The San Francisco Fallacy: The Ten Fallacies That Make Founders Fail

by Jonathan Siegel

Sharing power and trying to make everyone happy diminishes the ability to take bold risks and make bold decisions.

People think visionary leadership is about convincing the markets. But you need strong leaders to take the kinds of stances and make the kinds of choices that are often unpopular within their companies.

Avoid this from the beginning by creating a clear hierarchy of leadership and equity.

This is why there’s an urgent need for a “failure boot camp.” This would teach you to make your own bespoke failure plan—a plan for how to identify when your company has failed and what to do to shut it down. Having a failure plan makes you no more likely to fail than having safety drills makes commercial airlines more likely to crash. You’re not planning to fail; you’re planning what to do if you

TAKEAWAY: HOW TO AVOID THE EXPERT FALLACY Beware of the experts. Don’t ignore them altogether, but look to them for targeted expertise, not systemic analysis. Experts, by definition, have bought into the system. If you want to create systemic change, they won’t help you.

The Idea Fallacy is the belief that inspiration, not perspiration, is the fount of creative success, whether in the arts, the creative industries, or in startups. It is the belief that the root of success lies in the idea rather than the execution—the belief that ideas have substantial intrinsic value—that they are the key item in the startup value chain.

This is counterintuitive to many first-time founders. Let’s say you have what you think is a brilliant business idea and you want to see if it’s viable. Which of these situations would you prefer to find? There are existing businesses with the same idea that are thriving. There are existing businesses with the same idea that are struggling. There are no businesses with that idea. First-time founders always answer (c). For me, the answer is always (a).

The “Failure Is Not an Option” Fallacy RightSignature was ultimately a great success, but that’s only in easy-to-see hindsight. Along the way, we had our wins—good conversion rate data and investor interest—but we also had our losses—such as times when we lost key customers and partners. We never treated RightSignature as if success were assured. Rather, we acted as if it could fail at any time. At our quarterly team meetings, we would discuss what would happen if we didn’t make our sales and earnings goals—and how our failure plan would work, if needed. Having that failure plan in the back pocket didn’t make us more likely to fail, but it allowed us the confidence of knowing that, if it came to it, we could shut down the business cleanly. That reassurance made for a calmer, more professional startup environment—and that, in turn, may have been a factor in our success. 5. The Expert Fallacy The nadir of the Expert Fallacy was when my own attorney refused to accept my e-signature on his documents. Had we asked his advice on RightSignature, we would have abandoned the business there and then. Like many an expert, he was so embedded in his field of expertise that he couldn’t see that the society and culture around him was shifting. The experts said that legal documents needed to be signed in hard copy; we sensed the culture was shifting. 6. The Idea Fallacy RightSignature launched into a field with at least two well-funded competitors. They had the same idea and were further ...