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6 Feb

The wrong reason to start a startup

Here's a major trap you can fall into, especially if you're a star performer in your company:

The internal monologue you have with yourself will start like,

“If I am a star performer within my company and still only capture a small share of the value I create for it, why not do it for myself and capture all of the value?”

Now at first glance, this sounds like a rational, logical decision. But wait a second. There are two major reasons why this is the wrong way to approach building a startup.

Reason #1

If you're a software developer, think about this:

Does software play the biggest role in the success of a software business?

Very rarely!

You can prepare excellent Goan cuisine and yet be a complete failure at running a Goan restaurant. Most great restauranteurs are not particularly good cooks. And most great cooks will probably not make good restauranteurs.

Every business is made up of a hundred different pieces coming together to make a whole system that's repeatable and reliably solves for a specific job-to-be-done. And it's easy to fall under the illusion that your job is the only job that matters within that system.

It's not.

You are right now one part of that engine. It might be a big part, but it is still fully reliant on the other parts of the system coming together to make the business work. Moreover, who knows, your productivity and success might be largely attributable to you being part of that engine! In some sense, it is not just you who is creating value for the company — even the company as a system is working together with you and helping you amplify the value you as an individual can create within it.

My intention here is not to demoralize you or tell you that you can't learn the other aspects that make up a business. Surely you can, and many have done so!

My point here is that many professionals — and this is mostly true for the excellent ones — will find a hard time replicating the success they have in their current domain to other domains, which can come as a shock when you're starting out on your own.

So, it's not a question of taking the leap or not taking it, but asking yourself whether you're willing to create your own engine from scratch — failing quite a bit in the process.

Reason #2

“I'll start my own business because it will allow me to capture more of the value” is the wrong frame to be using while thinking about starting up.

Here's what you're missing with this frame:

1. You're thinking about the value you can capture before you're thinking about the value you can create for the customer.

2. You're thinking about capturing a bigger share of the value while ignoring the risks of starting up and the base rate of success in the startup world. Nine out of ten startups fail.

I know both of these points are truisms at this point, but you need to understand that the frame you use to see the problem decides a lot of the decisions you make down the line. If your framing isn't right, you will go down chasing ghosts and illusions in deserted alleys.

Startups are usually a conflict between personal ambition and the market's desires. It is rarely the case that the two meet. And it's usually personal ambition that you will have to trade off in service of fulfilling what the market wants if you wish to build a successful startup.

A lot of specialists can have a hard time thinking about sources of value outside their box of expertise, and they tend to approach problems using their own frame of reference instead of that of the layperson. This can lead them to building products no one wants except a handful of people like themselves.

Having said that…

… only some self-awareness around the costs and trade-offs is needed.

If you're a specialist, think about this the next time you wish to hastily quit your cushy job to start on your own. And if the trade-offs make sense, go ahead!

I wish you all the best.

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