The ‘Weird’ Startup Investment Game You Need To Stop Playing
In the United States, we elect a president every 4 years. One candidate can serve two terms, for a maximum total of 8 years in office. Now, around two-three years through any given president’s first term, a common trend prevails: Legislative agendas generally become less ambitious, previously polarizing views are swapped out for those that are more middle of the road, and messages which were previously more laden with detail and precise figures degrade once again into campaign-esque rhetoric.
What the heck is happening? In short, another election cycle will soon be upon these presidents, and they need to start thinking more about getting re-elected than continuing to push through any work their currently tied up in.
The exact same phenomenon happens with startup founders, except that their term is a burn rate runway, and their election campaign is a quest for further financing. If you find yourself heading up a grand idea, and it turns into a company, the way of business these days is, ironically, not very business-like at all. In fact, instead of focusing on profit margins and costs of operation, most founders are focused on obscure and multi-measurable metrics like ‘growth’ and the like, aimed at figuring out they can make the numbers, any numbers, impressive enough to secure another round of funding.
If you find yourself in this exact scenario with a company that you’re heading up, it’s important that you know that, for the rainmakers who founded the biggest, most disruptive companies in the world, these thoughts never even crossed their mind. Indeed, there has recently been a reversal, in which instead of achieving something great in order to secure wealth, people are working on the premise of securing wealth in order to achieve something great. Forgive the cliché, but did Zuckerberg start his ‘The Facebook’ website in his dorm room in hopes of securing millions of dollars from Sequoia Capital? Hell no!
Founders these days who want to not find themselves with a valueless company in three years’ time, need to get comfortable with the idea that they are still running a business, they still need to act and make decisions based on the premise that if they are not profitable very, very soon, they’re out. Most startups fail. Of those that don’t fail, the vast majority will be steady, sustainable businesses that can catapult their founders into the upper middleclass, but they won’t be Facebook, they won’t be Snapchat. And they won’t be a household name. And that’s OK.
The narrative that everyone has to be a tech founder that turns the market upside down is overhyped and, ironically, not the path to its own realization for most tech world heroes. Instead, the most common path to greatness is a stellar work ethic, a mental resilience to discouragement, and a passion and drive that’s the stuff of legends. So the next time you see that some Silicon Valley hotshot just closed a $200 million C-series, just remember that there is more than one path to greatness.