Mike Arrington, founder of Techcrunch, wrote a great article "Are you a pirate?" which captures the essence of the startup mind set. I have been on both sides; the pirate life with 5 startups (Forte, AltaVista, Napster, Bowstreet, Groove Networks), and corporate life with two big companies (Microsoft, Google). The pirate analogy works for me. In fact, at Napster, we were actually called pirates. Literally.
Another analogy that I often use is startups play poker, big companies play chess. Entrepreneurs are "all in" every day. Jason Calacanis is an awesome entrepreneur, and I think it is not surprising that he is also a great poker player. The skills required to play both at a high level are very much the same.
Using a game analogy, startups are more like poker players. They take big risks, they bluff, they make quick decisions, change direction constantly, and they keep their competitors off balance. In poker you never have all the information, but you must make fast decisions. You never know if what you are seeing is a real threat, a bluff, or something that will soon disappear under the stress of the game.
Poker is an aggressive game where if you play your cards right you win big, and win fast, or totally wipe out in just a few hands. However, if you lose a hand on a reasonable bet, you can come back and double your money in the next hand. There is no time to wallow over a loss. You did your best. Move on and your luck will be better next time. Chess is a very different game. Both require incredible skill and talent.
Big companies think long term. Like chess players, big companies think four or five moves (years) ahead. They protect their assets, play defensively, think strategically, and carefully consider the options before making a move. Big companies have a lot to lose, while small companies don’t. No offense to Steve Ballmer of Microsoft, but big companies like Microsoft don't go "all in", risk everything, and bet the company on one thing. Big companies can lose a "pawn" or even a Rook in a strategy move, but they wont risk the King.
Big companies leverage their assets (conservatively) and flex their muscles where they can. They go for incremental improvements in position. Big company CEOs, like chess players, work a long term strategy. Each short term move plays a part in a longer term strategy that is not visible to the casual observer. In fact, their strategy is often kept secret, and they take care to make sure their short term moves don’t reveal their long term plan. Strategy is a competitive advantage.
Chess is a game where all the information is on the table. There are sophisticated strategies, but all the moves are visible to all players. There is no bluffing, betting, or "all in" in chess. In poker there is very little information. You need to read the players, look for clues, establish a persona, and outwit the other players. I'm sure you can see the similarities to the startup world.
One area where poker players and entrepreneurs are very different is the concept of "folding". Poker players will quickly fold and move on to the next hand. Entrepreneurs tend to fight to the bitter end. Here there is a very fine line between brilliant visionary and delusional dreamer.
Fail Fast – Bill Warner, founder of Avid Technologies, Wildfire Communications, etc, said recently “Some of you guys are so smart you turn what should have been a one year failure into a five year death march.” Entrepreneurs are resourceful, smart, and have that indomitable spirit that doesn’t allow them to quit. This can be good and bad. Sometimes it is better to “fold” and move on to the next game. If you are going to fail, do it fast and move on to the next thing. More in depth thoughts here. Being successful is always the goal, but if it is going to fail...Fail fast.
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