From banking and consulting to working at public or early-stage companies, there are pros and cons to exploring each option. People will try and compare several wildly different types of paths, which is a very apples to oranges exercise. In reality, there’s no course that will serve you best – instead, you should focus on creating a risk-adjusted background that will increase your odds of startup success.
There are five common risks that can lead to the death of a new startup. For people who aren’t dogmatically ready to be a founder right now, there are experiences you can pursue that will help you lower the risk from those “causes of death.” I’ve broken down the kinds of “life-saving” experiences that can help increase your odds of survival as a founder.
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Table of ContentsProduct-Market Fit
Inability To Hire
Inability To Sell
Inability To Fundraise
Building a Risk-Free Resume
Product-Market FitBy far one of the most common problems that lead to a startup’s failure is a lack of product-market fit. There’s a reason why Y Combinator chose the motto “make something people want.” The ramifications for a bad product market fit is huge: failing to pick something people want is one of the easiest ways to guarantee startup failure.
When you’re considering what resume experiences to pursue, evaluate them based on their ability to teach you how to discover product-market fit. There are two specific ways you can develop this skill:
Sector Expertise: Anyone who built their career at Square, Toast, or Servicetitan are going to be much better at identifying product-market fit for SMBs. If you are interested in building a company in a certain sector down the road, you should identify an opportunity where you will get a deep insight into that sector.
Build For Yourself: Once you’re in a job, look for needs. I call this “opportunity canvassing.” Typically at later stage companies there are more opportunities to identify needs. A great example of this is Rick Song, the cofounder and CEO of Persona. While Rick was working as an engineer at Square, he helped build the identity verification workflow–and it was really hard! That led him to build a solution to his own problem, and today Square is a Persona customer!
Cofounder RiskSelecting a solid cofounder is crucial and failure to find the right person is a common cause of failure for a startup. Not being able to attract a good cofounder can also be a red flag in and of itself. Are you making strong connections and building your network now? The connections you make in your early career will define the kinds of people you’re around for better or for worse. Not attracting a good cofounder can be just as bad as accidentally attracting a bad one.
Paul Graham, cofounder of Y Combinator, lists “having a single founder” as one of the top 18 mistakes that kill startups. He describes it as a vote of no confidence—it reads as the founder being unable to talk any of his friends into starting a company with him. Your friends are the ones who know you best, so if you’re unable to get any of them to build something with you, maybe you should re-evaluate your qualifications for being a founder.
Let’s say your friends are all wrong and the company is a good bet to take—starting a company is typically too hard for one person to do alone (as Graham points out). You need a thought partner for high-quality brainstorming, emotional support, and for talking you off the ledge of bad decisions.
The best way to find a good cofounder is to join a “talent vortex” as quickly as possible and build strong relationships. A talent vortex is a company that has assembled a group of talented people that attracts other talented people. As that talent vortex spins it becomes self-perpetuating. Smart people want to associate with smart people because they know they can trust them to find the best solution.
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Inability To HireEven if you and your great cofounder(s) are able to tackle something the market wants, you’ll need to be able to hire great talent. Access to high-quality talent is another ancillary benefit of working in a talent vortex. No shortage of great people to try and take with you.
When you’re considering what resume experiences to pursue, evaluate them based on their ability to know what a good hire looks like and have access to high-quality talent who can join your team. It’s common for ex-employees to bring some top talent with them from their previous experience, so make sure you work alongside talented individuals that might be enticed to join you later.
Inability To SellYou may think that selling is something you do once the engineering and design is done, but you’d be wrong. You’re selling from day one. First, you’re selling yourself on the opportunity. Then, you’re selling your cofounders and early hires on the opportunity. Next, customers and VCs. Sales isn’t a future job for a “professional CEO” once you’re trying to scale up. Sales is a fundamental part of success from the very beginning.
You can learn sales in small and large organizations, depending on your role. But the further removed your role is from being customer-facing, the less likely you are to hone a legitimate skill in sales. The only exception to this is internal politics as a form of sales, which is historically weak. If you’re looking to become a founder, it’s beneficial to be in a role that stays close to the customer.
Inability To FundraiseBeing in companies backed by solid VCs gives you positive connections by association. When you’ve worked at a startup that has done well, it improves the way a lot of VCs will regard you. VCs are fickle creatures, so any positive association helps.
Beyond that, the most effective way to raise capital is to have a phenomenal business. If you’ve done everything else well—product market fit, finding the right cofounder and early hires, and nailing your ability to sell—then a phenomenal business will often come naturally after that.
Beyond that, fundraising is just herding cats.
Building a Risk-Free ResumeSo you may think, “if I just nail these 5 things I’ll be successful as a founder.” The first principle of risk management is understanding that risk never goes away. The most successful people with the most significant funding can still fail. Your focus in building your background is not on removing risk but on managing it.
Every job you evaluate–from the earliest startup to the biggest corporation–should be measured against this bar of founder success. Will spending time here make me more likely to succeed as a founder? If the answer is yes then it can be an experience worth pursuing.
May the odds be ever in your favor.