Builders are Much More Likely to Start Massively Successful Companies - Deepstash
Builders are Much More Likely to Start Massively Successful Companies

Builders are Much More Likely to Start Massively Successful Companies

  1. Even first-time founders like Mark Zuckerberg and Bill Gates were not really first-time builders.
  2. They had started various projects before starting their companies that we know them for.
  3. Zuckerberg had created a music app called Synapse, and Gates had built Traf-O-Data, before starting Microsoft.
  4. People who have a bug for starting projects, creating side-hustles, and seeing them through, are much more likely to start massively successful companies than those with shiny resumes or experience of having worked in leadership roles at large companies but lack a bug for building.

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MORE IDEAS FROM The Founders of Clubhouse, Spotify, Stripe, and 42% of Unicorns Have One Thing in Common

More than 70% had Founded Company with High Revenue
  1. Another relevant data point: of the repeat founders of billion-dollar companies, more than 70 percent had founded a previous company (42% in absolute numbers) that was acquired for around $10 million or had similar levels of revenue — compared to 24 percent in the random group, a statistically staggering difference.
  2. In other words, founders with one small exit or prior company with a small outcome were much more likely to end up building billion-dollar companies.

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The Best Preparation is to Start Something
  1. It turns out that the best preparation for starting a wildly successful company is founding a startup.
  2. If you have never started a company, the best preparation for doing so is to start something, maybe a club, a side hustle, or simply selling something online.
  3. You might get to your billion-dollar outcome on your first try, but the data show that it’s more likely to happen on your second, third, or tenth.
  4. What is important, though, is to keep building until your luck comes through.

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60% Were Not First-Time Founders
  1. Among the founders of billion-dollar startups, almost 60% were not first-time founders.
  2. In a randomly selected group of startups that had raised a minimum of $3 million in venture capital funding but didn’t reach unicorn status — the typical picture for a seed-funded startup — about 40% were not first-time founders.
  3. The statistic shows that repeat founders were more likely to start a billion-dollar company.
  4. This is not to discourage first-time founders. It is rather to encourage those with a failed or those with a small outcome in the first attempt to go at it again.

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RELATED IDEA

Fundraising sources

Fundraising is both a science and an art. The method that a startup uses to raise money helps determine its financial situation and how much help and advice the startup receives along the way.

Startups may initially use personal or family funds to start the business, but crowdfunding has also grown in popularity. Still, venture capital funding is the dominant source and is at an all-time high in recent years; CB insights reports that U.S.-based venture capital investments totaled $130 billion in 2020.

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Taking off

Startups take off because the founders make them take off.

Generally, startups take a push to get them going. Once they are on the track, they will usually keep going, but there is a separate and robust process to get them on a roll.

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  • Understand the different outcomes that could happen (both positive and negative)
  • Calculate the expected return or loss of each outcome
  • Attach a probability to each outcome
  • Understanding the magnitude of the return or loss
  • Multiply the probability by the magnitude (probability of winning * value of win) — (probability of losing * cost of the loss)
  • Add up and subtract all of the expected returns and losses
  • To get started you don’t need to know the exact probabilities. Just following the process will give you unique insights you wouldn’t have had otherwise.

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