Sunday, September 23, 2012

Startups, lottery tickets, and the audacity of hope

Skeptics often refer to startups as lottery tickets. I suppose this is a natural reaction to amazing success stories like YouTube or Instagram, where a relatively young company with almost no revenue achieves a billion-dollar exit. "Amazing luck," the skeptics scoff.

The skeptics are wrong, but startups are like lottery tickets.  Just not in the way that you think.

Winning the lottery combines two key factors--amazing luck and massive overnight success. Ultimately, it's the latter that matters, not the former, when it comes to startups.

In traditional industries, it's hard to imagine a plausible scenario in which an individual person achieves massive overnight success.  You can't join McKinsey right after graduation, and find yourself a full Partner 12 months later.  You can't start at GE at 25, and be tapped as Immelt's successor at 26.

But in the startup world, you can achieve amazing success, seemingly overnight. Drew Houston graduated MIT in 2006. In 2007, he founded Dropbox. Today, he's worth an estimated $400 million, and is the most successful YC entrepreneur.

Yet while many might consider him lucky, few people in the Valley would attribute his success to luck.

That's what makes the startup world so special. The possibility of massive overnight success means that everyone who hasn't made it big (which is 99.999% of us) can dream of hitting it out of the park with our next startup.  It's like baseball--as long as you haven't made the final out, you can always rally.

Now the sad fact is, just like most of us won't hit the lottery, most of us won't start billion-dollar startups. But isn't it nice to work in an industry where that hope is always there?

1 comment:

Hank Leber, GonnaBe said...

I like to think of luck as Seneca (and/or Oprah Winfrey) do:

"Luck is what happens when preparation meets opportunity."

In this light, it's about aptitude and hard work. Starting a company is much more difficult than buying a ticket. Each entrepreneur has been preparing his/her whole life for the "overnight." Ask any successful one.

Great post.