If you’re a founder, startup investor or advisor, understanding the path to startup success requires more than just ambition and a great idea. One of the best-known and funniest parables about business strategy comes from South Park: the "Underpants Gnomes" episode. This iconic satire holds an unexpectedly powerful message for startups trying to make their way to profitability.
The satire's "business plan" is a comically oversimplified three-step process that goes like this:
Collect Underpants
???
Profit!
As ridiculous as this sounds, the satire reflects a very real issue that many startups face. Often, founders and advisors start with an ambitious idea and set profitability as the goal without a clear plan for how to get there. Here’s why South Park’s “Underpants Gnomes” satire should be required viewing for everyone involved in startups—and how it reveals the roles founders and advisors must play in transforming an idea into a sustainable business.
Background: The Importance of South Park's "Underpants Gnomes" Satire
The "Underpants Gnomes" episode aired in Season 2 of South Park in 1998, tackling the impact of big business on small communities and offering a critique of vague business strategies. In this episode, the titular Gnomes have a unique business model they believe will make them rich: they obsessively steal underpants, confident that they will eventually turn this into profit. Yet when asked how they plan to make money, the Gnomes reveal their plan, which includes the mysterious "???" phase between collecting underpants and achieving profit. The satire humorously points out a common gap in strategic planning, and its simplicity underscores a crucial truth in business: ideas alone don’t make a profitable venture; execution and planning are everything.
This “???” phase—representing an undefined strategy—is a challenge that trips up many startups, where founders might have an idea but no clear model for generating sustainable revenue. For founders, investors, and advisors, understanding how to define and navigate this phase can make the difference between a startup that flourishes and one that flounders.
For Founders: Building a Roadmap Out of "???"
Founders are typically the visionaries, filled with passion and optimism about their idea. However, this enthusiasm can sometimes lead to focusing heavily on the concept (“Collect Underpants”) while losing sight of the steps necessary to make the idea profitable. Founders must actively work to break down the "???" phase, transforming it into actionable steps that lead to revenue and growth.
Here’s how founders can avoid falling into the "Underpants Gnomes" trap:
Define Revenue Streams: Many founders get excited about building a product but may not fully define how the business will actually make money. Whether it’s through subscriptions, sales, partnerships, or another model, defining your revenue streams is critical.
Develop and Test a Go-to-Market Strategy (GTM): Having a brilliant product isn’t enough if there’s no strategy for how to reach customers. A well-defined GTM strategy helps founders navigate how to approach their market, from customer acquisition to sales channels.
Create a Minimum Viable Product (MVP): An MVP lets founders test their idea with minimal investment, providing essential feedback and data. This way, startups don’t pour resources into a fully built product that lacks market interest.
Set Clear Milestones and KPIs: Milestones and Key Performance Indicators (KPIs) provide a way to measure progress, course-correct, and validate assumptions. By breaking down growth into measurable steps, founders can more easily identify when they’re on the right path or if adjustments are needed.
Embrace Agility and Iterate: Founders often need to pivot from their original vision based on feedback, evolving their strategy as they learn more about their market and customers. Agility allows startups to fine-tune their product and strategy to better fit market demand.
These steps help founders avoid the pitfalls of the "Underpants Gnomes" by creating a clear path through the "???" phase and ensuring they have a practical, tested approach to moving toward profitability.
For Startup Advisors: Guiding Founders Through "???"
Advisory board members play a crucial role in helping startups avoid getting lost in the "???" phase. Advisors can serve as reality-checkers and strategists, drawing on their own experience to help guide founders through the complex challenges between ideation and revenue. Here’s how advisors can best support founders in defining this phase:
Ask the Right Questions: Advisors should encourage founders to think critically about their revenue model, customer acquisition costs, and scalability. Asking questions like, “What’s your strategy for customer retention?” or “How will this model scale as you grow?” helps founders think deeply about aspects they may have overlooked.
Provide Industry Insight: Experienced advisors bring valuable industry-specific insights that can help founders avoid common pitfalls. This expertise can help the team better understand market dynamics, potential competitors, and revenue strategies that are proven within the industry.
Help Establish KPIs and Metrics: Advisors can assist founders in defining realistic milestones and tracking them, providing guidance on key performance indicators that best reflect the startup’s progress. These metrics act as checkpoints, letting founders know if they’re heading in the right direction or if changes are needed.
Challenge and Refine the GTM Strategy: Advisors with experience in sales, marketing, or product development can help founders refine their GTM strategy, ensuring that it’s realistic, budget-friendly, and likely to generate a strong customer base.
Encourage Focus and Prioritization: Founders often try to do too much, spreading resources thin. Advisors can help keep them focused on core priorities, ensuring that they don’t get distracted by too many secondary goals that don’t directly support profitability.
Advisors, by providing constructive criticism and strategic guidance, can help clarify the "???" phase, helping founders avoid ambiguity and ensuring a well-structured plan toward profitability.
Why "Underpants Gnomes" is Essential Viewing for Founders, Investors,
and Advisors Alike
The “Underpants Gnomes” satire may seem like a lighthearted critique, but its message is deeply relevant for anyone involved in the startup world. Startups are often created on the premise of solving a problem or filling a market gap, but the road to profitability isn’t automatic or obvious. Founders, investors, and advisors need to approach the "???" phase strategically, with detailed planning and a clear understanding of how to bridge the gap between a promising idea and a profitable venture.
Understanding the "Underpants Gnomes" satire reminds everyone involved in a startup of the essential need for clarity, planning, and accountability. Profit doesn’t happen by accident; it results from careful planning, strategic execution, and a clear roadmap. For startups to avoid getting lost in the “???” phase, they must have not only a bold idea but also the processes and guidance that make that idea sustainable and scalable.
So, if you haven’t yet, take 1 minute and 36 seconds to watch the “Underpants Gnomes” episode. Let it be a humorous but potent reminder that every idea, no matter how unique, needs a clear roadmap, not just a vague dream. Whether you’re a founder, investor, or advisor, learning to navigate the “???” is the key to transforming ideas into thriving businesses.
Watch here: https://www.youtube.com/watch?v=a5ih_TQWqCA
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