The “Garage Startup” Is Officially Dead

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The “Garage Startup” Is Officially Dead

Are you ready for what’s coming next?

The “Garage Startup” Is Officially Dead
Photo by John Paulsen on Unsplash

The concept of the garage startup comes from Silicon Valley culture. It’s a reference to the fact that some of the world’s most successful and iconic tech companies had their first headquarters in — you guessed it — garages.

Examples of garage startups include companies like Apple, Amazon, Microsoft, Hewlett-Packard, and Google. You may have heard of them?

Garages aren’t just settings for the mythic origins of some of the world’s most famous tech companies. Plenty of other well-known, non-tech businesses also trace their roots to similar types of spider-infested sheds including companies like Mattel and Harley Davidson. Though, to be fair, I suppose it makes sense that Harley Davidson would have started in a garage.

In any case, the myth of the garage startup is an enduring part of entrepreneurial culture. In Silicon Valley and other startup communities around the globe, garages have evolved into a sort of ideal. They represent a cheap space where a few motivated founders can gather together in order to build something they believe can eventually change the world. However, thanks largely to the success of garage startups themselves, the weaknesses of the garage startup paradigm are becoming hard to overlook. Today, founders have a better option.

In their heyday, garage-based startups were a way for founders to be efficient. By starting companies in inexpensive garages, founders could invest more of their money and resources into the technologies they were building. Because of this, they crammed themselves into the dirtiest parts of their (or their parents’) houses and spent months (or years) developing a product. Once that product was ready, they put enormous amounts of effort into marketing and sales.

The result of this garage-centered approach to entrepreneurship was a business paradigm that looks liked this:

In the above model, notice how the product is at the center of the company, and all the work and effort of building the actual business is focused on marketing the product.

This product-centric strategy made sense in the early days of the digital revolution. However, the same concept has become inefficient. Specifically, garage startups operate on a fundamentally flawed principle. They’re centered around creating a single product that has to be sold. But what if the product doesn’t sell? What if nobody wants it? What if the founders can’t figure out how to effectively market it? Then the product fails, and all the time and effort spent developing the product was wasted.

For evidence of this inefficiency, consider all the techniques entrepreneurs have developed to help combat it. You’re probably familiar with many of them. For example, methodologies like “lean startup,” “design thinking,” and “agile development” are all strategies that teach entrepreneurs how to quickly iterate on their products in order to figure out what customers want as fast possible.

Those types of strategies for developing startups have certainly made the old garage startup approach to building companies more effective and efficient than it was in its earliest days, but it’s far from a perfect system. This is obvious when you consider the fact that everyone involved in the larger entrepreneurial community expects — and even promotes — a high startup failure rate. Heck, my most popular entrepreneurship course at Duke is called “Learning to Fail,” and it’s about teaching entrepreneurs how to embrace failure. Somehow, failure has become a badge of honor in the entrepreneurial community.

Entrepreneurs have rationalized the high failure rate of startups as a reflection on the difficulty of building successful companies. But that’s not right. A high failure rate is actually a symptom of a flawed approach to entrepreneurship. Maybe it’s time for us to change the way we build companies.

In addition to my “Learning to Fail” class, I also teach a class at Duke about social media and social marketing. In order to teach the class, I spend lots of time studying things most people in the entrepreneurial community would consider a waste of time. For example, I’ve spent years following the Kardashians.

Don’t laugh. I guarantee they’re more successful entrepreneurs than you.

Did you know the Kardashians have over a billion followers among them and operate one of the largest and most influential media empires in the world?

I’m also a huge fan of Dwayne “The Rock” Johnson’s social media strategy. I consider his Instagram feed to be better than a marketing master class. And I’ve spent more time than any 40-year-old man reasonably should watching tweens dancing in order to figure out the best strategy for becoming TikTok famous.

The more I study social media, the more I’ve begun to recognize and appreciate the emergence of an alternate and more efficient type of startup than the traditional “garage startup” approach to entrepreneurship. For the sake of consistency, if we’re going to call product-centered companies “garage startups” because some of the most successful ones were launched out of garages, let’s call these new types of companies “bedroom startups.” Yes, I realize the less-than-wholesome and, in some cases, not entirely unfounded implications. Whatever. I’m not here to judge. Instead, I’m trying to explain why bedroom startups enable a more efficient entrepreneurial model.

While garage startups encourage entrepreneurs to focus on building products, bedroom startups force entrepreneurs to focus on something different. Let’s call that something “audience.” It results in a business paradigm that looks like this:

In bedroom startups, entrepreneurs are focused on building audiences around shared interests and/or sets of values. Once those audiences exist, entrepreneurs can direct them toward infinite numbers of different products.

This audience-centric model of entrepreneurship is a wildly more efficient way to build companies than product-centric entrepreneurship because, when products fail, so what? The audience still exists, and the audience is the asset with all the value. Once you have an audience, you can direct it toward another product. And another product. And another product until you find products your audience is willing to buy.

Technically, the structure I’m describing when I explain bedroom startups isn’t new. After all, non-Internet celebrities have been capitalizing on their fame and huge audiences for years. For example, rappers like Jay Z and Dr. Dre have sold everything from alcohol to headphones.

Before that, movie stars like Paul Newman and Raquel Welch were selling salad dressing and fitness products, respectively. And way before that, back in the 1800s, you had someone like Fanny Fern, the most popular newspaper columnist of her day, selling novels to her enormous audience.

In other words, the idea of building a huge audience and then monetizing on it is nothing new. In fact, one of the pioneers of modern marketing, P.T. Barnum, was famous for it. There’s an entire movie about it.

However, while attention-based entrepreneurship has existed for a long time, thanks to social media and the Internet, it’s become significantly more accessible. Anyone with a laptop or a cell phone can reach huge audiences. Heck, I’m literally doing it right now… with this article.

That means you could be doing it, too. It’s certainly not easy, but it’s also not impossible. More importantly, cultivating an audience and then monetizing on it is a much safer approach to startups than building a product and trying to sell it. Products cost lots of time and money, and, if you can’t sell them, everything you spent was wasted.

That’s not true with audiences. Once you have an audience, so long as you continue maintaining it, it’s yours. And best of all, in the digital age, building that audience doesn’t even require walking as far as your garage. You can do it right now… from your bedroom. So what are you waiting for?

Go to Publisher:

Entrepreneur's Handbook – Medium


Author: Aaron Dinin, PhD