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The Best Startup Advice: Be Lucky

Posted by indi.ca on Tagged Startup, Business, Equality

Privilege really improves your productivity

Lakshmi, the Hindu goddess of wealth and good luck

Young people ask me for startup advice and I feel bad for them. I try to tell them the truth. It’s mostly luck. It doesn’t matter when you wake up or how much butter you put in your coffee. The real answer is that you need to be born lucky and then keep getting lucky, over and over again.

Be Born Lucky

I started healthy, wealthy, and educated. I was able to have an extended childhood, going to University and being supported by my parents through my twenties. My parents provided startup capital and I married into more wealth. That’s the real foundation. It’s nothing special about me as a founder.

In the US, most startup founders have secured over $150,000 in investment before they turn 17. That’s just what it costs to raise them, and it’s getting higher every year. College is easily another $100,000. That means your average founder is starting with a quarter mil in investment before they write a line of code. The first venture capitalists are your parents, and you can’t pitch for them. You either get lucky or you don’t.

The traits most correllated with being a successful entrepreneur are mostly set through birth and childhood. The other curious trait is that founders tend to be more criminal (I’m guilty of this), but more likely to get away with it through privilege.

The incorporated tend to be white, male, more educated, and more likely to come from high earning, well-educated, two-parent families than salaried workers… those who become unincorporated business owners also tend to engage in more illicit activities as youths than salaried workers. (Smart And Illicit: National Bureau Of Economic Research, 2013).

This is just from one paper, but just look around. Startup founders tend to be rich and white or — in the south — rich, and white-sounding. They tend to start on a stable family platform, have the money for an elite college, and the connections and cash to get started. This isn’t even getting started on gender, race or class.

Startups are not some magic part of economy that somehow transcends inequality. If anything they’re worse, because they demand a high tolerance for risk and sacrificing potential earnings for a long time. It’s fundamentally a rich man’s game, and you have to be born lucky to play.

The rich get richer and the poor get productivity tips.

The Power Of Stories To Make Us Stupid

Humans love stories and we hate math. We point out a few examples of people in garages and say ‘look, anyone can do it’. We attribute everything to the person and nothing to the environment. It’s privilege dressed up as productivity.

The math is much simpler and much more cruel. Rich people have more time and opportunities. Rich people have privileges and — most importantly — money. They have connections to other rich people and live in rich places. That is the foundation of startups. Only then do you get the heroic founder.

There’s a whole industry of content around startup tips — like how many books they read, or how many meditation retreats they go on — but the truth is that most of it is out of your control. The rich get richer and the poor get productivity tips.

Getting Lucky

But let’s say you are born lucky. You’re rich, you’re educated, you have connections, time and health. If you’re going to succeed, you still have to keep getting lucky, over and over again.

Even if you have a great idea, you have to launch it in the right place at the right time, and with the right people. You still need competitors to not exist or to fail. You still need the general market to be healthy, and your specific market to be growing; so you can ride that wave.

Most of this is out of your control. You can optimize everything, do everything right and your idea just may not be right for the market. The market may not exist, or you may be too early or too late.

You do have to work hard to create and capture opportunities, but after a point it’s just out of your control. Lots of people are smart and hard-working, but the successful ones also catch a lot of breaks. They get lucky.

My Advice

Young people ask me for advice because I have launched and now sold a prominent startup in a small country. I always feel like an impostor because our balance sheet was worse than a roadside fruit seller, but it is what it is. This is also part of the startup game.

The main question people have is “what do I need before I start?” It breaks my heart, because by the time they ask this question there’s nothing they can do. Be born somewhere else. Be born richer. Be born a man. None of these are helpful tips, but they’re true.

What people really want to know is what subject should they study, or how do they find investors, or how do they structure their first cap table.

My honest advice is that it doesn’t matter. The whole process is so out of your control that you may as well just start. Even if you do everything right it’s still a risk, and at some point you just need to jump in and take it.

So that in itself is kind of positive, I guess. The right time to start is now, and to start wherever you are, because you’re probably screwed no matter what you do.

But I still think people are asking the wrong question. The question isn’t how do I become a founder. The question is how do we become founders. Not how do we improve ourselves, but how we improve our societies.

People want to change the world, but they don’t actually want the world to change. They just want to be on the winning side.

Socialism For Better Capitalism

What breaks my heart is all the talent we leave on the table, all the great ideas and businesses that the poor and disenfranchised could start if they were just given the stability and leisure that the rich enjoy.

I feel like the great startup ideas are still out there. Honestly, rich people have stupid problems. It’s annoying to call the cab, I don’t want to leave the house to eat, what do I do with my third vacation home. Hence we end up with a slew of well funded startups delivering convenience for the rich and prosperity and jobs for very few.

If we had a more equitable society, where luck was more evenly distributed, I think we’d have much better startups. If more poor people were founders we might solve problems that impact more people, in a more positive way. We’d at least be solving different problems beyond ‘what did my mom used to do for me?’

But nobody wants to hear this. I tell people about structural inequality and socialism, but they really want to know about how many slides their pitch deck should be. Everybody thinks that they’re the exception, and who am I to tell them no.

People want to change the world, but they don’t actually want the world to change. They just want to be on the winning side.

So good luck. You’re going to need it.

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