Chapter 1: The Philosophy of Startup Founding

Are you genuinely a startup founder?

“Can language shape our reality? You have four hours.”

Philosophy was never my favorite subject in school; it often felt overly abstract. However, after years in entrepreneurship and mergers and acquisitions (M&A), I've come to appreciate its concrete relevance. Economics, as a logical branch of philosophy, illustrates this connection.

Recently, an old friend reached out via LinkedIn. He had seen my recent investor collaborations and wanted to reconnect over drinks. He has been developing a networking app akin to Tinder, where each match leads to a 15-minute video call. With the backing of private seed investors, he focused heavily on R&D to create a unique product featuring proprietary calendar and video conferencing tools.

Confident in his offering, he expressed a desire to raise a Series A round and asked if I could facilitate introductions. I gently pointed out that Series A investors typically back early-stage startups that have demonstrated success. He insisted he fit that definition, leading me to share my perspective on what constitutes an early-stage successful startup. We ended up disagreeing, as he relied on definitions he found online that aligned with his views.

This conversation exemplified a critical lesson I've learned about business over six years: success hinges on understanding people. In high-stakes scenarios like M&A, founders invest their lives in their companies, facing risks and personal sacrifices.

M&A situations often force founders to reckon with whether their efforts have been worthwhile. Thus, improving the likelihood, speed, and scale of such transactions is vital. I've learned that business fundamentally revolves around people and effective communication, which begins with the careful selection of words.

Words represent a shared understanding among individuals. For instance, my friends and I coined the term "Vivance" to encapsulate the joy of creating memories through enjoyable activities.

Credit to Avengers Infinity Wars

As language evolves, so do the meanings of certain words. For example, "mediocre" originally meant average but now carries negative connotations. Imagine a VC attempting to negotiate with startup founders expecting a 20x ARR valuation, only to be met with offense when suggesting their growth is merely average.

Understanding people involves a shared comprehension of terminology. We tend to favor those who align with our beliefs, such as my preference for those who view Spider-Man as the ultimate superhero.

His resilience and struggle to balance his personal mission reflect the characteristics of many driven entrepreneurs.

The excitement surrounding startups stems from their potential to create a better future. As Babak Nivi of AngelList said, "Startups aren’t here to change the world; they’re here to save it." Many aspire to be part of this transformative group.

Belonging is a fundamental emotional need, reflecting our desire to connect with like-minded individuals. If you're outside the startup ecosystem but share its aspirations, your interests must align with those of its members. In this context, having a shared definition of a startup is essential for successful collaboration.

To understand startups, we must first explore the etymology of the term. "Start" indicates a beginning, while "up" implies growth, encapsulating the initial impetus behind a new venture. Paul Graham, co-founder of Y Combinator, emphasizes that starting a startup is a declaration of ambition, committing to launching a rapidly growing enterprise.

But do you know what it takes to build such a company? I didn't until I learned that it involves creating a product that addresses a significant market need and effectively reaching that audience.

Paul likens startup founders to economic researchers, searching for unique ideas that facilitate rapid growth in a marketplace where many opportunities have already been claimed. My experience as a biotech engineer involved working with renowned scientist Alain Prochiantz, who sought innovative treatments for neurodegenerative diseases. He pioneered the discovery of homeoproteins' neuroprotective properties, aiming to develop solutions for conditions like Alzheimer's and Parkinson's.

In biotech, testing an idea carries substantial product risk, requiring years and considerable funding. Conversely, in tech, the marketing risk is higher. Thanks to modern infrastructure, including the Internet and low-code solutions, you can test ideas more affordably and quickly.

Returning to Paul’s insights, he distinguishes startups from traditional businesses based on their potential for hyper-growth. While a barbershop can meet local demand, a software solution for barbershops can scale globally.

Achieving consistent growth transitions a startup into a competitive force on a worldwide scale. This scalability hinges on the implementation of effective growth strategies.

Photo by Erik Mclean on Unsplash

A marketing growth engine is a robust, predictable system designed to drive exponential sales growth. It allows companies to invest a specific amount in marketing, expecting a proportional sales return. Building such an engine is one of the toughest challenges for startups, akin to crafting a high-performance F1 engine versus a standard urban vehicle.

Of the numerous startups I've encountered, only two successfully developed effective growth engines. Just as an F1 engine's quality is measured by speed, a startup's success is defined by its growth trajectory.

In my neuroscience career, we relied on the slowing degeneration of neurons as a guiding metric. Similarly, in startups, growth serves as the compass directing decisions. It underlines the necessity for scalable business models, innovation, and technology investments.

If you choose to pursue VC funding, it's crucial to understand that investors build diversified portfolios. They evaluate growth as a primary criterion, with each type of investor focusing on different growth phases:

• Seed investors: transition from MVP to initial traction
• Pre-Series A investors: evolve from traction to a functional marketing growth engine
• Series A investors: scale a marketing growth engine to broader levels
• Series B+ investors: transition from scale-up to a tech powerhouse

From my observations, a successful early-stage startup is characterized by strong growth potential, supported by a validated marketing growth engine. Notably, this definition does not mention technology or innovation.

Thank you for reading!

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Chapter 2: Overcoming Co-Founder Challenges

In this insightful video, explore strategies for addressing co-founder issues while raising funds.

Chapter 3: Understanding Startup Fundraising Dynamics

This video offers a comprehensive overview of how startup fundraising works, perfect for founders navigating the ecosystem.