Why you should start a venture-backed startup

Forget the money! Do you have the temperament?

Let me start by saying that startups are not for everyone. Perhaps a better way to put this is that entrepreneurship is not for everyone. But I’d like to make the case that if you’re going to start a business, don’t start a small unscalable business; go all the way. Build something that can touch millions of lives. If it doesn’t initially scare you, you’re on the wrong path.

Suppose you’re already thinking of starting a business, maybe considering opening a small restaurant or an online store. In that case, I’d like to convince you that you can be spending your time on something more substantial, an endeavor that will be more exciting, more impactful, and potentially make you very rich. While no one can guarantee your success, one thing is sure — you’ll have one hell of an adventure.

Before moving on, allow me to distinguish between startups and small businesses.

Startup = scalable, venture-backed, seeks hyper-growth. Examples include Airbnb, Uber, Google, Amazon, and almost every Silicon Valley startup.

Recommended reading: The Hard Thing About Hard Things by Ben Horowitz and Blitzscaling by Reid Hoffman

Small business = Bootstrapped or self-funded, seeks gradual growth, has hard limits on scaling. Examples include your neighborhood’s grocery store, the ice-cream parlor on the corner, and your friend’s online shop.

Recommend reading: The E-Myth Revisited by Michael Gerber

Caveat: Some small businesses become very large, even publicly traded giants. But they take decades to reach a tipping point.

At this point, I believe I know what you’re thinking; that it’s much easier to start a small business than a venture-backed startup. But consider this, if you want to continue to see progress in your business, if you’re going to keep growing it beyond a freelance gig, then both the startup and the small shop will be very challenging. Yet, only one of them has the potential of becoming very big in the next three years.

Your most scarce resource is time, not money.

Building anything worthwhile takes a lot of dedication, persistence, perseverance, and of course, a lot of time. In the beginning, you’ll do everything yourself, from decorating to hiring to sweeping floors to marketing. You don’t have a lot of money, so you’d like to be as frugal as possible and stretch every dollar to the max (and, of course, that’s the right thing to do). At this point, you try to save every dollar you can by doing everything yourself. But here’s the problem… You only have 24 hours a day, and you only live once.

So whether you’re building a Blitzscale startup or creating a small cleaning business, you will still spend 60+ hours a week building your company. Both paths will be full of setbacks and struggles, so why not go all the way?

Let’s do the math. You’re investing no less than 50 hours a week for at least five years before you see some success (more realistically, 7 to 10 years).

50 hours x 52 weeks x 5 years = 13,000 hours

So you’re going to struggle anyway; why not struggle while building something great?

“Life is struggle.” I believe that within that quote lies the most important lesson in entrepreneurship: Embrace the struggle. — Ben Horowitz

What you want is money, but what you need is temperament.

Building a business is demanding, but so is everything worth doing in life (at least if you want to be good at it; I know I do.) If you think that your major roadblock is money, you’re wrong.

Most people struggle with managing their emotions, egos, and anxiety levels when they perceive the stakes to be high. But in most developed economies, the stakes for the moonshot startup are lower. Sure it’s a high-pressure, high-adrenaline environment, but what you’re staking is your time and any little money you‘ve invested. That’s it.

I don’t mean to downplay the opportunity costs; otherwise, I wouldn’t value time over money. The truth is that most of the anxiety and emotional rollercoaster involved is in your mind; it’s how you choose to interpret things. You may have to give up buying nice things for a while, and you may need to crash on a friend’s couch and eat a lot of cup noodles, but that’s not too bad. You can always get back up, find a job, and give this another shot on a better day.

You need to develop the temperament of a firefighter.

Do you see firefighters panicking and running away from the fires or bravely mustering their emotions and utilizing their training to take control of the scene? For most people, it’s the latter. That temperament doesn’t come naturally to most; it results from years of dedication and effort.

As a founder, you will need to learn to take a deep breath, assess the situation, and put out the fire. You’ll even have to calmly watch a few fires blaze until you have the time and resources to deal with them.

In a later article, I’ll share my experience (and struggles) building my temperament and how you can build the necessary mindset for entrepreneurship.

Now that you have the temperament (and mindset), the money will follow you.

There’s more to entrepreneurship than temperance; entrepreneurship is a mindset. You’ll also need a lot of knowledge and skills, but you can pick those up quickly if you apply yourself. You can think about entrepreneurship in three broad categories:

- Knowledge/Skills (Your business and technical know-how.)

- Mental models (heuristics that guide how you think of problems.)

- Attitude (what I broadly call temperament; how you perceive and react to the world.)

Knowledge and skills can be quickly gained, depending on how complex the subject is; it might be weeks or years.

The most useful mental models can be learned in a few weeks and applied as you go from one phase to another.

An example is, how do you get a business idea? Think of the recent buzz around crypto and build something around it? That’s the wrong approach (what Paul Graham calls “a solution in search of a problem.”)

You need to be thinking of a problem affecting people who can eventually become your customers and build a solution around that. If you’re an absolute beginner, a good place to start is YCombinator’s Startup School.

The hardest part is building out your temperament, Captain! How do you look at problems? How do you handle the pressure? Does your fight or flight system get triggered when things don’t go as planned? Do you fear confrontation or tough conversations? Are you uncomfortable in tough negotiations? Do you have a difficult time saying no? Do rejections break you?

If you said yes to any of the above, start working on overcoming these roadblocks before (or while) you start your venture.

But when will the money follow?

Well, to be clear, you’re not likely to have investors chasing you in the very beginning. But once you’ve built a solid reputation for being level-headed, reliable, persistent, and have solid business acumen, you’re not going to have a difficult time raising money.

Fundraising, after all, depends a lot on your ability to accept feedback (and rejections) and quickly adapt or move on. And what most people don’t tell you is that raising funds relies heavily on your connections and your ability to get solid referrals (people who can vouch for you).

So now you’re wondering, when do you start?

I would say start now. Start by building your temperament, start working on your self-discipline and focus. If you have a job, take on more responsibility, volunteer to take that project everyone is running away from. Hey, even offer to change your little niece’s diaper (if you can’t tolerate baby poop now, how are you going to deal with real sh*t when you start a business?) Become someone people can depend on.

Work deliberately on assessing where you are lacking now and what you need to build to be ready. But don’t over-prepare; you’ll never learn how to swim from a book. But you can learn to have the necessary calmness before jumping into the deep end.

Now, if you’re crazy enough to want to start a business, why not go all the way and build something crazy?

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