Here is a list of the unexpected and sometimes controversial lessons I have learned from startups. Far be it from me to give startup advice at 21, but these are the things I wish I’d known at 16:
The average business goes bankrupt. The average trader loses money. We tend to confuse the notion of average with that of median, leading us to believe that 50% of people are below average. However most distributions follow a pareto principle, where 20% of a population is responsible for 80% of the output. This means the vast majority are actually below average, and an even smaller percentage are good enough to succeed.
Most startups are by definition, average. And most startups fail. Doing what everyone else is doing (competitors, partners, users, investors, etc.) is the surest way to fail.
There is nothing worse than being unoriginal.
Easy or non-original ideas appear to be low-hanging fruit. In fact, it's the opposite. They are
rife with traps and non-obvious challenges. Easy ideas are average which makes them unlikely to
succeed.
Note: do not confuse easy and simple. Building reusable rockets is hard, but the idea is simple.
You should think of everything in terms of odds, statistics and probabilities.
Luck, is a question of odds. You can create your own luck by stacking favourable odds on your side. Create serendipity by seeking out the right place and the right time.
Building a successful startup is statistically very difficult. About 95% will fail and you are not the exception, if you think you are, then your odds are probably closer to 99%.
You might calculate that if you create 10 startups, the odds of at least one succeeding is ~40%. What's less obvious is that if you keep working at the same problem, learning from your mistakes and failures, the % of failure goes down over time. While a particular startup might have a 95% failure rate, your mission's probability of failure over a long enough timespan and after enough startups can be significantly lower.
This means your mission is more important than your startups.
If the truth is not useful to you, you have more to gain by ignoring it.
A belief that is false, but actionable is more valuable than a belief that is true, but not actionable.
Reality is less objective than people believe, much of it is someone's interpretation of the facts. Choosing to be right and choosing to win are not always the same choice.
For example: It might be true that external influences will play a greater role in your failure than internal problems. However, if the belief that these internal problems are solely to blame is the more actionable one, then that is the belief you should adopt. Perhaps your competitors were just luckier than you, perhaps they even acted illegally, but focusing on this truth will do nothing to help you, so it should be ignored. What might be less true, but more useful, is to find the actionable ways in which you could have done better.
Note: be careful not to generalise this, I am referring to startups, nothing more.
Those at the frontier between delusion and the real world, between madness and sanity, are what I consider geniuses.
If you are a genius but unable to articulate your ideas, you are just mad, and your genius will not be rewarded.
There is no honor or glory in being the misunderstood genius or mad scientist. If you cannot contribute anything meaningful to your field then you are effectively useless.
If you're willing to be focused, you can most likely stay in school, and will not need to drop out. You probably don't need to quit your job either. While distractions can and will kill your startup, you should wait to find the kernel of product market fit before dropping out.
You should not drop out if you're studying engineering, and don't already know engineering. If you're 18 and aren't already comfortable programming, you should probably stay in school.
You need valuable hard skills to truly contribute as a co-founder. If you are the technical co-founder, you will not be adding any value unless you are a good engineer or designer. If you haven't learned how to be a good technician before getting into college, you're not likely to learn it on your own outside of college, so don't drop out.
If you're studying business, economics, social sciences, or some kind of soft skill, you should drop out. Learn a technical hard skill like design, engineering, applied science, logistics, or even an artisan craft. You will have your whole career to acquire soft skills, but only a short window early in your career to become good enough at a hard skill.
Building a company with your friends or with people close to you is usually a bad idea. Not because it sours your relationships with friends, but because that team will lack intensity, and intensity is the fuel that powers a startup.
Pick people based on their intensity. Respect will form, and thus trust. From that trust, comradery can emerge, and usually friendship.
I say recruiting and not hiring, because when someone joins your team, it should be for life. They are joining your mission, which means they're joining your life, not just your payroll.
A good team can pivot into anything, which is why recruiting is more important than fundraising. A team can go far without fundraising, but it won't go anywhere without good recruitment.
People are capable of creating incredible amounts of energy, the kind of energy that your project needs in order to be successful.
Founders are more important than their businesses. Co-workers are more important than your job.
Mono-maniacism is good in startups. If there is no captain Ahab at the helm of your startup, how can you hope to find a mythical whale that nobody before you has captured ?
You need to always be thinking about the problem you're solving. In the shower, when you sleep, when you eat, when you're on a date, etc.
If you see something nobody else sees, that alone should keep you up at night.
Ahab got further than anybody else chasing this whale, but he was wrong. He couldn't kill it. You will most likely be wrong, but if you're not obsessed, you'll never even make it far enough to know.
Ahab failed because he didn't listen to nature. He receives inumerable hints and warnings that this whale is most likely immortal or divine, which he ignores out of hubris.
There are many things that can doom your startup idea, but none is more definitive than defying the laws of physics, human nature, or mathematics.
Be brutally honest with yourself, and don't live in your own delusions. If you can't do this, find your biggest critics and most cynical friends, and regularly get their feedback.
Does your solution obey human psychology ? Will people have to fundamentally change who they are to appreciate your product ? Are solar panels sufficiently energy efficient for your solar power project ? Is your market big enough for this network solution to be valuable ?
Jeff Bezzos has great advice about this.
Sometimes, obsession goes beyond the user, and beyond the product, and an obsessive founder can start focusing on competition. This is unhealthy for multiple reasons. First, the sum of your competition is what defines average, so they are likely to fail, and so are you if you emulate their ideas. Secondly, you care more about your competitors than your users. Thirdly, there are few practical (and legal) things you can do to stop your competitors. So you are worrying about something you can't control, instead of the things over which you have full control over.
Competition is a useful tool to create a sense of urgency within your team, but its influence over decision makers should be minimal.
Writing about your knowledge is a great way to build up credibility, at least it worked for me.
It also allows you to develop a much deeper understanding of your field. This is what can allow you to obtain and share unique insights, the kind that separate you from your tragically average peers.
Do take this to mean "regurgitate what your heroes say". Everything you read, and everyone you respect, should be treated as wrong. Either they are average, and thus wrong. Or their track records give them an above-average status, meaning they were once right. But times change, and what was true inevitably becomes outdated.
The word "investor" is so often synonymous with the word "follower" that you will save hundreds of hours thinking of them in the same way.
Most investors wait for others to make the first move, they ask uninteresting questions (such as about your competitors), and they can/will fuck you up. Some will consciously fuck you up to benefit their short-term incentives, but you should be more worried about the ways in which they inadvertently mess up your company:
The average investor sucks at their job. You are unlikely to ever meet the good ones, so assume every investor you meet is subpar. The very few that are single-minded, early adopters, and deep thinkers are already very well known.
If you can operate your business without investors, that's total victory. Raising a 9-figure series A is closer to failure than you would imagine.
This is the most important point yet hardest to follow.
Seek exponentiality in everything. The benefits of compound growth have been discussed enough, but what is less often mentioned is how to tell if you are currently participating in compound growth.
I have found that the best thing to measure is regularity. If you are learning to write, write every day. If you are optimising your health, sleep often rather than on weekends.
Many people can pull off "work hard play hard", but the sum of downtimes resulting from "play hard" will eventually bear a toll on your work.