The megalomania trap
Have you noticed the way media stories - even 250 cool kid blog stories - seem stuck in the description of the startup landscape as either "the next (insert billion dollar company name)" or "so much fun, working from home weaving colorful baskets!" lifestyle companies. These two extremes paint a lot of companies' visions and set themselves up to fail.
There's something in our psychology that has trouble differentiating risk, especially the number of zeros behind the odds of success. A 1/10 success still requires you to "do something crazy" in the eyes of the careerists, so heck, you might as well shoot for "Japanese Palace in Palo Alto" money and go for the 1/10,000 shot.
And so these companies do the things companies do when they're trying to get huge and they fail, when if they'd just kept their costs down and moved into more of a niche space they could have been very successful. If they're lucky - when you swing for the fences you often don't get the disappointment of hitting singles. Fortunately it isn't that difficult to have six decent ideas and take them far enough to see how the market reacts, giving yourself better than even odds of a nice retirement. But I've ranted before about the awful space some entrepreneurs get in where they never have any ideas because they're waiting for "the big one", not realizing that the people who've succeeded with a "big one" didn't set out to conquer the world, they just went out to their garage and started tinkering on a project for themselves. That is if you even accept the idea that the big successes aren't flukes to begin with and that they have some lesson for the rest of us. What's the old saying... to have another Microsoft you'd first need another IBM to bend over?
My advice for other realistic-success minded entrepreneurs - or those pursuing "lifestyle" companies or global domination behemoths for that matter is to find cofounders who fall into the same camp. My advice for the megalomaniacs is to build into your plans for world domination a small success at first. If you are really bent on having your own 767 then surely guiding one small startup to a "liquidity event" won't present too much of a challenge.
There's something in our psychology that has trouble differentiating risk, especially the number of zeros behind the odds of success. A 1/10 success still requires you to "do something crazy" in the eyes of the careerists, so heck, you might as well shoot for "Japanese Palace in Palo Alto" money and go for the 1/10,000 shot.
And so these companies do the things companies do when they're trying to get huge and they fail, when if they'd just kept their costs down and moved into more of a niche space they could have been very successful. If they're lucky - when you swing for the fences you often don't get the disappointment of hitting singles. Fortunately it isn't that difficult to have six decent ideas and take them far enough to see how the market reacts, giving yourself better than even odds of a nice retirement. But I've ranted before about the awful space some entrepreneurs get in where they never have any ideas because they're waiting for "the big one", not realizing that the people who've succeeded with a "big one" didn't set out to conquer the world, they just went out to their garage and started tinkering on a project for themselves. That is if you even accept the idea that the big successes aren't flukes to begin with and that they have some lesson for the rest of us. What's the old saying... to have another Microsoft you'd first need another IBM to bend over?
My advice for other realistic-success minded entrepreneurs - or those pursuing "lifestyle" companies or global domination behemoths for that matter is to find cofounders who fall into the same camp. My advice for the megalomaniacs is to build into your plans for world domination a small success at first. If you are really bent on having your own 767 then surely guiding one small startup to a "liquidity event" won't present too much of a challenge.
posted by aseever at
8:58 AM
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