A friend told me yesterday, “Think like Travis.” Wow, I thought. It’s a new age. Then I also thought: he is probably right… (The Travis he mentioned is the Uber CEO.)
Then today I see someone mention a competitor to my company Knotable (kind of a competitor, you’ll see what I think of their chances in a second). So I look up this company and puke on myself. Rather than call them out, I will tell you why I instantly dismiss them as turkeys (I still signed up, and they are probably laughing, thinking “ha ha we are below the radar”).
Here are some things that make me puke:
– The team has XY years of experience in such-and-such. Groups of people that sum their years of work experience to make a number like 60 or 120 years. Here is what is moronic about it. Number 1, the assertion that “a year of experience” is useful ipso facto. In most cases, it’s the opposite. If it’s amazing relevant entrepreneurial impactful time, great. If it is 120 years at Verizon, it is the opposite. Number 2, how on earth can you pool the experience of groups and get a unit of measure? 5 guys with 60 years experience vs 1 guy with 60 years…?
– Startups that are not in one of the handful of startup hubs. For example, Arizona. Sorry but these people have the wrong friends, read the wrong newspapers, look at the wrong art, have the wrong hobbies to be “in the flow”.
– Venture funds that have XY years of experience that are from these nowheres-ville places as your investors. These venture funds compound the problems that the entrepreneurs face. They are so much more disconnected and so much more reliant on shallow information than the founders building companies. These “VCs of Nowheresville” meet 100s of companies a month right? (If they don’t, then what are they doing?) But the 100s they meet are surely much WORSE than the 4 they manage to invest in each year. So what are they LEARNING from the patterns they observe. In NYC or SF you meet hundreds of companies you do NOT get to invest in. People screw you daily because they are better than you, and you meet amazing companies just to learn from them. And you learn patterns that you then apply in other situations. Cool. But these Kings of Nowhere are learning the opposite. Maybe they are like Warren Buffet and thinking deeply and better than anyone, but they are not learning by virtue of their isolation. It’s not *better* that they are nowhere. There are great deep thinkers hiding in Menlo Park also (Ram Shriram for example).
Now you may think it’s an over-reaction to puke about this stuff, but being a little better does make you worth a whole lot more. That’s the superstar effect, and people always always question the effect when they observe it in nature. Baseball players who aren’t that good, classical soloists who sound the same as your kid, fancy name VCs in Union Square who aren’t so much smarter than the good people of Cleveland…why do they get all the money, all the looks, all the returns?
Well explaining any one of those scenarios takes you down a separate path of reasoning, but the broader phenomenon is explained in the discipline of economics that has developed around the Superstar Effect.
The paper that kicked off the field here — rosen-1981-superstar-effect — and a checkin after 30 years here: The Economics of the Superstar effect
So, maybe great founders should be thinking like Travis. Since tech will help them get waaaay bigger than the last generation of startups ever dreamed. And VCs should be thinking this way too, if they are superstars.