Traps to avoid when you do another startup
The changing nature of building companies as you get older
I have had the ‘doing another startup’ conversation many times with serial founders, startup execs and periodically, on long walks, with myself. For all the various founder illuminati groups that exist, it remains a woefully under-discussed topic in public (and is as relevant for founders and senior hires as it is for investors). Jason Lemkin’s1 recent X-tweet on hiring repeat VPs prompted me to unify a bunch of previously disparate notes into what emerged as three general traps to avoid when either starting or joining another startup.
“Men desire novelty to such an extent that those who are doing well wish for a change as much as those who are doing badly.” Machiavelli
“I know consistency is key/but it’s hard to stay consistent/when you’re in the mix/consistently a G” Fredo
The energy trap
The biggest cognitive blind spot I’ve seen with people jumping into the game again is simply not grasping the fact that time has passed. I don’t mean being out of touch with the market but being out of touch with themselves. Countless times I have been the blunt instrument in a conversation pointing out to the other party they now have children and are no longer 30. They have family commitments. They probably have a partner to talk to about this decision. The percentage of their life energy available for a company is mathematically much less than the last time they did this. Or even if none of those things are true, their general energy levels are different now that they’re older (and memories of pain endurance fade quickly). Does this preclude older people from building a company? Absolutely not. But it definitely means you should be going about it differently to the last one. If you’re not able to describe the life leverage you’re going to employ, you’re not ready.
The survivor bias trap
I think that ‘everything is survivor bias’ might be the startup equivalent of Matt Levine’s ‘everything is securities fraud’ meme? Whether it’s founders taking to investing or VCs taking to dispensing company-building wisdom, our ecosystem (or at least its content marketing) is heavily shaped by this remarkable human behavior. When I’m talking to other founders about previous experiences, I really try hard to caveat everything as ‘do not take this literally, here are some things which worked for me, they were probably situationally dependent in a way that I didn’t realise’. If you are going again at a new thing, find some kind of way to accept that you know nothing2. Seek operational leverage, but do not assume the same approach will work as before.
The motivation trap
Perhaps this is a European bias but I frequently find people are far too polite to discuss the topic of motivation. To some degree, it doesn’t matter what the motivation is so long as it’s there but I think the nature of the motivation should influence what kind of startup you point yourself at. Generalising to the extreme, my observations of people building again are driven by:
The need to make money: Frequently serial builders have no choice but to start another company (either because they are unemployable or believe themselves to be)
The desire to make money: comes in lots of forms, sometimes as startup veterans who have tasted success and want more, sometimes just people who like to accumulate money (and occasionally just as a measurement of success)
A chip on the shoulder: the cliche but it exists. I’m not sure how much I trust it.
A sense of self-worth or purpose: The most binary in terms of outcomes. Particularly for founders, identity is a continuum with one end being absolute purpose and the other holding ego and status. It can be very easy to fool yourself that it’s about the former when it’s really about the latter3.
Continuing my ongoing deep-dive into future demographics and their consequences, one of the most commonly asked questions of the Buffett/Munger partnership is could they be as successful if they were starting today? On the basis of population growth as a simple proxy for economic growth (economists, come at me), I looked at the 50yr net increase in US population in 1965 (around when Buffett and Munger started investing together) versus 2023. Driven by the huge decline in fertility rate, the latter is about 50% less. Simplistically this means only half the growth rate is available for the same strategy, all things being equal (which they absolutely are not). Obviously half a Berkshire Hathaway is still monstrously successful but it’s an interesting point to think about. Make me wonder about who has not yet updated their long-term pension models.
It is a remarkable fact that the majority of AI breakthroughs have been funded by profits from ad businesses. Some reflections on this by Brad Slingerland from NZS Capital here.
I added Robert Cialdini’s superb Pre-Suasion to my founders reading list. Essential reading for anyone who needs to communicate effectively.
Razib Khan wrote a longish and very good essay on the current state of our understanding about when the first humans reached North America (and who exactly they were). The dates have been pushed back by at least 10,000 years.
whose level of company-building wisdom appears to be as close to omniscience as I can grasp.
I was not in the least bit surprised to see Sam Altman recently mention that everything he did at OpenAI was the opposite of all the advice he gave to YC startups.
Ambition sits within this continuum too (I feel it’s subtly different from purpose). Kyle Harrison recently wrote a goodish post about it