Why startup? (Ricky Weekly #16)

This is where I share 3 things every week with my friends and anyone else interested.

A picture from my life:

I performed at a comedy show last night with my friend David Philipson. His parents almost named him Elliot Aaron Philipson and that would’ve been tragic because how many l’s and t’s in Elliot? How many a’s and r’s in Aaron? Or is it Erin? How many l’s and p’s in Philipson? 😂

Thing on my mind:

Last weekend was “Camp YC.” Thousands of Y Combinator alumni got together in San Francisco to catch up. At a dinner I asked the four other startup founders at my table, “having now done a startup at least once, would you do it again?” Everyone’s answer was “Yes.” I asked them why, pointing out how it was much easier to justify back in the day when you knew nothing, but now you know the costs and the long odds viscerally. Everyone acknowledged my point, and went on to explain their reasons, but no one was able to do it very compellingly. 

One guy mentioned that in the AI world, most of the available talent goes to companies like Google Brain, Deepmind or OpenAI, and they end up working on things that are not very practical. They go because 1) these companies pay extremely well and 2) it is hard to figure out how to apply AI to something that is actually practical. He has a strong AI background and when he sees that it behooves him to go and start a company. I like that his answer essentially points at the overall undercapitalization of talent in that sector, which I don’t think applies only to AI specialists but may be extremely pronounced there. I also know that before he started his current AI startup, he was working on an idea that didn’t have to do with AI. His “reason” for starting a company again is probably more opportunistic in that case.

Another founder’s reason was mission-driven. She thinks about her future self and all the women like her and she can’t help but want to work on what she’s working on. She also mentioned that she has always wanted to build her own business since she was a child, so I’m sure there’s much more to her reason than mission-driven. Two other founders both cite simply enjoying building products people want. In fact, in both cases when the company-building activity became more about building a business than building a product, they both stopped enjoying the process as much. The reason why they’d start a company again is because they enjoy building something from nothing. They are like artists to me. Not the starving kind because they’re highly skilled. 

There are mentions of other reasons. I mentioned that you can potentially find similar opportunities at a large company where you’re responsible for creating a brand new product or business unit, and even get to recruit your own team. But still, everyone would still do a startup.

There seems to be no good rational reasons to startup. But there are millions of valid reasons why founders continue to choose to be founders. I wrote down the reasons why I want to do another startup, and it was two pages long and I gave a bunch of reasons ranging from personality, insecurities, ambition, competitiveness, self-improvement, greed, challenge, passion, etc. “Why startup?” is a difficult question to answer and I think it’s worth examining from time to time.

Piece of content I recommend:

Recommending two podcast episodes this week.

The Ezra Klein Show: When meritocracy wins, everybody loses

I thought this was a pretty nuanced discussion about economic inequality. Ezra Klein and his guest Daniel Markovits talked about how the rich people today feel like they deserve their position because their wealth is not coming from legacy or nepotism like the previous generation but from working hard (even though the opportunity to work hard for it requires a certain level of resources to begin with and that is an on-going arms race). Poor people are getting poorer because we went from having jobs like loan officers who have the autonomy to make loan decisions to automated risk assessment and the loan officers became low-level paper pushers.

The middle falling out is the result of capital and technology rewarding scale and concentrating the fruits in the hands of those at the top. I recently got a chance to talk to owners of Dairy Queen, Subway and Yogurtland franchises and they painted a pretty dire picture in terms of individual franchise owners’ abilities to compete with the likes of Chipotle and Starbucks. I work with capital and technology so most of the things I work on exacerbates this trend.

Heavyweight: #24 Jimmy and Mark

A nice story about four kids biking 240 miles over three days to go to grandpa’s house.

As always, you can find out what I’m thinking in more real-time on Twitter and my essays are on my website. My latest essay is called The arc of social