While indigestion is the most prevalent threat to early-stage startups, starvation is just as dangerous. The most talked about form of starvation is running out of money. But again, I think that’s most often a symptom more than a root cause. Instead of challenging everything within an industry, many startups challenge absolutely nothing within an industry. This is a death knell.
How do startups even begin by challenging nothing? There are a couple of ways this can happen. Most often, it’s because while the industry is already defined, there is room for multiple winners in the space. So companies start, looking to take a slice of the space. In essence, they are starting up to take second place. This is what I’d call the aggressive version of challenging nothing. They do it on purpose.
Instead of challenging everything within an industry, many startups challenge absolutely nothing within an industry. This is a death knell.
The other primary form of challenging nothing comes from founder comfort. It’s much more passive, and therefore much more deadly. At least when you’re intentionally challenging nothing you can be aware of the implications. This “founder comfort” is an unhealthy and inflated version of founder-market fit and is often disguised as such. However, their familiarity with the space causes blind spots to some of the opportunities for disruption. What ends up happening, however, is that the founder(s) do what they’ve always done, and they end up challenging nothing new. Sometimes this leads to a positive result for employees and investors…but sometimes it leads to a quick and sudden death.
For me, there’s two positive observations here:
- Founders working in related industries is best. Whether it’s someone from traditional finance moving to crypto-economics, someone from wealth management moving into personal finance, or someone from Uber starting a scooter company, I’ve personally seen founders from one industry transitioning to another, tangential industry extraordinarily well. A couple things result from this: first, finding founder-market fit is accelerated. There’s a foundation of knowledge for the founder(s) to work from and build on top of. Secondly, they’re able to translate challenges faced in one industry to another. They’re immediately challenging something because they’ve seen challenges in a prior, related space.
- Between challenging everything and challenging nothing, challenging nothing is the easiest cultural snag to overcome. During the course of building the business, it’s quite possible that you’ll see and seize a key opportunity. Seizing that one opportunity when presented is a lot easier than killing off the inertia of solving multiple challenges. As a leader, I’d much rather deal with the challenge of finding a challenge than trying to narrow down a set of challenges.