Startups don’t hedge their bets

Recently I was giving advice to someone who is looking to move to the Bay Area and break into the startup world. He’s looking for a job at a startup here, and his plan is that if he doesn’t find one soon, he’s just going to quit his job and move here anyway while he continues the search.

He asked me whether that would look bad on his resume, to have been out of work for a few months. I told him no, and that in fact, as a hiring manager, I would admire his decision. He has the guts to take a risk by quitting his job in order to take a bold step toward his goals. That’s the right mentality for a startup.

Startups don’t hedge their bets. The very nature of a startup is to take a big risk for a huge reward. The challenge is so great, and the resources so small, that everything you have must be concentrated on a single objective. Startups have one bullet in the chamber, one chance to hit the target. You can’t afford to hold anything in reserve for a backup plan. (And besides, compared to an established, profitable company, you have nothing to lose.)

Part of the founder mentality is being willing, indeed eager, to take on this kind of risk.

2 Comments

  1. Anonymous says:

    I found quora question amusing: How would you go about “shorting” a startup?

    http://www.quora.com/Startups/How-would-you-go-about-shorting-a-startup?q=short+a+startu

  2. I agree with what your getting at — but I believe startups can hedge their bets in certain ways. Try new feature X with a minimum viable solution — doesn’t take after a reasonable attempt? drop it for the more popular feature, etc. Same things with the companies themselves — try your minimum viable product and see if it sticks, if it doesn’t try another idea. Some people I talk with definitely stay more towards the ‘one bullet in the chamber’ approach with their companies, but I see my startup as something I’m calculating. I don’t move until I’m completely convinced I have a high probability of success (even though others may not agree). Now, I don’t exactly have ‘success’ on my side to contribute to my point and many may view the this approach as not quick enough etc, but just wanted to throw out that I think of it differently — maybe it’sĀ naive or semanticsĀ but I but I see myself hedging my moves and not jumping until I’ve validated to myself that there’s a high probability of landing. This said, others around me might describe what I’m doing as risky despite my confidence in what I’m doing.

    Stating the semi-obvious: Startups take a lot of work. The internet tells me on average they don’t make it, but in my opinion you don’t have to feel like you’re walking a tight rope to try it.

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