Ali Tamaseb has analysed over 300,000 data points from the startup world before he wrote the great book Super Founders. This gives readers an unprecedented look at what the data tells us about the world’s most successful startups and the people who create them. Below is the main 20 points taken from the book, which we 100% recommend you purchase.
- Billion-dollar startups, or “unicorns,” make up for less than 0.1% of startups. Despite the “eccentric Ivy League drop-out” stereotype, many successful startups and their founders defy assumptions about competition, education, financing, and more. Don’t assume that you can’t be one of them.
- A founder’s age does not correlate strongly with success. The median age of unicorn founders in this study was 34. Some founders were as young as 18, and others as old as 68 when they got started. On average, founders who were 34 or older had a more extended history of entrepreneurship than their younger counterparts.
- Age has no appreciable advantage when you start a company. Marc Lore was 42 years old when he founded the e-commerce site Jet.com. David Duffield was 64 when he founded human capital management software giant, Workday.
- Data reveals that only one person founds one out of every five billion-dollar companies. However, it also shows that a duo founded nearly a third (28%). It is less common, although not unheard of, to start a billion-dollar company with three or more co-founders.
- Industry background matters but does not necessarily define the outcome of a startup. The data reveals that 50.5% of billion-dollar company founders had a business background, while 49.5% had a technical background.
- Experience is not always a requirement for billion-dollar startups. Over 50% of CEOs and over 70% of CxOs (other chief executives) had less than a year of industry or relevant work experience before they launched their companies. Science-related startups are a different story. On average, 75% of founders had directly relevant experience.
- Industry experience can vary between founder duos, with great success. One of Brazil’s few unicorn startups, Nubank, was founded by two completely different professionals. David Vélez, with his investment background, joined forces with Cristina Junqueira, who had accumulated years of experience with local banks.
- If your first attempt at billion-dollar unicorns doesn’t work out, don’t be discouraged. It is more likely that “second or third time’s a charm,” as was the case with many founders observed in the study. Treat the process as a journey, invest in a portfolio of people, and try again.
- When one startup attempt fails to go as planned, be open to new ideas that are right under your nose. When Stewart Butterfield’s online game, “Glitch,” failed to catch on, his team realized that the communication tool they built would help others too. And Slack was born.
- The trends that created billion-dollar companies in the past won’t necessarily be the same for those in the future. Over half of the startups reviewed by the author were software companies when the technology experienced a boom. Today’s trends lean toward biology, space, agriculture, or AI.
- Founders often hear the advice to create a painkiller and not a vitamin pill, which is a company that solves a problem versus one that maintains a joyful experience. Most billion-dollar startups indeed fall under the painkiller category, but vitamins like TikTok and BuzzFeed do just fine, so don’t second-guess your idea.
- Startups that save time and money are the most common needs addressed by billion-dollar companies. Productivity startups accounted for close to 40% of those observed.
- It pays to be different. Over two-thirds of billion-dollar companies were highly differentiated, i.e., they offered consumer experiences that varied greatly from others in their industries. Customers are more likely to try something new if it is radically different. Nest became a success when it updated the thermostat for the first time in decades.
- Contrary to popular belief, billion-dollar startups are more likely to be created in large existing markets than small, nascent ones. Only 32% of these companies created a new market, and the rest competed for market share.
- Timing plays an integral part in whether a startup will reach a billion-dollar valuation. The cell phone boom made batteries more affordable, which allowed electric car manufacturers like Tesla a possibility. Better smartphone cameras gave rise to Instagram, and PayPal grew alongside eBay.
- Competition against powerful incumbents is possible – and expected – but a startup must be defensible against copycats. Peter Thiel, the co-founder of PayPal and Palantir, said that startups should strive to create monopolies. Engineering is a common defence against copies, as 56% of billion-dollar startups have utilized this method.
- There is a misconception that only low capital expenditure (CapEx) software-as-a-service companies can be capital efficient. High expenditures didn’t always lead to low efficiency, and CapEx is impacted by shifting dynamics in business and technology, such as cloud computing.
- Founders should think about unit economics early on regardless of their ability to raise a lot of money. According to a 2019 study by Tomasz Tunguz, capital efficiency for software companies has been in decline since 2006. How and if your ideas can become profitable with their current costs are vital to their success.
- A great idea is only as great as the people who bring it to life. A survey of 900 venture capitalists by Stanford Graduate School of Business found that the most important factor for investment was “the team” at 53% compared to “the product or technology” at 12%.
- If you want to found a billion-dollar company, it’s not about being first with the idea but rather closest to the turning point. The Affordable Care Act allowed Oscar Health to grow as it offered virtual care services and transparency around billing.
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