“The $100 Startup” – A Critical Review

The $100 Startup Review

Would you trust advice from a successful business book – or the Web?

There’s loads of information on the Web – some of it very good. But would you give up your 9.05 to 4.55 job based on that advice? I’ve been thinking about this subject because I’ve been reading a book called “The $100 Startup” by Chris Guillebeau. It’s an interesting book – well worth a read – and I’m sure you’d find parts that are very relevant. But it contains a serious flaw, and that same flaw is common in much of the advice spread throughout the Web.


“The $100 Startup” Overview

The book chronicles the stories of people who started up their own business with almost no money and shows how they became successful.  Chris collected details on more than 1500 start-ups before writing the book – a very sizable sample.  He then selected 50 stories for the book. He introduces those stories with the following comment:  “Our story is about people who start their own microbusinesses without investment, without employees, and often without much of an idea of what they’re doing. They almost never have a formal business plan, and they often don’t have a plan at all besides “Try this out and see what happens.””


Controversial Advice

He was later interviewed on the book’s Amazon page by Gretchen Rubin:

GR: You give some controversial advice: you don’t need a business plan, you don’t need to spend too much time planning, you don’t need a large amount of money to launch, and you don’t need special skills or expertise. What do you say to people who disagree?

CB: I’d say the proof is found in everyone who has made it happen. My hope is that this book will serve as a blueprint for many more success stories, just like the unconventional and unexpected entrepreneurs I talked to from all over the world.


The Study

So – here we have a best-selling business author who’s taken the time and effort to get a sample of 1500 business owners, and has gone to the trouble of identifying exactly how they achieved successes. What could possible go wrong by acting on that advice?  The answer is: pretty much everything.


The Sample

The problem is that those 1500 business owners were not taken at random. These people came forward because they wanted to talk about their success! We didn’t heard about the failures. Take Michael who lost his job in 2009. On an impulse he bought a lorry load of cut-price mattresses from a friend, set-up a shop in an old car showroom and delivered the mattresses by bicycle. Luckily he was successful – but suppose he hadn’t been? Would we have heard about a man in Portland who bought a lorry-load of mattresses and couldn’t sell them? He certainly wouldn’t have featured in Chris’s book.


The core problem with "The $100 Startup"

The Failures

Success stories are interesting and statistics are boring but they’re an important part of the story.  It’s estimated that at least 3 out of 4 startups fail – some people put the figure as high as 9 out of 10. If Michael’s mattress business had failed, it probably won’t even have shown up on the official statistics – many businesses fail without a murmur.


The Unlucky Ones

There were approximately 6.3 Million new business set up in the USA in 2015 (according to the Kauffman Index). That means that at least 4.7 Million businesses failed – more than the entire population of Ireland (men, women and children – 2013 census)! Why? Probably because the owners had no idea of what they were doing and didn’t have a plan – the type of person that Chris is suggesting should go for it.


The Lucky Ones

But wait! The businesses that featured in his book succeeded – didn’t they?  Yes – some of them certainly did but when you have over 6 million people starting business it’s inevitable that a proportion will strike it lucky. For example, Chris talks about two designers who put up a one-page website and woke up the following morning to their first sale. That’s not just lucky – that’s close to a miracle.



And that’s the problem. He’s building a strategy on the results of people who’ve been very lucky. That’s not to say that some of them aren’t extremely talented, hard-working and clever. After all, they developed and sold things that people wanted. However, the results are not repeatable. If you were to do exactly what they did would you be successful too?  I wouldn’t bet my life savings on it.


Final Advice

So here is my advice (yes – I am aware of the irony!).

  • Don’t believe everything you read – check it out carefully to see if it makes sense
  • Don’t give up your day job until you know exactly what you’re going to do
  • If possible, test your idea before you give up your day job
  • Learn as much as you can about how business works – beforehand
  • When you get conflicting advice (and you will) – evaluate everything very, very carefully!

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