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I have been spending the last three years and a half into the startup world.
At the "peak" of my startup journey, my shares were worth 300k, we got into the final of a big startup competition (in Europe), and were growing quite fast.
But we still failed, for predictable reasons.
Overall, while building a startup sounds "hot" and "easy-fast" money, this isn't a fastlane path I would recommend for the following reasons:
1. Control
Nobody builds startups alone, even Zuck had 4 co-founders. Building a startup with someone else means you need people with different skills but the same vision.
It's hard. It's really hard. The three co-founders of my last startup each built a different company. One left after three months, the second after six months.
You also (likely) have to raise money. Besides the fact that raising money is hard, you will receive a term sheet that dictates the what and the how.
One of the things you will have to agree on, for example, is that you are not allowed to do anything else but your startup. Your shares will also be vested, doesn't matter if you are a co-founder or just a random employee.
TL;DR: when you raise capital and have co-founders, forget about control. Welcome to the world of negotiation and concessions.
And if shareholders vote to kick you out, you'll lose your own company.
2. Randomness
Building a biz is quite random, but startups are particularly random.
What's the definition of a startup?
Some say it's a company meant to grow fast. Some say it's a company that builds something brand new.
The second definition is correct.
If you build a dry cleaning or a gas pump, just go talk to someone that has one to find out how to do it too. These businesses won't be different in 30 years than they were in the 1980s.
But startups are never like this because they are unique businesses solving unique problems at a unique time.
TL;DR: you massively rely on luck and randomness when you decide to build a startup.
3. Only the very smart people succeed
This one is more controversial, but it needs to be said.
While high IQ does not cause wealth, wealth is directly correlated to high IQ. Understand: only the smart people get rich.
The "you can achieve anything you set your mind to" is what I call "toxic self-help" because:
1. It gives false hope to people.
2. It's not empirical. In fact I believe that the reason why so many people fail is that they're too dumb to succeed. Business is about solving problems, and your capacity to solve problems depends on your IQ (or talent). That's why we chose geniuses to solve the problems of building the atomic bomb...not Brenda from Wal-Mart.
In the startup world, only the very smart people succeed. They're engineers, STEM PhDs, self-taught geniuses...they're smart people. They understand high levels of complexity and solve problems faster than most people.
They're the people that reach 100k followers on twitter after 6 months because they say smart interesting stuff because their IQs allow them to see and understand things the common folks simply can't.
It matters to be smart because your customers, employees, and financiers don't invest time or money into someone who is not smart enough to build his/her product.
I am pretty smart, but not smart enough to build a startup. I am part of these people that are smart enough to start building startups but not smart enough to successfully finish them. I'd say most people that try to build startups are in this situation.
If you're not in the red zone, forget about it.
Oh, and BTW, the stupid people that succeed are the exception, not the rule.
Conclusion
A few years ago I read "Re-work" from the basecamp guys and they said: "don't build a startup".
I knew what I was getting into but I didn't believe it. Well, here we are now.
I think the best way to get rich with startups is to be an early employee. You get the upside of being in a startup without the hustle of co-founding one.
But these positions are hard to get and...it's a job, so you can still get fired.
At the "peak" of my startup journey, my shares were worth 300k, we got into the final of a big startup competition (in Europe), and were growing quite fast.
But we still failed, for predictable reasons.
Overall, while building a startup sounds "hot" and "easy-fast" money, this isn't a fastlane path I would recommend for the following reasons:
1. Control
Nobody builds startups alone, even Zuck had 4 co-founders. Building a startup with someone else means you need people with different skills but the same vision.
It's hard. It's really hard. The three co-founders of my last startup each built a different company. One left after three months, the second after six months.
You also (likely) have to raise money. Besides the fact that raising money is hard, you will receive a term sheet that dictates the what and the how.
One of the things you will have to agree on, for example, is that you are not allowed to do anything else but your startup. Your shares will also be vested, doesn't matter if you are a co-founder or just a random employee.
TL;DR: when you raise capital and have co-founders, forget about control. Welcome to the world of negotiation and concessions.
And if shareholders vote to kick you out, you'll lose your own company.
2. Randomness
Building a biz is quite random, but startups are particularly random.
What's the definition of a startup?
Some say it's a company meant to grow fast. Some say it's a company that builds something brand new.
The second definition is correct.
If you build a dry cleaning or a gas pump, just go talk to someone that has one to find out how to do it too. These businesses won't be different in 30 years than they were in the 1980s.
But startups are never like this because they are unique businesses solving unique problems at a unique time.
TL;DR: you massively rely on luck and randomness when you decide to build a startup.
3. Only the very smart people succeed
This one is more controversial, but it needs to be said.
While high IQ does not cause wealth, wealth is directly correlated to high IQ. Understand: only the smart people get rich.
The "you can achieve anything you set your mind to" is what I call "toxic self-help" because:
1. It gives false hope to people.
2. It's not empirical. In fact I believe that the reason why so many people fail is that they're too dumb to succeed. Business is about solving problems, and your capacity to solve problems depends on your IQ (or talent). That's why we chose geniuses to solve the problems of building the atomic bomb...not Brenda from Wal-Mart.
In the startup world, only the very smart people succeed. They're engineers, STEM PhDs, self-taught geniuses...they're smart people. They understand high levels of complexity and solve problems faster than most people.
They're the people that reach 100k followers on twitter after 6 months because they say smart interesting stuff because their IQs allow them to see and understand things the common folks simply can't.
It matters to be smart because your customers, employees, and financiers don't invest time or money into someone who is not smart enough to build his/her product.
I am pretty smart, but not smart enough to build a startup. I am part of these people that are smart enough to start building startups but not smart enough to successfully finish them. I'd say most people that try to build startups are in this situation.
If you're not in the red zone, forget about it.
Oh, and BTW, the stupid people that succeed are the exception, not the rule.
Conclusion
A few years ago I read "Re-work" from the basecamp guys and they said: "don't build a startup".
I knew what I was getting into but I didn't believe it. Well, here we are now.
I think the best way to get rich with startups is to be an early employee. You get the upside of being in a startup without the hustle of co-founding one.
But these positions are hard to get and...it's a job, so you can still get fired.
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