On Surfing and Startups
Imagine two surfers, equidistant from shore. One is on the wrong side of the breakwater, where the waves have been quieted, their energy spent. The other is exposed to the full strength of the ocean, with strong, rolling waves that crash upon the shore.
If it were a race, which one of these surfers do you think would reach the shore first? Beyond what’s necessary to catch a wave, do you think their ability to paddle will make any difference to the outcome?
Startups operate something like these surfers. As a small individual on a floating board you are ill-adapted to move quickly through the water.
The only hope then is to have chosen the correct stretch of shore on the correct day and to have enough luck & skill to start paddling at just the right time to catch the wave.
Then imagine that at this allegorical surf competition we have spectators on the shore. Many of them are ex-surfers who’ve found success and now sponsor the younger generation.
These moribund old men have told each other stories of their glory days for years. In their hagiography they’ve chalked up their prior success to herculean effort and superhuman stamina.
Jeering and bellowing from the shore they implore the surfers, “Just swim harder you bums! Don’t you want to win?” They’ve forgotten the power of the ocean. But regardless of this sin, these old men almost always win now.
Because if you want to surf and get paid for it, you need their sponsorship.
On Commodities And Brands
This is the part of the thinkpiece where one would normally link to a bunch of tweets. However, I will not give platform to these particular voices.
If you are truly lost, an overview of the current controversy can be found here. Instead of their content, I’d like to talk about why investors say such things.
Investors traffic in the purest commodity we know, money. And there are a lot of them, especially around the Bay Area.
How does one outperform in a commodity market with an undifferentiated product?
The tried and true method for differentiating commodities is building a brand. And Twitter is a platform for congealing the bleating of our id into a brand identity, shiny and proud.
The savvy marketers of the investor community adopted this platform early and have ever since been building their brands to differentiate their money from the next firm’s. They sell the veneer of success and the promise that they alone have the guidance to usher you into entrepreneurial Valhalla.
It’s prosperity theology dressed up in a tech t-shirt and blazer.
So everything you see posted on Twitter or in a blog needs to be critically analyzed from this angle.
VC’s carefully construct a mythos out of themselves. One investor might want to be known as the hardest working, and of course his ethos is that you must work hard as well.
Another disagrees and says you must be far smarter than the competition. Yet another crows about his pervasive network, open to you but for a small price.
Like the gods of old they require belief and sacrifice.
They’ll publicly shed a tear for the occasional suicidal founder, but don’t think for a minute any of them will lose sleep over it. The few that do will not hack it in this business. After all, the ability to coldly cut ties with your losing bets is a core competency of the VC business.
The Rigged Game
Not all investors are like this, of course. And you’ll often get a more nuanced perspective one-on-one. Talk to enough of them and you’ll see a pattern emerge. Investors invest in markets, for the most part.
They’re betting on the size of the wave: that it will capsize the incumbent behemoths and that you’ll have a chance to ride it to success.
Investors love to cite workaholics like Bezos and Musk as exemplars of the startup industry. But in reality they know they will not be lucky enough to invest in superhuman operators with a perfect ground game.
Something about the product and/or the market must be good enough to overcome the myriad flaws and destructive tendencies of founders. Indeed, it has been my experience that many of the most overactive CEOs are also the most disruptive to the company.
When they travel to conferences and meet with customers, it always seems like things run more smoothly.
Talk to enough startup veterans and you will come to understand that each company is broken and dysfunctional in its own unique and special way.
For the company to work, the dysfunction must simply be an insufficient impediment to success. And so many of the factors which define that success are ultimately out of the immediate control of the company. Again, this is why investors place a wide number of bets.
As one of my investors once told me and another executive at a breakfast meeting, “Remember boys, I’m diversified. You are not.”
So it’s a gamble.
One that requires a lot of luck, some skill and some hard work. Of course, that sort of message rings hollow. It does not engender a mythos.
Instead there’ll be yet more bizarre behaviors and artifacts to lionize: meritocracy rugs, sleeping under your desk, and mainlining gray market designer nootropics from Chinese labs.
The good news is that entrepreneurs can choose to ignore the lifestyle being advocated.
Don’t take money from the blowhards who advocate this nihilism.
Understand that there is no such thing as a value add investor. When you’re sucked under the waves and crashed upon the rocks they will not jump in and save you. Indeed, they might just hold you under to get the write-off into a more advantageous fiscal year.
