Dissecting Pando Daily's Hack Job Covering the Chicago Startup Scene

After writing this post yesterday, where I commented on the article titled The Midwest Mentality, I took some time yesterday to read all the articles that Trevor Gilbert has put out so far covering the Chicago startup scene.

The short version is that his coverage is a hack job, completely undeserving of a place in Sarah Lacy's new publication.  In all seriousness, Sarah, please go back and read through each article, beginning to end.  I think that if you're honest with yourself, you will see that this coverage is totally undeserving of being published in Pando Daily.  

And I'm not talking about whether the things about Chicago were good, bad, or indifferent.  I'm talking about writing interesting, compelling stories, that people might care about.

Let's break down the coverage.  Trevor spent two weeks in Chicago, and so far he's written 5 articles.

His first article, My first time in the Second City, was published on March 3rd, and it's essentially an introduction post. His second post, written on March 8th, was titled Breaking News: Chicago is Windy.  After spending 5 days supposedly investigating the Chicago Startup scene, he ended up writing a 958 word post about Chicago's weather.  That's right, the weather.  Although, we also learned that Trevor is under the age of 21.  He writes:

While I was living on the streets without a place to stay and slowly recovering from my illness, Sarah decided to allow me to stay a couple of nights in a hotel, which is great. Guess what I found out about Chicago? Approximately 90% of the hotels here require you to be 21 or older to check in.

So wait, let me get this right.  Pando Daily wanted to cover the Chicago Startup Scene, get the ins and outs of the community, see what's up and coming, and she sent someone who can\'t even go grab a beer with a few founders?  Are you kidding me?

I'm not knocking age here.  I'm knocking an editorial decision to send a reporter who can't legally participate in what is obviously the most natural place for someone to hang out and learn about the startup community: Bars.

In his third article, titled Trunk Club is Locking it Up, Throwing Away the Key trevor writes about a Chicago Startup that is trying to change the way men shop.  It's a fine article, but there's nothing all that interesting or remarkable about it.  He writes at one point when talking about the founding team:

Spaly was asked to join the Trunk Club team as the founding CEO. After noticing some accounting irregularities, Spaly made some changes and was left as the head honcho at the startup.

Oh really?  That sounds interesting.  What kind of accounting irregularities?  What happened?  Did someone steal money from investors?  Did something else happen?  We don't know because that's all the information the reader is given.  And that basically sums up all of the author's reporting on Chicago.  Very surface level stuff.  No depth. No inquisitiveness.  No asking questions to get to the bottom of something.

In his fourth article Enterprise: The Chicago Kiss of Life and Death we again see the author's lack of creativity.  When opening the article, he says:

When I first joined PandoDaily way back in the day, one of the things Sarah mentioned to me was that she wanted to report on the stories that other reporters were ignoring out of lack of pizzazz (my word, not hers), and inability to reach the top of TechMeme. The attitude was a little more inclined to cover companies that are rocking it, and less inclined to cover companies because they are the latest mobile photo sharing app. This means enterprise.

  Actually Trevor, no, it doesn't.  In Chicago, this means trying to find the next 37signals, or the next Threadless.  It means trying to find the bootstrappers who have turned down $400k from Lightbank because they think their product will be better without investors.  Covering startups in Chicago is going to be hard because there's no steady ticker of who invested how much money into what startup.  

You need to actually investigate.

But let's go ahead with your premise though.  Let\'s talk about all these Chicago Startups that are making products for the enterprise.  Some excerpts:

People in Chicago, as they are starting companies here, all want to have a revenue stream immediately — rather than take investment and figure out a revenue model down the road — and the best way to guarantee a revenue stream is to sell directly to businesses. Therefore, startups that don’t want to be ostracized go the enterprise route, even though they could be changing the world in a bigger way by taking bigger risks.

The second issue with being so focused on enterprise is that potential talent isn’t convinced of the importance of the ecosystem. Ask an engineer to choose between staying in the Valley and working for a hot new, untested, consumer product like Twitter and an enterprise company that already has a steady revenue stream that provides marketing simplification for insurance companies, and they will choose the hot new startup.

All of that being said, enterprise is largely the only option open to Chicago at this point. However, being the only option currently available doesn’t an excuse make. Sure, founders can sit back and say “well there are so many companies here to sell to, it makes sense to do enterprise!” That’s not a very good reason though, however pragmatic and however Midwestern. It makes sense from a business standpoint, but from an ecosystem standpoint it doesn’t.

After all this reporting on Chicago Startups, in this 1,125 word article, how many Chicago companies that are following this strategy did he mention and link to in his article?  Zero.  How many founders did he quote about why they took this strategy, and how it's worked out?  Zero. How many of their customers did he interview?  Zero.  How many of these startups, selling to the enterprise, are working on their own products on the side?  We don't know because he probably never asked that question.

In fact, we don't know whether this was even reporting at all, because there are literally zero sources.  Hack Journalism at it's finest.

And then there is the latest article The Midwest Mentality which I wrote about yesterday.

The only thing I'll add to what I've already written is that it\'s clear the author has absolutely no understanding about how challenging it is to build one's own self sustaining business.  If it was easy, wouldn't we all have our own small self-sustaining businesses? This part magnifies his ignorance:

Work a 9 to 5 job and see steady, predictable growth over time. You get a salary, and you are possibly acquired. You spend time with your family and get to send your kids off to college.

As the founder of a small web development company and as the husband to a woman who owns a yoga studio let me tell you, this is such bullshit I can hardly stand it.  

I don't work 9 to 5.  I don't have a "steady salary".  Sometimes I have to deal with clients paying me 60 days late.  My wife and I have taken what would be our retirement and invested it in our own businesses and our own products.  We've taken risks and the "pragmatic" thing for us to do would have been to work for Accenture. Being able to send our kids to college with these investments in ourselves is anything but certain right now. I wouldn\'t have it any other way, but to call what we're doing as pragmatic is complete ignorance.

The author's lack of understanding about what it's like to build a sustainable business is something that Sarah Lacy and Pando Daily should be utterly ashamed of.  Sarah has written entire books about Entrepreneurs.  She should sit down with her reporters and tell them what it's like sometime.

Because the thing is, you know how sometimes you read an article in the paper about a subject you know something about, and they get it all wrong?  And then you ask yourself, if they got this wrong, what else are they getting wrong? That's how I feel about Pando Daily right now. And I hope Pando decides to keep covering Chicago.  Because I still think they're kind of awesome.  But Sarah, do us a favor, if you're going to cover Chicago, do it right or don't do it at all. 

Pando Daily and the Chicago Startup Scene

Pando Daily, a fantastic new site about technology, startups, and other tech-related news published a post today titled The Midwest Mentality.  In it, the author Trevor Gilbert, outlines some accurate, and some not so accurate, observations about the Chicago tech scene.  (note, he wrote a post that he'd be in Chicago, willing to meet with anyone that wanted to chat with him. I missed that post so shame on me a little.)

He writes about why a Twitter or Facebook would likely never be born here.  Citing, among other things, an unproven business model and being dependent on multiple rounds of financing. The whole article is well worth a read. Unfortunately though, the main point he makes around "the problem" with the Chicago startup scene, and the thing he bases his entire article on, is wrong.  Or rather, it's incomplete.  He says:

Understanding the Midwest Mentality is key to understanding the entire Chicago ecosystem. It affects how startups are created, who gets funded and who gets accepted into the ecosystem. It is the glue of the shoe, the plugs in the boat and the sandy foundation all wrapped up into one.

He goes on, to state his main point:  

Although I’m coming from a different perspective, it appears to me that after having looked at the ecosystem from an outsiders’ perspective, the entire concept can be boiled down to one term: pragmatic.

This single statement shows me that the author misunderstands the motivations of most Chicago tech entrepreneurs.  It's true, many of us are pragmatic.  But why we're pragmatic seems to be irrelevant to him.  Without using the exact words, he touches on the whole "Lifestyle Business" dig that people often make:

Sure, being pragmatic has its benefits. Work a 9 to 5 job and see steady, predictable growth over time. You get a salary, and you are possibly acquired. You spend time with your family and get to send your kids off to college. That’s fine, but its not revolutionary, which is something that the technology industry – regardless of geography – is based upon.

If you've read my blog for any amount of time, you know this kind of tone makes my blood boil.  See Every business is a lifestyle business for more on that. Here's the thing he's missing.  Chicago Entrepreneurs are independent.  

Surely, sometimes to a fault, but understanding that it's this independent streak that causes the pragmatism is fundamental to understanding Chicago entrepreneurs.

Having to answer to investors seems not all that much better than having to answer to an employer.  Building a business without a revenue stream means we don't have the ability to sustain ourselves, and are therefore not independent.  Not being able to live the life you want to live because you're busy trying to make something "go boom" seems absurd.

The other thing is that a lot of tech entrepreneurs here don't think of themselves as "startups".  We think our ourselves as small businesses.  Technology is the vehicle, not the destination.

I guess my fundamental criticism of the article is that it seems they didn't ask "why?" nearly enough.  They think they found the "why" - we\'re pragmatic! - and what our goals should be - GROWTH! - and are viewing everything from that perspective.

The biggest problem with the Chicago Startup scene is the same problem we have with everything else, whether it be sports, business, or architecture.  We have an inferiority complex.  Unfortunately this article is going to do nothing to help with that.  But the biggest mistake the Chicago tech community could make is to try and be like the valley.  

It's true that the next Twitter or Facebook might not be born in Chicago.  You know what else wouldn't be born in Chicago though?  "Color":http://color.com. I'm just saying.

Mr. Gilbert mentioned that he'd never been in Chicago before this trip.  And I appreciate that Sarah Lacy and Pando Daily genuinely seem curious about what\'s going on in Chicago.  But if they're sincerely interested in Chicago's startup scene, they need to keep coming back, they need to keep digging, and they need to ask 'Why?' a whole lot more.

If anyone could do it well they could, and the Chicago tech community would be better for it.

The man who broke Atlantic City

Fascinating Article in The Atlantic about Don Johnson, who took three casino's for $15 million.

When casinos started getting desperate, Johnson was perfectly poised to take advantage of them. He had the money to wager big, he had the skill to win, and he did not have enough of a reputation for the casinos to be wary of him. He was also, as the Trop’s Tony Rodio puts it, “a cheap date.” He wasn’t interested in the high-end perks; he was interested in maximizing his odds of winning. For Johnson, the game began before he ever set foot in the casino.

So Awesome.  (via Hacker News)

Why is everyone talking with so much authority?

Something's been bothering me lately.

It seems as though everywhere you look, there's someone telling you exactly how you should build a product, how you should start a company, what kinds of tests you should run, when you should raise money, when you should keep bootstrapping, when you should sell, when you should push through the dip, how you should get PR, how you should promote yourself, etc, etc. etc.

The thing that's wrong isn't that the advice is necessarily bad.  A lot of times it's very good and often inspiring.  My issue isn't with people sharing their knowledge and lessons about what has worked and what hasn't.

It's that in almost *every* situation, it's far too premature for people to be claiming that they know what they're talking about with so much authority.

People working for unprofitable funded startups, who have never started their own business, are writing posts with huge amounts of authority about how to run companies.  How to get PR.  How to hire.  How to increase conversions.

And by the way, there are bootstrappers too talking with authority about how VC money is bad, and it'll ruin your idea.  I've said this before, but really, it's just my opinion at a moment in time, subject to change whenever something else makes more sense.  Maybe you've reached a point where in order for your product to thrive you need to focus on it 100% of the time and raising money is exactly what you should be doing.  

Or maybe raising money would kill your baby!  Maybe, Maybe, Maybe. That's the real answer to most things, isn't it?  Not everything, but a lot of things.

Stella Feyman of Fee Fighters, who seems to be a genuinely nice, smart, intelligent woman engaged in the tech community and a co-founder of  Entrepreneurs Unplugged wrote a post titled 3 businesses models to avoid in 2012, one of which was virtual currency.  Fred Wilson on the other hand, one of the most influential Venture Capitalists in the tech industry had this to say about virtual currencies:

But Bitcoin or something else, I'm confident we'll see the emergence of currencies that are not controlled by nation states in my lifetime. Whether that is a good thing or not remains to be seen. I think it is, but there are significant ramifications that will result from the decoupling of currencies from governments. And one of them is an interesting investment opportunity that we hope to participate in.

One of them sees virtual currencies as a business to avoid.  The other sees it as something that could be so disruptive that we can't even begin to fathom the ramifications of that business model's success.  Who's right?  I. Don't. Know.

Mark Zuckerberg famously turned down $15 billion dollars from Microsoft in 2007.  Had he taken that money, surely he would be speaking about building and selling a startup.

But would that have been a "success"?  We certainly would have thought so at the time, but knowing what we know now, would it have been good if he sold?  Maybe.  Maybe not.

The reality is, there are so many nuances, so many factors that apply to just you, or just me, or to a particular moment in time, that the more likely scenario is that we do a very good job of identifying correlation, and are far worse at identifying causality.

It seems that all advice could also be spoken as "here's what worked for me, at this particular time in my life, at this particular time in history, and it may or may not work for you considering where you're at."

I'm still going to share my opinions.  I'll keep sharing what works, and what doesn\'t work, for me and my business.  But I'm also going to try and share more facts.  More information about how things can be done, and what tools exist that we can leverage to do things differently.

And when I am sharing my opinions, I'll be just as opinionated, but I'm going to try doing it with a little less authority.

The problem with Lineage

For the past few months, I've sort of had yoga on the brain.  If you follow me on twitter you probably know that my wife Maile opened up a yoga studio in Logan Square, the Chicago neighborhood in which we live.

This ended up in my company building a yoga studio software product that Maile uses to run her studio.

During the course of all this I've started to learn a bit about the yoga world, although I'd certainly still consider myself a newbie to it all. One of the things I've found fascinating is the extent to which people in the yoga community focus on an instructor's lineage.  

Who taught them, where they were taught, who taught their teacher's teacher, etc. It seems to me that this focus goes far beyond understanding what has influenced a person, what's inspired them, and what things led them to who they are today. Instead, the focus on lineage seems to define, permanently, what someone is today based on who taught them in the past.  I don't understand this, and I don\'t think it's all that healthy.  

The problem with this focus on lineage is that it puts a greater emphasis on the past than it does the present.  It presumes that who taught you is more important than the kind of teacher you are today.  It seems to give the benefit of the doubt to  a bad teacher with good lineage over an awesome teacher who was taught by their yoga instructor friend that no one knows about. And unlike influence and inspiration, which encourage one to tweak, transform, experiment, remix, and reinvent - lineage seems to be steeped in a tradition that says there is a "right way" to do something.  And to deviate from that is not only wrong, but potentially disrespectful to one's heritage.

Inevitably, this leads to good people feeling the need to redefine themselves when they find out the makers of their pedigree aren't everything they were cracked up to be.  Not because they're suddenly worse teachers.  Not because their classes are suddenly bad.  But because they think their lineage is damaged.

Understanding where people come from, what their styles are, what influences and what inspires them - these all seem to be things we should try to understand. But so much emphasis on one\'s lineage, I don\'t think that's healthy.

After all, if lineage were what we cared about as a society, we'd all still be ruled by Kings.

​