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A Startup Reality Distortion Field?

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Who can be a founder, and how must one run a venture? In answering these questions, today’s startup world presents a reality distortion field; should one remain within it?

Last summer, I worked at a tech startup in which one of the hardest-working employees, aged 25, turned to me and asked if getting health insurance from one’s job, or having an employment contract at all, was “a thing.” I was a bit taken aback by her question, but as I began to interact with the dozens of startups in the working space / accelerator we were at, I realized that everyone seemed to be in a sort of reality distortion field, independent from all the ideals present in business outside of this realm (diversity, employees’ rights, caring for employees beyond the direct value brought in, etc.). Among the almost 100 employees there across dozens of startups, very few were actually employees, despite nearly universally falling into the legal definition of one.

Today’s environment, in which the startup world is “cool” and likely oversaturated with people who might be better suited elsewhere, presents pressures to conform to a stereotypical path to startup success. As a founder, can one combat these, and more so, can one even be a founder if one doesn’t fit the mold?

The phrase “tech startup” in many people’s minds conjures ideas of a venture founded by under-25, elite-school-dropout, fairly well-off, white male coders who live in San Francisco, New York, or maybe Boston, in small, expensive apartments; who use standing desks, huge Starbucks drinks, and whiteboards excessively; violate labor laws by keeping all employees as employed-at-will, benefitless “independent contractors”; have a general disdain for laws and regulation in general (the last two being the result of the rise of Uber’s Ayn Randian “sharing economy”; and speak in lots of jargon (see CollegeHumor’s “Startup Guys” sketches) on a ruthless path to VC funding rounds and then an IPO or big sale.

According to a CB Insights study, while 87% of funded startup founders in the U.S. are white, and 92% are male, the average age is actually 35 to 44 (with 26 to 35 year olds raising the most money), 39% are repeat founders, twice as many were in marketing or product management roles than engineering, and 2/3 of teams have founders with graduate degrees. In other words, even evaluating just the world of VC-backed ventures, which are subject to all the human biases entailed therein, reality doesn’t quite match up with the stereotype. (and if one looks at startup founders in general, the data are even further from the stereotype)

On the “values” question, I believe that ultimately, the founders’ values will permeate the venture and the course it takes, so these are very important to establish and live by from the start. While there are certainly many examples of not-very-nice people succeeding, and the short-termism encouraged by the venture climate tends to mask the opposite, the lessons one can learn by studying businesses a century ago are equally applicable today.

In the 1920’s, Walter Chrysler, a rising star at GM, left to create his own car company. Feeling suffocated by the staggeringly hierarchical, oppressively cutthroat, uncaring, innovation-stifling air at GM, Chrysler inculcated his startup with a very different set of values. His ended up being the last successful automotive startup in America (before Tesla, though others have lasted longer than Tesla has so far, so the jury’s out), and entering that industry late as a smaller player was very difficult, but the kinds of employee-centric values Chrysler instilled in his firm arguably allowed it to survive for the eight decades since (albeit on a bit of a roller coaster trajectory). No startup today is even dreaming of being around for that long, but that doesn’t mean the same approach to business is out of place.

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