Founders Should Aim to Invent New Forms, Not Just Chase Money

It doesn’t necessarily always work out that way, but I hope it does. Here I want to explain why.

First, there has never been a moment in human history when industries stayed fixed in place.

No matter the era, when you look at things on a scale of a hundred years, no industry is ever truly stable, and humanity has always grown by letting the old be crushed underfoot by new attempts and new ideas. Long before the word “startup” existed, humanity had already been repeating startups over and over. So if you aspire to start a company, I think it would be wonderful for you to write one of those pages. That is always what I think whenever I do it myself.

So concretely, what is the key point of a “developmental vision”? In my personal view, being developmental does not necessarily mean having a long-term plan; I think it is more accurate to describe it as “functioning as a kind of reference.” You could call it “the invention of a form.” Startups bring some new perspective or new device into the market (sometimes this is called innovation), and the application of that becomes, within the founders themselves, a “long-term milestone,” while for others it becomes “a reference as a new foundation.” Through that, it lives on within them, then within others, and then within the others who saw it, propagating outward like that. I think this itself is what deserves to be called “developmental.” In other words, “Don’t aim to scrape together a little money with a fiddly, slightly-tweaked business model — draw a big vision!” is easier to understand if you read it as: bring to the market a new perspective or device that can itself become a model for others.

Second, there are an extremely large number of things in the world that will not move forward unless a startup does them.

Concretely, there are far too many things that stay impossible even if you spend 10 years, 20 years, or 40 years at a large company. This is not at all a matter of superiority or inferiority — I think it should be understood as a division of roles. The world runs on all kinds of infrastructure, for example, and large companies mainly bear the role of supporting that.

One characteristic of startups is that “no one would be surprised if it went under six months from now.” Suppose logistics suddenly stopped. If Amazon deliveries stopped coming, and then mail stopped arriving too, and then air freight stopped as well, maybe nothing fatal would happen, but it is easy to imagine society falling into massive chaos. This kind of area (some parts are fine) is too precarious to entrust to a startup that might collapse six months from now.

But a challenge like switching some portion of logistics, limited in time and region, to for example unmanned delivery by self-driving vehicles, suits a startup better than a large company. The reason is simple: all sorts of trouble is surely going to happen.

Large companies almost always run some core business separate from their new ventures. They funnel the profits earned there into investment elsewhere. A loss in year one, fine. Year two, also fine. But if the losses continue into year three, year four, the position of the person in charge of that project within the company gradually worsens. In some cases, the person in charge gets replaced. In other cases, the project’s budget gets cut because the core business’s revenue has dropped. Project members, too, may request a transfer, thinking that working on the core business, where results come more easily, serves their individual careers and compensation better than staying on a project with no visible exit. I think this is simply “the normal thing” at large companies.

A startup, on the other hand, has no escape route, no options. There is nothing to do but “just do it.” No matter how many years of losses pile up, there is nothing to do but burn through, day by day, to produce a clear result before the invested funds run out (the term “burn rate” really says it all). Which of the two is more likely to produce results is, I think, obvious.

Finally, I would point to the fact that a startup is an entity in which the gap between risk and reward is stretched open to its absolute limit. In two or three months there might be nothing left, but in two or three years it might have turned all of society upside down. Drawing employees, collaborators, and customers into a company like that requires a big developmental vision.

Everyone knows how low the success rate of startups is. But even so, the reason a certain number of people still join startups is not, I think, because “when they ran the numbers, the odds of winning were high,” but because they saw there “a dream worth betting on.” A developmental vision, in most cases, radiates an appeal that draws people in.

The content of this post is an excerpt (original text) from the following book. If you’re interested, please pick up a copy.

The Shape of a Happy IoT Startup

The Shape of a Happy IoT Startup

Originally published in Japanese at https://clazytech.com/2022/10/1223/. Translated with LLM assistance and reviewed before publication.