A Pirate’s Guide to Start-ups
We live in an age of mega-corporations, globalization, and mobilization. A time of heavy government regulations, venture capitalists, and of course start-ups. None of this is new. It began in the 80s… the 1580s.
Despite popular misconceptions — Walmart did not invent big business. Railroad tycoons and robber barons did not invent the corporation. Joint-stock companies were invented some 800 years ago (thank the French for that). By 1580, the East India Company would begin a global corporate empire that would last nearly 300 years.
Those were the days of globalization. New markets, new cultures, new connections. Government regulation (with some help from the pope) had literally carved the earth in two pieces, giving monopoly trade rights to Spain and Portugal. It was also a time of mobilization. Not rails or automobiles, not the internet or jets, it was the age of sails. An age when more people would travel farther and longer than ever before. It was also an age of start-ups.
They were called Corsairs or Privateers, and sadly today, most lump them in with Pirates (which they were to the Spanish and Portuguese). Corsairs and Privateers were quite different than your run of the mill pirate. Understanding their process makes an interesting analogy for today.
The Corsair’s Process
1. Taking the right risk — the risk taking of pirates/corsairs is not something that needs to be promoted. It needs to be tempered. Sailors in that time lived a dreadful existence. Pay was low, discipline was brutal, and death was likely. These men (and some women) were entrepreneurs — not blood thirsty nut cases.
2. Keeping it legal (mostly) — the Corsair gets his name from the ‘Lettres De Course’ they were issued. In the US and Britain, they were known as ‘Letters of Marque and Reprisal’ (still a bit French but leading to the less impressive name Privateers). This is what distinguished them from pirates and hopefully kept them from a date with the gallows. It was also a defacto business plan.
3. AdVenture Capital — once the would-be Captain/Entrepreneur had his ‘Letters’, he was free to seek some financial backing. While not insubstantial, this was the equivalent of seed money. Corsair’s gathered just enough money to get a seaworthy vessel (not warship) and enough food, water, and gunpowder to last a few months. ROI is an ancient concept too…
4. Make it work — long before Tim Gunn, Corsair’s were the masters of making things work. They often started with a barely seaworthy merchant vessel and a few dozen, half-drunk (if they were lucky), crewmen. What followed was an A-Team styled construction montage. Guns were added, decks removed, masts reinforced, and sails repaired. Corsairs were the masters of low burn rate and, judging by their appearance, may have invented sweat equity.
5. Charting the unknown — while the Barbary Corsairs and the raiders from Ireland were the exception, our seafaring entrepreneurs were setting off on a global voyage of discovery. The Atlantic Ocean (and later the Pacific) were highly uncharted waters. Maps, navigation equipment, and other technology were at a high premium. Worse yet, privateering was only a survivable (or profitable) endeavor if you could find and subdue the prize.
6. Partnerships — our sailors weren’t the only start-ups braving the new global markets of the 16th & 17th century. Another type of start-up, one that was labor & resources intensive, required far greater funding, and suffered from extreme burn rates and high employee turnover (death) existed in those days. These were the new world colonies. The two made natural partners. The colonies could never have survived without the cheap goods that successful pirates brought to their ports. For their part, Corsairs were more concerned with a faster turn rate (it was a long voyage back to Europe). They also took advantage of colonial ports for recruiting.
7. Reputation — finally, our crew and Captain knew that reputation was king. It may surprise us today, but even 500 years ago, word got around. Success led to greater success. A crew known for their achievements could expect higher recruitment in local ports, better treatment by local officials, and most important, their prizes often surrendered without a fight. Conversely, acts of piracy, breaking the initial contract, led to a short drop and a sudden stop. All this without Twitter, Facebook, or Yelp.
