Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The coffeeshop fallacy

thestartuptoolkit.com

Post reply on HN
Print view View original

11–20 of 99 posts

Re: The coffeeshop fallacy

#11

Post by JoeAltmaier »

rick888 wrote: post #4
aloneinkyoto wrote: post #2

This is the paradox of capitalism. Focus on creating something inherently good and it will not be sustainable. Focus on creating something sustainable and profitable and it will most likely not be as inherently good as it could be. Example: McDonalds. Brilliant business model. Awful product.

I have to disagree with you there. If Mcdonalds had such an "awful" product, nobody would eat there and it wouldn't be as popular. There are plenty of alternatives.

Some of their food is very tasty; all of it is pretty bad for you physically. I particularly enjoy the large sweet tea for $1.06.

However I have to agree that others do it better. Hardees has the best fast-food burger around. Also the best ads :)

Re: The coffeeshop fallacy

#12

Post by nlh »

Similar to the coffeeshop fallacy is something I described to a friend over dinner the other night as the "ambulance fallacy" ...

He was telling me about his startup ambitions and about one particular business that he said sounded like a ton of fun (it was an alcoholic beverage business) - he loved the lifestyle potential of being "that guy".

I told him a story about how I wanted to be an EMS worker when I was 12 years old. Why? For a single, simple reason -- I thought it was _extremely_ cool to be able to drive around with lights and sirens blaring, blasting through traffic. That was it.

Then a family friend who actually was an EMS worker told me one day what the job was actually like - sure, for about 10 minutes you were driving like a madman through traffic, but the rest of the time you had to, you know, actually BE an EMS worker :)

And the same goes for startup life -- you have to actually BE a startup founder for 99% of the time. Don't get caught up by the lights and sirens.

Re: The coffeeshop fallacy

#14

Post by nwomack »

aloneinkyoto wrote: post #2

This is the paradox of capitalism. Focus on creating something inherently good and it will not be sustainable. Focus on creating something sustainable and profitable and it will most likely not be as inherently good as it could be. Example: McDonalds. Brilliant business model. Awful product.

McDonalds quality control is second to none. Their standard menu tastes practically the same everywhere in the world. It's the same with Starbucks. I know that no matter what part of the planet I am at, I can get exactly what I expect to get. I'm never disappointed. I can't stress how important that part is. Bad quality control can really injure restaurants.

Re: The coffeeshop fallacy

#15

Post by aloneinkyoto »

rick888 wrote: post #4
aloneinkyoto wrote: post #2

This is the paradox of capitalism. Focus on creating something inherently good and it will not be sustainable. Focus on creating something sustainable and profitable and it will most likely not be as inherently good as it could be. Example: McDonalds. Brilliant business model. Awful product.

I have to disagree with you there. If Mcdonalds had such an "awful" product, nobody would eat there and it wouldn't be as popular. There are plenty of alternatives.

The point I was trying to make with the McDonalds example was simply that a scalable and successful business model necessarily implies that they are unable to create the "perfect" hamburger. They have practical limitations inherent to their process that makes it impossible. If they instead were running a two star luxury restaurant they might have a chance at making a perfect product. But that wouldn't be a scalable and sustainable business, and most like not very profitable either. Most luxury restaurants have extremely low margins and in many cases operates with considerable losses.

And just to make it clear, I am not trying to criticizes capitalism per se. I'm only basically stating the same thing the article is stating; that there is an inherent paradox in capitalism that makes it more complex to deal with than is directly apparent. Everyone that goes into business or deals with business indirectly through policy-making should be as aware as possible of this paradox, simply because it will prevent us from collectively ending up in a world with great processes but awful products or with great products but awful processes. Neither of which are very tempting scenarios.

Re: The coffeeshop fallacy

#16

Post by quinndupont »

Since when does a coffee shop have a 10% success rate? According to a large study by the Speciality Coffee Association of America, independent coffee shops in the US have a 90% success rate. Perhaps the author mistakenly assumed coffee shops have the same market dynamics as a restaurant, but coffee is low-staff, low-overhead, and high-profit. So long as people are walking in the door, you'll do okay.

Re: The coffeeshop fallacy

#17

Post by quinndupont »

lhnn wrote: post #5
aloneinkyoto wrote: post #2

This is the paradox of capitalism. Focus on creating something inherently good and it will not be sustainable. Focus on creating something sustainable and profitable and it will most likely not be as inherently good as it could be. Example: McDonalds. Brilliant business model. Awful product.

Whoa, whoa, whoa. I'd downvote you if I could, not because I disagree with you, but because this is a strawman. The author used a low margin, low sucess business example to make a point about what mindset someone should be in to successfully run a business. You took from that the message that anything enjoyable is not sustainable. "Focus on creating something inherently good --> it will not be sustainable" You also l…

Coffee is an insanely high margin product. You think it costs $4.00 for the 5 grams of coffee in your drink?

Re: The coffeeshop fallacy

#18

Post by sabat »

steve8918 wrote: post #3

Not to hijack the conversation, but the following line really struck home with me but in a different way: "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." This is very similar to what I said about buying a home in Silicon Valley. In the nice areas like Palo Alto, the homes around > $1.5MM. If you don't buy a house in a good school…

Fallacy: you don't need to live in Palo Alto to live in the Bay Area. There are much more sensical places to live, particularly if you have kids.

Re: The coffeeshop fallacy

#19

Post by mildweed »

quinndupont wrote: post #16

Since when does a coffee shop have a 10% success rate? According to a large study by the Speciality Coffee Association of America, independent coffee shops in the US have a 90% success rate. Perhaps the author mistakenly assumed coffee shops have the same market dynamics as a restaurant, but coffee is low-staff, low-overhead, and high-profit. So long as people are walking in the door, you'll do okay.

As a coffee blogger in Kansas City (kcperky.com) I can attest to coffee shops being a hazardous business to be in. For every two shops that open, I expect one of them will close in 6-18 months.

Re: The coffeeshop fallacy

#20

Post by pagekalisedown »

steve8918 wrote: post #3

Not to hijack the conversation, but the following line really struck home with me but in a different way: "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." This is very similar to what I said about buying a home in Silicon Valley. In the nice areas like Palo Alto, the homes around > $1.5MM. If you don't buy a house in a good school…

Being house-poor is extremely common in the bay area, to this day. It totally baffles me as to why people keep doing it. My only guess is that people are more economically irrational than I'd like to believe.
Post reply on HN