Two takeaways from Reid Hoffman & Ben Casnoch’s The Start-up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career, as embodied by the following excerpts…
1. Use size to your advantage; if you’re small, be creative:
Little startups have to be scrappy to survive, so use advantages like nimbleness to outmaneuver big companies:
“The less money you have, the fewer people and resources you have, the more creative you have to become. Get resourceful or die.”
See also: Frugality breeds resourcefulness (Bezos)
2. Dealing with systemic risks:
This is a question that’s haunted me. So much ink has been spilled about founders/leaders managing that which they can control, but how about that which they cannot? The known-knowns and known-unknows are something contingency planning can help us brace for, but how about the unknown-unknowns (i.e. black swans)? What can we do when systemic risk explodes, and everything from capital markets to customers shut down around us?
“Novice entrepreneurs sometimes freak out during a recession, bailing on their startup idea because they think raising money is harder, getting customers to spend money is harder…
“Experienced entrepreneurs know that in reality, starting a company in a down economy has lower risk than people think, precisely because other people are scared-off…
“When you start a company in a recession, there’s less competition.”
For example, Microsoft and FedEx were started in the depths of recessions. But those are survivorship biases, as so many more have gone bankrupt due to systemic shocks.
Intuitively, contingency planning strikes me as the only thing you can do to prepare for systemic shocks. As Ben Horowitz says: “Keep death in mind at all times.” Prepare for your cash to burn down to zero right when capital markets freeze you out.
At that point of despair, I’m reminded of another Horowitz recommendation about raising money: “Look for a market of one… You only need one investor to say ‘yes.'”
A more detailed, executive summary is available at the book’s own website.
#Business #Startup #Fundraising #Capital raise