Speed is your only advantage.
Here is some inside baseball: the only thing we have found to be consistently deterministic to a startup’s success after we have invested is the speed at which the company moves. Not the vector—just the speed. It can be speed towards a product that doesn’t work or a market that doesn’t pan out.As long as the founder is moving quickly, the initial missteps seem mostly irrelevant, and eventually, like a Pachinko ball, these fast-moving companies almost always make it through.
I got to thinking about the importance of speed while I was reading this book review of an (older) Elon Musk biography:
The main answer to the paradox of “how does he succeed while making so many bad decisions?” is that he’s the most focused person in the world. When he decides to do something, he comes up with an absurdly optimistic timeline for how quickly it can happen if everything goes as well as the laws of physics allow . . . then, when things go less quickly than that, it’s like red-hot knives stabbing his brain. He gets obsessed, screams at everyone involved, puts in twenty hour days for months on end trying to try to get the project “back on track.”
There it was again—speed. Not genius or some ineffable entrepreneurial quality but just raw knives-stabbing-at-the-brain focus on getting things done quickly. This perspective matched up with my experience with founders so closely that I couldn’t stop thinking about it. Why is this one variable so deterministic? How can it compensate for objectively insane and value-destructive things, like fighting with the SEC for no reason?
The answer, I think, is simply that speed is the one unique advantage startups possess.
We tend to be dismissive of big companies here in VC land,but consider objectively how many advantages they have. Big companies, even ones with miserable cultures, can hire talent simply by paying a lot. They can create highly beneficial relationships with government bodies. They can spend outrageous sums on marketing. Their upper management tiers are mostly composed of intelligent and talented people who are friends with legions of other intelligent and talented people. They can do everything your startup can; in many cases, they can do those things better.
They cannot move faster. They cannot fail at a product six times in six weeks and then nail it on the seventh. To succeed at a new product launch, they must get it right the first time, meticulously plan it over months or years, hope the market doesn’t change, and execute it perfectly. If they fail, their shareholders will penalize them so severely they won’t try again for a decade. To innovate, they must be farsighted geniuses.
As a startup, you . . . don’t. You can just try things as quickly as you can imagine them and see what hits. The ideas that work often are impressively exotic and unpredictable, so founders look like oracular geniuses in retrospect. In my experience, though, it’s mostly the result of taking way more shots on goal than anyone else. It might seem impressive if you manage to guess my ATM PIN, but given the choice between “be a genius who can read Tyler’s mind” and “just try 5,000 random numbers,”there’s not much contest if your goal is to raid my checking account.
Importantly, I am not talking about persistence here.It is related but different. Persistence can result in speed (obsessively trying new things) or slow you down (refusing to give up on a failed concept).
If a big company CEO manages to combine all of the advantages of scale and incumbency with speed, we are all doomed. Until that happens though, you can win simply by moving faster. I have some ideas for how to do that effectively, but always remember that your ultimate advantage is speed.