Optimise Your Startup For Learning, not Success
Founders start startups hoping to succeed: They want to build a great product, attract a lot of users, run a bigger company than they did, impact the industry and earn enough to not have to work again.
But the reality is that less than 1% of founders succeed, as measured by whether they earned more from their startup than they'd have had they taken up a job [1].
Another study found that the average entrepreneur in the UK earns less than the average non-entrepreneur.
Ignore all the magazines showing famous entrepreneurs’ faces. They’re outliers, which catch our attention for the same reason that a car falling off a bridge catches our attention. The media takes advantage of this, because they don’t care about giving us an accurate worldview.
When you decide to do something, be it a job or starting a startup, you’re investing your time. A time investment is no less serious than a money investment. And when you look at it as an investment, investing principles like risk and reward apply. When an investment has too much risk, reward is immaterial. The investment isn’t even an option for you to pick from.
As an example, imagine I told you to jump off a moving plane without a parachute, and if you live, I’ll pay you X. There’s probably no value of X for which you’d jump. Because the chance of landing into a haystack that lets you live is so low that you wouldn’t accept the deal irrespective of the money.
Similarly, if anyone says that the average founder makes X, ignore it. Statistics is inapplicable when the distribution is so skewed that averages no longer make sense. It’s like saying that when Elon Musk walks into a room, everyone in the room is on average rich. At a technical level, that’s true: Elon has $100B+, so if there are 10 people in the room, each person on average has $10B. But practically, you’re not getting into a helicopter when you leave the room. So ignore any statements about the average founder [2].
To Succeed As a Startup, You May Have To Take Excessive Risk
In a car race, things like this happen:
A sane person would look at this and say, “Well, what do you expect if you drive faster than 300 km/hour glued to each other? Maintain a sufficient distance between cars!”
But the sane person would lose the race. What’s the point, then, in participating in the race, in the first place? If you participate, you need to drive at the speed of the fastest competitor, whether or not you think that makes sense. Go big or explode. There’s no middle ground, no sane path.
Startups are like that. You have to take crazy risks, sacrifice your work-life balance and family time, lose all your savings, go into debt, take an insane amount of stress, and deal with tech, process, market, people and other problems all at once. You have to go at the speed of the fastest competitor, even if it’s risky. You can’t drive at a sane pace, though that maximises your chances of reaching the finish line by avoiding an accident, because reaching the finish line late has no value, in a car race or in a startup.
Systems often force individuals to behave in ways that are good for the system as a whole, but harmful for the individual.
Let’s take a step back and summarise the points above: first, most founders don’t succeed. Second, startups may require one to take excessive risk.
The conclusion from the above is:
Optimise Your Startup for Learning, not Success
Learning is anyway the biggest benefit most founders actually get, as opposed to what they hope they’ll get. The learning translates into fast career growth. For example, I now work as a CTO, a role I would not be able to perform had I not started my startup Futurecam. After shutting down my startup, I consulted, and I could work with CEOs at a much higher and strategic level than I could earlier, when I was just an engineer. I was also able to advise other startups. So, whether as an employee, consultant or advisor, learning was the biggest benefit I got from starting my startup. I’m now a leader rather than just an engineer.
If learning is the main benefit from starting a startup, why not optimise for it consciously? This will mean re-examining conventional wisdom, by looking at things from first principles, and having the courage to follow the conclusions that result:
• Do everything yourself rather than hiring employees or contractors. Don’t be constrained by thinking of yourself as an engineer, so you should get others to do other things. When I stopped telling myself that, I was able to learn UX design, project management and product skills. Learn whatever is needed to help your product succeed, like marketing or sales, rather than holding yourself back by preconceived definitions. This will take months and years, and that’s okay. Think of it as a continuation of college — you’re getting educated. And if you’re not educating yourself, you’re obsolescing yourself. Instead, invest in your career, which will compound for decades. Deciding not to hire eliminates a whole bunch of issues: writing JDs, interviewing, writing contracts, satisfying people, being answerable to them, worrying about people leaving and dealing with the consequences, dealing with people issues, people not taking your work seriously because they have a main job… Certain decisions are high-leverage, in that saying no to one thing eliminates at one go a huge amount of work and distraction that would otherwise affect you fractally.
• Not paying others means that you don’t deplete your savings, which reduces stress. And it gives yourself the time to learn. I’ve seen some founders grow a team too big too quickly, beyond their ability to manage, leading to a big failure. Learning takes time, and you can’t speed it up just because you need to, any more than you can learn tennis in a week just because you have a match coming up. Trying to force it will only cause stress and failure.
• You can opt out of the rat race against your competitors, doing things at your pace, rather than stressing yourself.
• You can consult or work part-time to fund the startup, which is more sustainable and comes with a lower psychological cost than exhausting your savings.
• You can have your work fit into your life, such as by giving yourself the freedom to travel, or spend more time on what interests you, be it an area of tech, art, music or anything else.
• We have a tendency to just stick with we know to get the job done quickly, even if it’s outdated or inefficient, instead of occasionally taking the step back to upskill ourselves. When you start a startup optimising for learning rather than success, you take a step back and ask yourself what the right, rather than expedient, solution is. For example, you may explore a PWA to see if it works for you, rather than sticking with a native mobile app. Normally, we don’t have much budget to take risks, but if you optimise for learning, options open up, like exploring unfamiliar technologies that have a decent chance of working out.
• You can build an app to scratch your own itch, which will produce a certain amount of satisfaction even if not enough others use it.
• You can say no to gatekeepers like Apple, who add the stress of wondering whether they’ll reject your app each time you submit an update, even for reasons you’ve already explained last time. Instead of dealing with Apple, you can build a PWA or a responsive web app. Or support only Android.
Conclusion
Most founders don’t succeed from having started a startup, so consider optimising your startup for learning, stress-reduction and flexibility instead of success as conventionally defined.
[1] Only 1% of companies get funded. And only 25% of founders of those companies earn more from equity than they’d earn from a job. Multiply these together, and you get 0.25%. Maybe these estimates are too low, and some companies succeed without venture capital, in which case the number may be higher than 0.25%, but it’s still safe to say that less than 1% of founders earn more from starting a startup than they do from taking up a jobby job.
[2] The median may be a better indicator — the median entrepreneur makes zero.
Solve people's problems, they are going to pay for it. Good read👌