is a sign of success?].
- the passion fallacy: it doesn't matter much how passionate the founders are about the product, and in some cases passion is a liability, since it can cloud judgment. what matters is that the market desires your product, and that you have the capacity to execute.
- the failure is not an option fallacy: most companies fail. be ready for failure, figure out what constitutes failure for you, and how you'll wind things down. this is not "planning to fail", but it will make things much smoother, and avoid wasted time and capital.
- the democracy fallacy: a startup is not a democracy, and the founders shouldn't have equal equity. rather, someone needs to be in charge, and with more responsibility comes more equity.
- the scale fallacy: it's okay to create something that can't scale to become the google of X / a service business is just fine. not only are there more opportunities for service businesses (by definition: no one player can easily scale to dominate the whole market), but they can provide steady, reliable income while you work on a "scalable moonshot" on the side.
a general message is that you need to focus on the following questions, as early as possible:
- is there a market for your product?
- how much does it cost you to acquire customers?
- how much revenue does a customer generate / how much are customers
willing to pay you?
- how many customers are there?
a good way to answer all these questions is to pay e.g. google adwords to direct traffic to various landing pages you create. you can create these landing pages before you even have an mvp. different landing pages can offer different price plans, and you can use this data to graph customer conversion rate vs price. you can use the landing pages to collect customer emails for beta testing, or offer early sign up promotions. if you're successful at this stage, it doesn't prove you'll actually be successful with a real product, but failure here is a strong negative signal, indicating that you should probably abandon your idea and work on something else.
short and sweet, more like a long blog post than a book. very practical sounding, simple advice, in the form of 11 fallacies (here phrased in terms of the refutation):
- sf fallacy: don't assume you need to be in sf with everyone else. starting your company somewhere else will be cheaper, and you'll have less competition for hiring talent. in general, avoid herd mentality.
- idea fallacy: idea's aren't very important, execution is what matters. indeed, the fact that other people already have your idea / there are already established competitors actually validates your idea by proving the existence of market demand.
- expert fallacy: experts can't tell you how to innovate in a new market, they can only tell you how an existing market works. they're invested in the status quo, and favor complexity.
- l'oreal fallacy [no idea why it's called this??]: your company is not worth what you think it's worth, it's worth what buyers will pay you for it. often, especially if you're not already financially independent and established, you should take any exit you can get. having a successful exit brands you as a successful founder, and can help open doors for you in the future. it also gives you capital to start your next company.
- investment fallacy: outside investment is not a sign of success, and it changes the incentives and strategy of your company. if you don't have vc money you can aim for low level success, but vc's would rather aim for a home run, at the cost of failure being the most likely outcome. the vc's will also block early acquisitions, that could be life changing to you as an individual.
- quality fallacy: quality is not an end in itself, and instead you should create an mvp (minimum viable product) and go to market as soon as possible. it doesn't matter how good your product is if no one wants it.
- tech fallacy: good tech is not an end in itself, you need to create what the market wants, not what's the "best" design in some pure sense. rather, create an mvp as quickly as possible and bring it to market. if the markets validates your idea, then you can improve it as needed. [maybe: the "fail whale" is a sign of success?].
- the passion fallacy: it doesn't matter much how passionate the founders are about the product, and in some cases passion is a liability, since it can cloud judgment. what matters is that the market desires your product, and that you have the capacity to execute.
- the failure is not an option fallacy: most companies fail. be ready for failure, figure out what constitutes failure for you, and how you'll wind things down. this is not "planning to fail", but it will make things much smoother, and avoid wasted time and capital.
- the democracy fallacy: a startup is not a democracy, and the founders shouldn't have equal equity. rather, someone needs to be in charge, and with more responsibility comes more equity.
- the scale fallacy: it's okay to create something that can't scale to become the google of X / a service business is just fine. not only are there more opportunities for service businesses (by definition: no one player can easily scale to dominate the whole market), but they can provide steady, reliable income while you work on a "scalable moonshot" on the side.
a general message is that you need to focus on the following questions, as early as possible:
- is there a market for your product?
- how much does it cost you to acquire customers?
- how much revenue does a customer generate / how much are customers
willing to pay you?
- how many customers are there?
a good way to answer all these questions is to pay e.g. google adwords to direct traffic to various landing pages you create. you can create these landing pages before you even have an mvp. different landing pages can offer different price plans, and you can use this data to graph customer conversion rate vs price. you can use the landing pages to collect customer emails for beta testing, or offer early sign up promotions. if you're successful at this stage, it doesn't prove you'll actually be successful with a real product, but failure here is a strong negative signal, indicating that you should probably abandon your idea and work on something else.
June 12, 2017
elsker bøger, der bekræfter mine egne fordomme. Og dette er bestemt én af dem. For hvordan kan man ikke elske en bog, der adresserer al den kritikløse hype, der er omkring Silicon Valley og hele start-up kulturen?
Allerede da jeg næste det første kapitel - at det ALDRIG handler om teknologi for teknologiens skyld - vidste jeg, at dette var en god bog. Og sådan fortsætter den. Visse dele kan være lidt irrelevante, hvis man ikke selv er entreprenør, men generelt er den vedkommende. Og så har den lige præcis en længde, hvor man holder ved og ikke bliver træt.
Skal man sige én negativ ting om bogen er det, at der som sådan ikke er så meget nyt i den. Den bekræfter, hvad vi (os der er kritiske, se starten ovenfor) allerede ved. Men det skader ikke at få det sagt igen og igen - og vel at mærke af folk, der selv har oplevet det på egen krop. Måske - måske - er der til sidst nogle, der lytter.
Allerede da jeg næste det første kapitel - at det ALDRIG handler om teknologi for teknologiens skyld - vidste jeg, at dette var en god bog. Og sådan fortsætter den. Visse dele kan være lidt irrelevante, hvis man ikke selv er entreprenør, men generelt er den vedkommende. Og så har den lige præcis en længde, hvor man holder ved og ikke bliver træt.
Skal man sige én negativ ting om bogen er det, at der som sådan ikke er så meget nyt i den. Den bekræfter, hvad vi (os der er kritiske, se starten ovenfor) allerede ved. Men det skader ikke at få det sagt igen og igen - og vel at mærke af folk, der selv har oplevet det på egen krop. Måske - måske - er der til sidst nogle, der lytter.
July 18, 2022
Awesome read many great sobering insights that really should be obvious but they’re not!
This is a really good quick read. It really cuts through all the glitz and glamour and mystique surrounding the San Francisco Bay Area and it’s startup founders. The difference between the successful and the unsuccessful is those who listen to their market. Not those who listen to the 20/20 hindsight, and self-aggrandizing quips of Jobs or Musk or some other wunderkind unicorn founder who’s success is 1 in a million. This book really gives you great insight on the mindset needed to succeed and it really allows you to see a path for how success could be possible. It’s not a pocket MBA book per se but when it comes to the basics of how to think about building a successful start up, this book is invaluable. Highly recommend.
This is a really good quick read. It really cuts through all the glitz and glamour and mystique surrounding the San Francisco Bay Area and it’s startup founders. The difference between the successful and the unsuccessful is those who listen to their market. Not those who listen to the 20/20 hindsight, and self-aggrandizing quips of Jobs or Musk or some other wunderkind unicorn founder who’s success is 1 in a million. This book really gives you great insight on the mindset needed to succeed and it really allows you to see a path for how success could be possible. It’s not a pocket MBA book per se but when it comes to the basics of how to think about building a successful start up, this book is invaluable. Highly recommend.
August 26, 2017
Voice of Reason
In all the hype to start and grow massive tech companies, this book is the voice of reason--and the voice of experience. He gets right to the point, shares just enough examples to be credible, and moves on the next point (unlike many books I've read that have 3-5 examples for every idea).
Don't over value the idea (execution is more critical), find out if there is a market before you build it, passion for your product can actually blind you to the reality of your company...it's the un-fun, honest maturity that leaders of many companies--not just startups--would be wise to think about.
In all the hype to start and grow massive tech companies, this book is the voice of reason--and the voice of experience. He gets right to the point, shares just enough examples to be credible, and moves on the next point (unlike many books I've read that have 3-5 examples for every idea).
Don't over value the idea (execution is more critical), find out if there is a market before you build it, passion for your product can actually blind you to the reality of your company...it's the un-fun, honest maturity that leaders of many companies--not just startups--would be wise to think about.
May 17, 2017
Sharp, direct and frank story told over the drink
Reading through conscious, log-like pages, I appreciated the "Ten Fallacies" as much as once-in-a-lifetime kind of conversation... the kind of a life-changing story over the glass of red or a pint of beer at an upscale hotel's bar when you're on a business trip... told by a guy whom you know you trust from the moment you start random talk... but you know that you'd hardly ever see him again, you know.
This trust feeling and sharp, direct story-telling, is brilliant!
Truly thankful, and cheers to that!
Reading through conscious, log-like pages, I appreciated the "Ten Fallacies" as much as once-in-a-lifetime kind of conversation... the kind of a life-changing story over the glass of red or a pint of beer at an upscale hotel's bar when you're on a business trip... told by a guy whom you know you trust from the moment you start random talk... but you know that you'd hardly ever see him again, you know.
This trust feeling and sharp, direct story-telling, is brilliant!
Truly thankful, and cheers to that!
May 18, 2017
This was a quick, easy read and to be honest, if it wasn't, I probably would not have come close to finishing it either.
There are many things in the book that resonates with me, but none of them felt new. In fact, I'd heard these things in other places many times in the past.
Furthermore, I'm by no means a San Francisco aficionado and am cautious of its groupthinking. But this book almost feels unfair in how it has blamed SF / Silicon Valley for the bad choices of many tech entrepreneurs worldwide.
There are many things in the book that resonates with me, but none of them felt new. In fact, I'd heard these things in other places many times in the past.
Furthermore, I'm by no means a San Francisco aficionado and am cautious of its groupthinking. But this book almost feels unfair in how it has blamed SF / Silicon Valley for the bad choices of many tech entrepreneurs worldwide.
July 25, 2017
Jonathan Siegel writes a concise, practical, and needed counterpunch to conventional Silicon Valley wisdom - but even more so, an outline of wisdom from several failures leading to eventual success in the startup game.
While the title might imply a complete reversal of conventional wisdom, since the publication of this book his concepts have clearly permeated SV startup culture and can now be considered part of the founder canon. The lessons on minimum viable product (MVP) and pre-product research and testing are particularly valuable. His recollection of his failures and the reasons for them are instructive and practical, translated into points of advice anyone can apply.
This book is a must-read for any would-be founder or entrepreneur.
While the title might imply a complete reversal of conventional wisdom, since the publication of this book his concepts have clearly permeated SV startup culture and can now be considered part of the founder canon. The lessons on minimum viable product (MVP) and pre-product research and testing are particularly valuable. His recollection of his failures and the reasons for them are instructive and practical, translated into points of advice anyone can apply.
This book is a must-read for any would-be founder or entrepreneur.
March 10, 2018
This was a quick read that I enjoyed. Jonathan describes the start up experience in a way that I relate to closely, not least because I was there with him for at least three of his stories. The lessons that he lays out are understandable and jive many lean startup principles that have gained attention in recent years.
As an introduction to the ups and downs of startup and the sometimes brutal truth of what building a business requires I would recommend this book.
As an introduction to the ups and downs of startup and the sometimes brutal truth of what building a business requires I would recommend this book.
December 27, 2017
A fast, informative read on some ways to think about starting and building a company. Given the focus on how SF is both the heart of the tech industry but also a huge drag on actually building a company, it’s topical and a useful heresy.
There’s plenty of good advice in here for any founder, and I’d recommend it for anyone at an early stage.
There’s plenty of good advice in here for any founder, and I’d recommend it for anyone at an early stage.
June 8, 2017
Great, quick read
An insightful story laced with 10 fallacies that are sure to derail your first, second, and third startups before you learn them in the field. Better to grab this book and memorize them, they'll save you a lot of pain!
An insightful story laced with 10 fallacies that are sure to derail your first, second, and third startups before you learn them in the field. Better to grab this book and memorize them, they'll save you a lot of pain!
July 23, 2017
Practical, to the point, sensible advice.
August 4, 2017
Nicely written with good insight, easy to remember stories. Even makes for nice holiday reading ;) The most valuable insights for me - the passion fallacy.
September 16, 2017
Great quick read, with some no BS tips & practical advice to think about when starting a business.
September 6, 2018
Wow incredible book
Just read it will thank later. So many valuable advices for startupers and entrepreneurs. Tech fallacy is my favorite. Super!!!
Just read it will thank later. So many valuable advices for startupers and entrepreneurs. Tech fallacy is my favorite. Super!!!
April 16, 2020
Short, sweet, and poignant.
It reinforces that failure is the best teacher. And that those who succeed in business are willing to start over - over and over again - after failing.
It reinforces that failure is the best teacher. And that those who succeed in business are willing to start over - over and over again - after failing.
July 23, 2022
Short but powerful and very practical book on tech startup and the big errors being made by founders. I have noted down things in almost every page
Displaying 1 - 23 of 23 reviews