VC for Entrepreneurs

Founding Strategies : A tube map on how people approach founding

We live in a great time for social research. Because everybody talks about founding a company. This is the best opportunity to look at how people think they have to approach founding a company. It all boils down to a simple Tube Diagram.


Four Types: The Dumbs, The Evangelists, and Founders, BBAs

The Dumbs: Typically, the majority of people you meet on the street know really nothing about business or the startup industry. All they know is a tiny pain point and they think there is a way to get rich. They come up with a visionary concept on how they want to get rich and have something like a very very obtuse and weird business plan. And they decide to work on this business plan for as long as they need to convice their bank to loan them money. They then register the business, onboard a bunch of ridiculously non-fitting chumps and run out of Cash. This is what raises the number of startup failures to such extravagant levels.

The Evangelists: They, too have never founded before. Their difference is that they are young and geeky and they believe to either have genius insight into their technology (the Pirrrrates) or they think immersing into the social startup ecosystem and knowing all the startup frameworks (lean, business model canvas and pain point analysis is what they spent their time on) will help them. So either they go overboard with onboarding people and end up with a giant piece of chaos that they try to control or they are iterating millions of years to come up with tracktion, without understanding anything about what they are doing.

The BBAs: The BBAs (Billionaires By Accident) typically don’t care about the start-up ecosystem, they don’t care about starting up or helping people. They somehow manage to be and remain highly enthusiastic about a very focused product nieche that actually will be disruptive – they don’t know that, they don’t care, they don’t test for it -, but the sole focus of their idea is that they are bored and they need to do something to feel alive. While probably the majority of them (like 99,99999%) will continue do so for their entire life and they will work at low-expectation jobs, there is this other 0,00001% that hits the Jackpot and they produce something that goes through the roof. If finally some narcistic trait kicks in and they do not abandon the idea to pursuit something “deeper”, these folks will become the next facebooks or whatever.

The founders: This is where the market actually lives. There are people that know a particular domain, they have enough experience to lead and build a company, are willing to learn and coach. Typically these guys/gals will see a clear pain-point, use their domain knowledge to have a rough estimate on the potential prices to be charged for a solution, and they have the network to find at least someone that is technicallyy adept enough and domain-focused that might serve as a technical co-founder. This will be sufficient to come up with a realistic prototype vision. Both will realize that their way to go is to get coaching, understand what they need to do – because typically they start with no background in the startup space – and they will seek help.
If they are not idiots that at some point decide to head the “dumb starting” road (see picture), they will realize that they need to focus on getting VC ready. Because VCs and ecosystems today provide huge networks and knowledge in particular domains to help them build a really strong company.

So which entrepreneur are you and what can you learn from the Tube Diagram?


Dumb - Lean - VC Routes

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