This article is a revisit to one of my previous articles, A New Perspective on Startups.
Last time, I had written a summary about the video which I came across of Paul Graham and didn’t explain how it helped me.
So, here is my attempt to explain what I meant last time.
Few months back I had gone into a very irrational phase of my life. Each day was making me feel miserable for not taking action.
What can it be for a college student so stressful that each day seemed like hell? It was the urge to have my own startup.
It might seem very ‘cool’ to have a startup and get excited about running one. But the truth is far from that.
I used to watch so many online videos on YouTube which used to suggest that skip college and go run your own startup, take a leap of faith, be your own employer, etc.
That seems attractive but you need to know on which idea you should take a leap and whether you should take a leap at the first place?
Continuous inflow of such content made me feel miserable if I was not working on a startup idea.
This led me to intentional try thinking about ideas and rationalize by giving reasoning that “this time its different”. I used to think that if I don’t come up with a startup idea soon, I would end up having an average life.
But hopefully, I was wrong.
Luckily, I stumbled upon a speech given by Paul Graham at Stanford University: Before the Startup
Watching that speech made me realized that this whole time my perspective towards startups was wrong.
I used to look at it as a money generating machine or something which is ‘cool’ to do. But I never paid attention on what it takes to run a startup.
My focus was just on getting that billion dollar idea. In reality, its not just about the idea.
I would divide the answer into three parts: Opportunity Cost, Expertise, and Ideas
In the speech Paul Graham recommends not to start a startup when you are in college.
As startups are time consuming, they would eat up your whole college life.
There are certain things which one could enjoy only when they are in their early twenties and if you step into the startup world so early you will end up missing out on other things.
For example: You could currently travel around with your loved ones without caring what people would think about you whereas the same could be quite difficult for Mark Zuckerberg. But one advantage he would have is that he could travel faster. (example mentioned in the speech)
Life is short and you only get one short of it, starting early can be a good option but not when you might get regrets later in your life.
Well, I agree with Paul Graham here but with one exception.
I think if what you are doing is what you love to do then the age discussion above does not matter. But this exception can also be counter argued in the next point that is expertise.
Knowing your stuff is very important in life and when we talk about starting a startup then its extremely important.
You must know what you are good at and then use that skill to add value to your startup.
- Mark Zuckerberg: Quite good at coding
- Steve Jobs: Known for his creativity
- Bill Gates: Again, coding.
- Warren Buffett: started his partnership after he had learned investing under his guru Benjamin Graham. (Also, bought his first share at age 11)
- Elon Musk: At age 12 sold his first game which he programmed.
All these people when went into forming a company where they knew what they were dealing with.
They didn’t start a startup just for the sake of it instead they found a gap in the society and exploited it towards their advantage.
Paul Graham suggests that focus on gaining knowledge and not starting a company just for the sake of it. Your company must add value to the lives of people it serves for.
So, how does one generate an idea to work on?
As mentioned above, the focus should be on gaining knowledge and while doing that your mind should be molded in such a way that it could recognize the flaws around you.
If you are working in the field of law, look around and experience the things in that field. Soon, you will be stumbled upon some problems which if solved can help many people.
One such example could be of usage of paper in the courts.
In India, so much of work is still done on papers. So, if you could build an integrated system that could reduce the usage of paper drastically then it could be a good idea to work on.
Talking about startup ideas one must also know about the quality of it.
Peter Theil in his book, Zero to One, recommends that your idea must be 10 times better than the existing solution. Only then you stand a chance that people might make a switch to your product/service.
If you are going to provide a product/service which gets the job done slightly better, it is highly unlikely people will switch.
People are reluctant to changes. Nobody wants to learn a new thing just because it provides slightly better solution. Instead they want it to be significantly better than the existing one.
Therefore, an idea which is solving a problem which people face in their day to day life and the solution is 10 times better than the current way then odds are very much in your favor.
But there is another side.
The type of problem which you are solving also matters.
In a recent podcast of Shane Parish this idea was discussed.
They discuss that if you are living in the future and recognize the gaps in the present world then you might be having an idea which will long live.
My thoughts(an example): If you have recognized a problem which people will start facing when there are electric vehicles all around, then I think you might have an idea which could long live.
Whereas, if you have an idea for a problem which exist in the present world then there is a huge possibility that a big corporation could take over your idea as they might have recognized it way before you. (Or, they might have the resources to take over your idea)
Alright, now you have generated an idea which has been derived by your own experience, solving a problem which people are facing in their day to day life, and the solution which you are providing is 10 times better, but…
Life is not easy.
Therefore even after having odds in your favor, dropping out of college is not a good idea.
There is a huge misconception about billionaires dropping out without a backup plan to pursue their startup ideas.
In the book Originals Adam Grant debunks it for us.
He writes that all these so-called college dropouts always had a backup plan in their life and it is quite rare that one goes without a plan.
Here is the list of examples he gave:
- Phil Knight: Phil had started selling shoes out of his truck in 1964 but still kept his job as an accountant until 1969.
- Steve Wozniak: Continued to work in HP even after starting Apple for a year.
- Larry Page & Sergey Brin: They had figured out google in 1996 but didn’t go leave their Ph.D. programs until 1998. Page said, “we were too worried about dropping out of our Ph.D. program.”
- Ava DuVernay: Made her first three films while working in her day job as a publicist.
- Brian May: After playing guitar for seven years he decided to go all in.
- Pierre Omidyar: He had built ebay as a hobby and left his day job only after it was earning more money than his job.
- Henry Ford: started his automotive company while being employed under Thomas Edison.
- Bill Gates: He waited for an entire year after selling his first software. Even then he did not drop out, instead took a leave of absence. Plus he had his parents to for financial support.
(I think Steve Jobs is an exception to the list)
So if you look at the list, being risk-averse is not a bad idea at all rather it provides you with a safety which helps you in exploring things in the way you wanted to.
Taking a leap also depends on what type of idea it is.
One must understand that having an idea and executing it efficiently are two different things.
If you have a great idea but fail to execute it properly then odds are that you won’t succeed, but if you have an average idea with great execution the odds are highly in your favor.
Quotes from podcast mentioned above:
“Ideas are cheap and easy and execution is everything.” Shane Parish
Great insight (Ideas) are like Archimedes lever that when its moved, it moves the world but, it still requires movement (execution). Mike Maples
When you decide to start a startup always consider three things: Opportunity cost, your expertise, and value of your idea. Plus, even after that always have a backup plan as you don’t know what you don’t know.