Recessions can spark startups. People laid off from work may have no other option in an economy with many downsizing companies. And with everything in flux, opportunities can arise.
Usually a startup begins with an idea, and a dream. But venture capitalist Rizwan Virk, who specializes in tech, believes it’s also important early on to examine your motivations and that of your team. Usually he finds it’s one of these seven:
- Money-driven: This seems to be on the upswing – what he calls “coin-driven” individuals, often who want to get very rich, building a billion-dollar company. Indeed, at some point in the past two decades entrepreneurs and investors became obsessed with the word “billion.” Every tech startup is supposed to scale to that size or otherwise it’s a bust. “If you really want to build a billion-dollar company, don’t try to build a billion-dollar company,” he advises in his book Startup Myths and Models. Find a small, emerging market opportunity where you can be a key or dominant player, and grow with it.
- Creativity-driven: Some entrepreneurs want to build neat products. When the company has a product that is accepted by the market they get bored as the focus should become building an organization and that’s not their particular desire.
- Technology- or market-driven: Some entrepreneurs are deeply immersed in a certain field and would never get into an enterprise in a different market. That contrasts with the money-driven entrepreneurs who almost don’t care which market they are in as long as they can ride a hot startup.
- Fame-Driven/Respect-Driven: Some entrepreneurs want to be famous, known for their success with a particular startup or as a guru who created a series of them. “Some of these founders can get what they want even if the company goes out of business, as long as they are seen as experts in the field and their startups get lots of press coverage,” he says.
- Independence-driven: These founders want to be their own boss. “They don’t really care what anyone else thinks or whether they are getting any accolades in the press, or whether the company is growing faster (or slower) than anyone else’s. They also don’t care so much about the money they are making; they just don’t want anyone telling them what to do,” he writes. Recession startups often begin with this impulse, the founder tired feeling cast off by their employer and wanting control.
- Empire-driven (or competition-driven): These entrepreneurs like to win and want to build something big and dominant. That instinct applies to many entrepreneurs, of course, but this subgroup can’t stand losing even a single deal to a competitor.
- Mission-driven: These folks want to help a particular community or further a cause. It may be combatting climate change, serving inner city residents, or focusing on the LGBT community
Mr. Virk notes that Bill Gates was a technical guy when he started Microsoft but fairly soon it became clear he was empire-driven – perhaps it’s fitting that some called his company “the evil empire.” Steve Jobs, founder of Apple, was also very competitive but was much more product- and creativity-driven.
Mr. Virk urges you to identify the primary, secondary and tertiary motivations of your own prospective startup. “The hard part of this exercise is being honest with yourself,” he warns, suggesting that if you have a co-founder you each might have a more accurate sense of each other’s motivation than of your own. Keep in mind that the motivations might change over time, so repeat the exercise annually.
If this exercise seems trivial, he would differ. If expectations are misaligned one of the co-founders is likely to leave early. And, of course, if you’re the only founder you might sour on your “baby” because it’s no longer meeting your aspirations.
The Globe and Mail, November 12, 2020