The pros and cons of doing a startup
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Last week, I had the opportunity to speak to 600 NYU Stern freshmen about the startup world as they explore potential career paths. So much of the startup world has been glamorized in movies, tv, press and social media. Startup founders are praised as heroes, but the path to innovation is littered with failed startups. For this talk, I used the first half to paint all the pros and the second half to show all the cons of starting or joining an venture scale tech startup. My goal wasn’t to sway these students either way, just to present ideas that might allow them to see both sides of the equation.
Here are some of the slides with my commentary:
Note: I figured it was hard to get their attention so I hand drew these slides with marker and crayon to stand out a bit. I thought it might be easier. It ended up being a lot more work!
When I asked this question, half the room raised their hands. Then I asked “How many of your parents want you to consider the startup/tech world?” Less than 10 hands stayed up.
Here are some of the reasons for being a founder
Big changes in our world comes from new ideas and ways of thinking. New products and companies have the ability to change the way we interact, communicate, conduct commerce, etc. For better of worse, it’s not hyperbole to say our world has been meaningfully changed by many a founder with an idea.
Regardless of your personal opinions of some of these startup founders, it is undeniable that they have shaped the world we live in. Many of the products created by these individuals are ones we use every day to conduct our lives.
If you do what everyone else is doing, how can you expect to have a unique outcome? A large part of our society encourages and rewards doing whatever everyone else is doing. However, usually the same inputs create the same outputs. Outlier outcomes require taking the unbeaten path.
The comedian Chris Rock once said about Shaq “Shaq is rich, but the guy writing his checks is wealthy.” Real wealth comes from ownership, real ownership is difficult unless you’re a founder.
Those are some of the upsides that have been glamorized by some about pursuing a startup. Now to the downsides…
Here are some of the downsides of pursuing a startup
Everyone is working hard, everyone is smart. There’s so much more out of your control. You have to build the right product at the right time, and get really lucky along the way. You have to catch a series of lucky breaks to be Facebook vs. Friendster.
On courage - You have to have the courage to make the leap and start something. It takes courage to endure the hardships of building something new and constantly failing. Its easy to be courageous when you have a huge safety net, rich parents, no student loans, pre-built network of investors/talent, etc.
The odds of making it are very low. Creating new products, forging new industries requires a lot of experimentation. Thousands of companies need to be launched before a new innovation takes hold. That means a lot of companies will fail.
Some people like rollercoasters, but they aren’t fun when just around the corner might be financial ruin, shame, stress, failure. People used to ask me if I like my job, I would always reply that while I appreciate and enjoy the work when stepping back, on a day to day basis, it can be soul-crushing and stressful. So much is out of your control and for high achievers who are used to doing well at everything they pursue, this can be a rocky road. (Fortunately I was never a high-achiever!)
I used to always say, if you’re part of a startup, you’ll get punched in the stomach twice a week. So if its Friday at 4pm, and you’ve only been punched once this week - it’s going to be a rocky weekend. Things are always going wrong, the ratio of bad news to good news is at least 100:1. It hurts your self-esteem, it makes you question your decisions. I’m numb to good news, because bad news is around the corner. I’m numb to bad news, because it’s everyday. That dynamic can change your personality.
There’s an old Capitan Picard (Star Trek) quote that goes “Its possible to commit no mistake and still lose. That is not weakness, that is life [insert “startups”]. The low odds of success means that you can spend a career pursuing startups and never “hit it big." People will get more than they deserve for successful outcomes and lauded as geniuses and not enough credit for the work they did at companies that didn’t work out.
My final message to students
These are 2 different perspectives. I’m not advocating one or the other - just trying to paint a fair picture of the pros/cons of pursuing startup ventures. Some industries are better marketed than others, this is one of them - so you should always examine why you’re interested in pursing this path and if this fits authentically to your personality and life goals.
Lynx Insights
Fundraising is a numbers game
I saw this post from Maren Bannon of January Ventures on how tough it is to fundraise as an early stage founder.
#1 on her list of what early stage founders need to do to raise a round is “You need a much bigger top of funnel.” This is a sentiment that we’ve heard echoed by other founders who have shared their experiences with our members.
Here’s Marc Manara, partner to startups at OpenAI and formerly at Amazon, also a former co-founder, on how many checks seed/pre-seed funds are writing and the odds of getting one of those checks.
Founder Kevin Wang also commented on fundraising as a number game. Here’s his perspective on how much outreach you have to do, more than he initially thought.
This sentiment is especially true during down economic times where less money is available for new investments as investors save capital to support existing investments or are they themselves having trouble raising funds from LPs. By no means are these founders/investors advocating for a “spray and pray” method of outreach, but the top of the funnel needs to be bigger than one expects.
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How do you align your purpose in life with your professional work? There are many of us who haven't identified either our purpose or our most valuable work, let alone gotten them to match up. In this session, Dorothy will share a few tools & frameworks one can use to identify a clearer purpose and the practical steps for aligning it with work. The talk is geared toward those planning to start a business or startup, but is applicable to anyone seeking more personal fulfillment in their day-to-day.
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