Should you start a startup?
Season 4, Episode 1
GM y’all!
Last week I warned that I was going to start posting about the founder journey. Well, it doesn’t get more cliche than this…
Should you start a startup?
Well, of course, the answer is, “it depends.”
However, I believe that in order to start a company you do have to “catch the bug” or “get the itch.” Funny that these expressions have negative connotations. Honestly, I don’t think it’s inaccurate. Having a “calling” to start a company complicates life.
But first, let me pause, and acknowledge my tremendous privilege. Growing up a straight, white male in middle/upper-class America, I was dealt pocket aces. I think to myself almost daily that I’m the luckiest person in the world. Maybe I’m in The Truman Show and you’re all in on this secret. But I do realize and believe I am 100% hashtag blessed. Truly.
Today I want to write about how I came to the conclusion of starting a second company. But more importantly, I’m going to try my best to explain a framework that you can use to make the decision. Because at the end of the day, we’re all unique, at different places in our lives, with different goals and incentives, different life circumstances, and so many more variables.
Here is what I’ll walk through in today’s post:
Mental models to make the decision
The “spreadsheet formula” I built to make my decision
Timing
Risk tolerance
Making the leap
But first…
Some context
As I was stumbling my way through my first company in 2016, my co-founders and I were approached by another (slightly further along) startup that wanted to acquire us. We were starting to raise money at the time, and things were looking good on that front. But something about our vision felt incomplete — it felt like we were building something that was a “nice to have” not a “need to have” product. And the company courting us was building towards a much bigger vision — one in which we could have a high impact, but fit nicely into their larger narrative. Also, I didn’t get the sense that I wanted to build a company for the next 15 years with my then-current co-founders. So, after dozens of hours with lawyers and a lot of heated back-and-forth negotiations, in January of 2017, we signed the final paperwork to be acquired and went for a celebratory steak dinner. Fun fact: after the dinner, my then-girlfriend (now wife) Britt and I walked back to my motorcycle outside the restaurant in SF, only to find it stolen. Don’t worry, a week later the cops found it dumped less than a mile away. But I’ll never forget that Lyft ride home, humbled, no longer with a motorcycle, and no longer with a company.
I stayed on full-time with the company that acquired us. It was a great ride, but unfortunately, after a couple of years, things fizzled out with them. I jumped ship and started consulting for a few companies while I figured out what I wanted to do next. This was…
The existential crisis
If you are reading this and I spoke with you between the fall of 2019 and the summer of 2020 — thank you! I spoke to a lot of people. When making big decisions, I like to remember that “there is wisdom in numbers.” And then once I’ve digested all the advice, I remind myself of the Naval quote: “if you survey enough people, all of the advice will cancel to zero.” Listen to that 3-minute clip linked above. It’s actually super relevant to this article. Naval is next-level big brain. Here’s another quote from it:
The best founders I know read and listen to everyone. But then they ignore everyone and make up their own mind.
They have their own internal model of how to apply things to their situation. And they do not hesitate to discard information. If you survey enough people, all of the advice will cancel to zero.
Relevant here, as I give you advice on if you should or shouldn’t start a company. :)
Anyway, I spent about nine full months thinking if I should start a second company. I talked to friends and family. I read books, articles and listened to podcasts. I talked with my therapist. I devoured every Paul Graham essay (check out Why to Not Not Start a Startup).
I had a classic case of analysis paralysis.
Letting the data decide
In the end, I decided I would create a formula and let the data tell me what to do. Seriously! And for me, it was tremendously helpful. If nothing else, it forced me to figure out what I cared about, and what I was trying to optimize for. Both in the short-term and the longer term. Here is a photo of the actual spreadsheet I built, with an explainer of what it all means. Notice the timing of when I was in the thick of this decision (more on that later).
I think it’s flexible enough to use for any decision, career or otherwise. Let’s break this down a little bit more.
1. I had identified three clear paths in my mind.
Option A - Head of Sales at a big startup (100+ people).
Option B - Head of Sales at a small startup (25 or less).
Option C - Start a company.
2. I mapped out the 5 variables that I cared about the most. Little embarrassed to share them — but hey, I committed to transparency, so, here we are.
Short-term Money
Long-term Money (and access to interesting people)
Equity + Control/Vision and Personal Growth Potential
Stress
Alignment to Mission
3. I assigned a weight to each variable.
So, for instance, you can see that the thing I care least about right now (only 7.5% weight) is “Stress.” Meaning, I’m okay waking up at 4 am with a slide deck idea on my mind, or thinking about work on the weekend, or working long hours, etc. And the variable I care the most about right now is having control over a vision and having skin in the game, aka equity (27.5%, precisely). These will certainly shift over time as I have children (Lord willing), and other life circumstances.
4. Finally, the spreadsheet calculates a weighted average.
Boom. There’s my answer! 😆 I laugh because, of course, this isn’t/wasn’t *the* thing that made me decide to start a company. In fact, when the numbers were calculated, I distinctly remember thinking: “wow, these are basically all the same number.” And in many ways *that* was the lightbulb moment for me. Essentially, the epiphany was: just pick!
Conclusion. There is no wrong answer. Or, as my mother always says: “two good choices!” (In my case, three!). It was freeing to know that I could take any of the three paths, and be relatively equally ‘happy’ based on what I was trying to optimize for. So, I could just choose whichever path I wanted more. And when I considered that, it was clear — the adventure was in Option C. I was going to start a company. But remember the date of the spreadsheet — this epiphany was February 2020. Two weeks later, the world would quite literally shut down.
The wait
As I mentioned earlier, I discussed this decision with my therapist… ad nauseam. He would later tell me that I can’t calculate every decision with a formula. I honestly still don’t know if I believe that. But, I do know now that at a certain point, you just have to take a leap of faith.
Analysis paralysis is real.
Even knowing I wanted to start a company, I didn’t know what kind of company. With who. Or when.
And the pandemic had just hit. I was consulting for a few companies at the time, and thought, maybe I should scramble and get a stable job. But tons of layoffs were happening. People weren’t being hired, they were being let go. And it’s certainly not a good time to start a company! So what do I do? Remember how I mentioned earlier that I feel like the luckiest person in the world? As such, one of the companies I had been consulting for over the last few months, was a company that had just gone public a few months back — a little company called Zoom.
I was in the right place at the right time. The “Zoom Boom,” as they called it internally. And a boom, it was. I can still picture in my head, the “inbound leads” chart in APAC in early March. A proper “hockey stick” graph. They doubled their headcount in 2021, and I joined them full-time. It was truly an incredible place to work. I had an awesome manager, worked with incredible team members, and was loving the chaos and shifting problems week over week. But I still had “the itch.”
Risk tolerance
There are a lot of lenses you can look through when making a decision.
The most important one for me, when deciding to start another company, was around risk tolerance. What am I willing to do? And more importantly, what am I willing to give up? For me, there was a very quantifiable dollar amount that I was giving up by not choosing “Option A” or “Option B” — software companies pay heads of sales good money. And I was looking at those offers right in the eyes and saying “no (…!?) thanks”.
It is a magnitude bigger risk to start a company from scratch than to join one. But again, I had to remind myself of the factors that I care(d) about in my career right now. I wasn’t trying to optimize for money or low stress. I want to hustle, grind, learn, grow and own something. Those require a very high risk-taking tolerance.
My brother was always the risk-taker out of the two of us. We’d work all afternoon building a bike jump, and he’d always be the first to test it out. If we built the landing ramp too far, he would be the one to case the landing, bend his tire, and bust his shin open. I’m an observer. But when I observe long enough and decide I want to attempt a jump, I’ve usually seen what not to do, and as a result, I tend to make the jump a higher percentage of the time. It’s not because I’m a better bike jumper than my brother. I’m not. It’s just because I am scared to go first.
But with a startup, you have to go first. Because, by definition, there is no one doing ‘the thing’ that you are going to do because you are creating ‘the thing’ from nothing.
Making the leap
Next week I’m going to talk about how I brainstormed startup ideas, and the best resources I found to do so. There’s a good amount of content out there on the topic, but I’ll share the ones that I legitimately used — the tactical stuff that you can implement today.
If you think someone will enjoy reading next week’s post, I would be very grateful if you send them the link below to subscribe:
Quote I’ve been pondering
Everything you can imagine is real.
-Pablo Picasso
ICYMI - Portals to corners of the web
• Say what you will about Elon, but the man is playing 3D chess. This Recode interview with Kara Swisher and Elon, the Technoking, is mind-melting. Here’s the closing question - Kara: Are we in a simulation? Elon: My heart says no and my brain says yes.
• Pomp ranting for 3 minutes about reports that the SEC will not oppose the Bitcoin Futures ETF applications that are set to begin trading on Monday (and likely the reason (bit)corn surpassed $60K USD today).
• We announced our fundraise this week at Groundswell. I often find fundraising announcements to be a bit shallow, so I took a different approach; check it out here: The new wave of selling 🌊.
• Kevin Rose has a podcast where he interviews NFT artists — it’s a great glimpse into the weird world, and he makes it entertaining and approachable. One of my favorite episodes was with Tyler Hobbs, a generative artist (art generated by an algorithm) known for his Fidenzas (floor price is now over 170 ETH, $650K USD).
• Relatedly, True Ventures, where Kevin is a Partner, invested $6M into Art Blocks this week. Art Blocks is a site where artists can create projects and allow users to generate art, aka “mint.” They also have a “Curated” Collection where a group of people hand-pick projects that artists submit and put their stamp of approval on. I think this is a really cool blending of decentralization and centralization.
• Tyler Hobbs’ Fidenzas is part of the Art Blocks Curated series, and since it’s one of my favorite NFTs, I’ll leave you with a Fidenza below (I love them almost as much as I love Punks). My wife (the artist) joked with me this week that it took tech to get me to appreciate modern art — she ain’t wrong.
What did you think of this post?
(All feedback is 100% anonymous)
PS - here were the results from last week’s poll. I was hesitant to talk about my startup instead of general tech things. But it seems y’all are okay with it, or too nice to say otherwise! :)
Thanks for hanging out with me again this week.
I’m feeling energized sharing things I’m tactically learning and applying in this wild ride that is a startup. Excited to get “caught up” with the backlog of posts I want to get out there and start writing about things I’m actively chewing on each week. My main goal is to 1) help founders avoid pitfalls that I’ve run into and 2) steal things that I found to work well.
This week’s struggle: hiring! The market for talent is bonkers right now, particularly engineers. So, if you by chance know of someone really good, feel free to send them my way — we’re paying a $5K (1.32 ETH) referral fee if we hire them. Peep the Job Description.
Here is a final nugget on four lessons I’m learning in hiring.
See y’all next week!
Cheers,
Brendan J Short
[Written while listening to Wild, by Tourist]