Can Do vs. Should Do

Jun 5, 2007

More than at this time last year, I am finding myself asking about the motivations behind starting companies.  It can sound like a hokey question, but the motive is pragmatic:  I’m trying to determine if the company was created because it can be built or because it should be built.

A “can do” company is built around some sort of feat of strength; often a show of technical prowess.   It’s as if the founders are saying, “Look what we can do!”  I have seen many impressive companies over my career which were clearly the result of “can do” thinking.  They developed feature-filled, fully-internationalized, highly complex products, all-things-to-all-people products.  Very few of those companies (or products) still exist.

“Should do” companies are based around a real need.  They solve a problem, scratch an itch, relieve pain.   Here at First Round Capital, we have companies in our portfolio that save you and me money, that can prove additional sales volume they drive for online retailers,  that help other companies manage and monetize their web APIs, and who simply help their users remember things.  Each one of these companies can point to a particular set of customers and tell me exactly what they do for them.

We appear to be at the part of the cycle where more folks are starting companies because they can rather than because they should.  If you cannot explain why your company should exist, you may want to rethink your strategy before you get too far.

Discussion and Comments

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  1. Jim Dempsey says:

    It has been my observation that many entrepreneurs start companies because they “can do.” The process usually works like this:
    1) “I want to start my own company.”
    2) “I better do something that I’ve done before (e.g. Social Networking, marketing, etc.), to minimize risk and because I might not have credibility otherwise.”
    3) “xyz is an interesting application in Social Networking. Let’s do it!”
    Although “can do” isn’t as good as “should do,” it’s a heck of a lot better than “can’t do!”
    At the core of this challenge are the fundamental differences in the strengths and vantage points of VCs and entrepreneurs: VCs are good at identifying opportunities and entrepreneurs are good at realizing opportunities.

    Commented on July 9, 2007 at 8:18 pm
  2. Mahesh Bhave says:

    This distinction is identified under “internally stimulated opportunity recognition” v “externally stimulated opportunity recognition” in Bhave, M. P. 1994. A Process Model of Entrepreneurial Venture Creation. Journal of Business Venturing, 9: 223-242.
    Though my bias is for “should do because..” I have to acknowledge that one comes more prepared if “can do” is the motivator. Things get a little complicated with “should do” because market timing may not match entrepreneurial need. “Can do” is more pragmatic.

    Commented on June 18, 2008 at 5:21 pm
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