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   by [27]robfitz • October 20, 2011 • [28]Best of, [29]Founders •
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[31]The coffeeshop fallacy

   Lots of people think they want to start a coffeeshop. They likely
   don’t. That’s like buying a minimum wage job for two hundred grand.
   What they want is to be a customer and sit in a cafe, drink coffee, be
   nice to people, and possibly curate an art gallery.

   We’re good at recognising when we receive pleasure from consuming a
   certain good or service. But then we extrapolate incorrectly to the
   conclusion that owning said business will deliver even more pleasure.

   Max Levchin (paypal, slide) said something to the effect of:

     You you can’t be in love with a particular idea or business. You
     have to be in love with the idea of running a business.

   It’s one of those quotes that has haunted me, in no small part because
   Max has been so successful in such a wide range of pursuits and because
   I both understand his reasoning and [somewhat] disagree with his
   conclusion. I still think that matching your business model to your
   values is a competitive advantage and that [32]doing otherwise is, for
   most people, a shortcut to disasterville.

   Here’s a working definition of the coffeeshop fallacy:

     The coffeeshop fallacy is a mismatch between the work one imagines
     to be involved in a pursuit and the actual day-to-day labour.

     It is most common in industries with a strong survival bias which
     create a fun or desirable product.

It preys on actors, artists, founders, and more

   For example, the founders of a game company are more likely to fall
   victim to the coffeeshop fallacy than the founders of a new CRM. The
   former are liable to believe that since what they are building is fun,
   the construction process will share that virtue.

   Beautiful young people covet the observed lifestyle of successful
   actors or models without recognising that their own career path will
   mostly involve schlepping coffee and talking to jerks. The founders of
   a film studio will spend most of their time managing a pipeline. The
   founder of a cafe becomes a mopper and accountant.

A stoic solution

   I think I can see where Max is coming from. I would unpack through his
   train of thought like this:

     Building a fun product still involves lots of painful and boring
     work.

     Enjoying the product is the luxury of the customer, not the
     producer.

     If I’m not going to enjoy building it either way, then choosing what
     I build based on what I would enjoy consuming is a fool’s errand.

     Therefore, I can chase the very best opportunity, whether it be
     fraud detection or glitter widgets, since in either case I’m still
     spending my time running a company.

   His framing basically solves the coffeeshop fallacy. Instead of saying
   “I want to start a cafe” you say “I want to spend my days mopping while
   risking $200k on a low margin retail/service business with a 10%
   success rate.” And then you go: “Hmmmmmm…”

Constraints and wiggle room

   However, not everyone is quite so mercenary as Max. I don’t know him,
   but based on what I’ve read and watched, I get the impression that he
   follows the market, full stop. If he saw a big opening he could
   exploit, he’d be there regardless of whether it was drilling for oil or
   starting a babysitting empire.

   Most founders have some additional constraints on the type of business
   they want to run and it’s important to recognise that. Not because
   you’re required to [33]follow your passions, but rather because it’s
   helpful to avoid your workday nightmares.

   Some founders care about the market or the customer or the value
   proposition or the impact or the scale.

   Caring about the product seems to be the most dangerous. It’s how the
   coffeeshop fallacy pops up and it’s how people end up spending years
   building stuff nobody wants to buy.

   Caring about a certain customer group still gives you a lot of wiggle
   room. Caring only about the market (like Max) provides infinite wiggle
   room, but I don’t think many people can honestly claim that value set.

I’ve made this mistake

   The first time, we ended up converting our creativity tools for kids
   into a straight-up brand advertising play. Although building the former
   was no more fun than building the latter (it’s code and metrics either
   way), I valued enabling creativity for kids in a way that I did not
   care about reinventing advertising. Advertising was the better market,
   undoubtedly, but our team was less able and willing to deliver
   something remarkable.

   The situation arose again at Nvana when we were building tools to teach
   entrepreneurship. We couldn’t scale the business by focusing only on
   universities, and we had some decent leads in re-applying the product
   to corporate use cases. Instead, we shut it down.

   [Image] from [34]dielis

Related Posts

   Previous post:
   [35]Getting and giving good startup advice Next Post:
   [36]Let’s admit that customer development is awkward
   about the author: [37]robfitz
   I'm a tech entrepreneur, author, and partner at [38]FounderCentric,
   where we help accelerators and universities design and deliver better
   startup education programs. I've successfully bankrupted 3 companies,
   am a YCombinator alum, and have built products used globally by brands
   like MTV & Sony. I've raised funding in the US and UK and recently
   crowd funded a [39]card game. I wrote [40]The Mom Test book about the
   practicalities of early stage customer development and sales. It's full
   of jokes. I live in Barcelona mostly.

5 Responses to The coffeeshop fallacy

    1. [41]Cafes: Why do most café startups fail? - Quora says:
       [42]October 29, 2011 at 11:07 pm
       [...] [...]
    2. [43]Logical Fallacy of the Day: The Coffee Shop Fallacy | The
       Thinker says:
       [44]November 3, 2011 at 2:03 pm
       [...] Rob Fitzpatrick at The Startup Toolkit blog: Lots of people
       think they want to start a coffeeshop. They likely don’t. That’s
       like [...]
    3. [45]咖啡厅错觉（Coffeeshop Fallacy）：太爱它就一定要拥有它？ | 沉思小屋 says:
       [46]November 28, 2011 at 5:35 am
       [...] 最近读到一篇文章，说到一个有趣的人性现象，你是否曾经听过身边的朋友，或者自己，曾经有过一个念头—— [...]
    4. [47]马克汀市场营销学一日一讲 » Blog Archive » 为什么很多人都想开咖啡店、书吧之类？好开么？赚钱么？ says:
       [48]March 17, 2012 at 11:30 am
       [...] coffeeshop fallacy》：
       地址：http://thestartuptoolkit.com/blog/2011/10/the_coffeeshop_fallacy
       /标签：市场营销准备：理解市场与消费者, 邪派NLP攻心营销, 零售 [...]
    5. [49]How to date a supermodel (or get dealflow or find cofounders)
       says:
       [50]June 7, 2013 at 4:55 pm
       [...] I’ve received a lot of value from transforming what appears
       to be a herculean or even sisyphean[3] task (cold calling &
       selling, going to bars to chat up strangers) into an easy pleasure
       (playing poker with interesting people, working in a cafe). [...]

     * [51]Mom Test Book Cover - A5

[52]Everyone is lying to you (the book)
     * [53]Habit YC Pitch

[54]4 dumb and 1 good way I’ve structured my work/life balance
     * [55]Screen Shot 2013-12-01 at 14.07.00

[56]How to do (and what to expect from) early stage customer development &
sales
     *

[57]How to make failure sustainable (and career entrepreneurship possible)
     * [58]This guy wants his windows fixed

[59]Abstraction makes us stupid at business
     * [60]Remember when we used to learn stuff like that from the nature
       channel? On the teevee?

[61]Blogging for your business is worth it even if you get no traffic
     * [62]The problem is the problem. Work it.

[63]The problem isn’t you. The problem is the problem.
     * [64]Aeir Talk Logo

[65]A man, a mop, a year, and an app – Joseph Hill on Aeir Talk
     * [66]Brainstorm wall

[67]How I come up with new startup ideas (in 4 steps)
     * [68]Cool kid

[69]Negotiate like you don’t need it (and other worthless advice)
     * [70]King of War

[71]Choose wars based on strengths & battles based on weaknesses
     * [72]Making decisions

[73]Making decisions
     * [74]Money shrub

[75]You’re a startup. It’s okay to ask about money.
     * [76]Dad

[77]My dad taught me cashflow with a soda machine
     * [78]Anthony_Trollope_portrait

[79]Trollope on shipping
     * [80]thank you generous

[81]It’s the CEO’s job to email the first 1000 signups
     * [82]Mop

[83]The coffeeshop fallacy
     *

[84]Getting and giving good startup advice
     * [85]They're acting all sweet but really just want your peanuts.

[86]How to date a supermodel (or get dealflow or find cofounders)
     * [87]mom pumpkins

[88]The mom test for good customer feedback

Latest posts

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       lifestyle trade-off
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  93. https://web.archive.org/web/20160304085903/http://thestartuptoolkit.com/blog/2015/01/improv-skiing-writing-and-starting-before-youre-ready/
  94. https://web.archive.org/web/20160304085903/http://thestartuptoolkit.com/blog/2015/01/the-gamblers-stack/
  95. https://web.archive.org/web/20160304085903/http://thestartuptoolkit.com/blog/2014/12/two-years-of-remote-working-hiring-scaling-culture-and-the-lifestyle-trade-off/
  96. https://web.archive.org/web/20160304085903/http://thestartuptoolkit.com/blog/2014/09/how-founders-get-paid-non-strategic-acquisitions-dividends-and-private-islands/
  97. https://web.archive.org/web/20160304085903/http://thestartuptoolkit.com/blog/2014/09/i-prefer-effectuation-to-lean-startup-sorta/
  98. https://web.archive.org/web/20160304085903/http://thestartuptoolkit.com/blog/2014/09/tool-and-resources-list-for-new-founders/
  99. https://web.archive.org/web/20160304085903/http://twitter.com/robfitz/
 100. https://web.archive.org/web/20160304085903/https://twitter.com/robfitz
 101. https://web.archive.org/web/20160304085903/http://momtestbook.com/?ref=stk

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