Founders try to explain to folks that starting companies is very hard. “Sleepless nights.”
People listen and by now many people know this.
Investors think of company incentive structures with this in mind – large pieces of the company need to be owned by founders, to keep them motivated in face of such difficulty.
But why is it so hard?
– You might run out of money at many time windows. Which then destroys everything.
– Everything is new so there are surprise failures that ultimately come back to you.
– The organization is incomplete and the people are new in their roles, so again the organizational failures come to you.
– The company is small and can’t survive small mistakes or external shocks, while a big company can. This makes the mistakes very important to aggressively manage.
I don’t think these other things are why it is uniquely hard:
– new products have uncertain fit with their users. Large companies make new products too.
– hard technologies. University research is hard.
– intense timing. NASA teams work super hard and fast too.
These latter things do add to the problems though they show that the apparatus of larger organizations can make these tolerable.
I wonder if there are sensible ways to address the startup factors. Incubators seem to provide this in part. This may also be what M&A does when a company reaches a suitable stage.