Startup founders are sometimes forced to lead a schizophrenic existence. They have big dreams, and the reason they want to create a startup is because they want to change the world. They’ve been told they need to think big , because the magic mantra today is disruption. Their icons are larger than life figures like Steve Jobs and Ellon Musk, who succeeded by breaking conventions because they had the courage to challenge the status quo.
Now the only way you can disrupt much larger companies is by battling them on their home turf . This requires a lot of guts, and is often doomed to fail, because the odds are always stacked against David, no matter how brave he may be. While startup founders want to create a big splash by shaking up the entire system, the reality is that because they have limited funds, a lot of their dreams never come to fruition. They will usually run out of money before tasting success, and this is a constant source of tension, both for the founders as well as the investors.
Friction Between Founders And Investors
On one hand, you have one set of investors who tell the founder, “We will give you as much money as you like – we want you to create something completely new. We need you to think out of the box, so that you can dream big and be innovative. We want you to experiment, because this is the only way to succeed – by daring to be different.”
On the other hand, you have investors who tell founders to think about profitability and unit economics. They preach the importance of being frugal, so they can conserve their funds. They advice them to run low-cost experiments and fail fast, so they can survive and live to continue the unequal battle.
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Both the options make sense, which is why the founder faces a dilemma. Though he has lots of hopes and dreams, he’s never sure whether he should go all in and take a big bet . If that fails, then he is back to square one , and everyone will blame him for running the company into the ground. On the other hand, if he doesn’t have the courage to take a big bet, then how can he call himself a daring entrepreneur?
As usual, there are never any right answers – they depend upon the circumstances the founder finds himself in, and this is usually out of his control. All one can do is empathise with his quandary, and help him to find the path which is correct for him.
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]