Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. This is our Wednesday show, where we niche down to a single topic, think about a question, and unpack the rest.
The Question: What are some startup assumptions that get it wrong?
This question comes after one of Natasha’s recent Startups Weekly column, "Let’s stop pretending there are silos in startup land." In the piece, which was teased out in her newsletter, she talked about how separations between late-stage and early-stage companies aren’t as ironclad as investors may try to sell. Of course, that spiralled into an op-ed about what other startup notions we have, and the difference between a silo and a semblance of one.
Here’s an excerpt from the piece:
You don’t need to be a web3 company to benefit from the growing mindshare around decentralization and alternative assets; just like you don’t need to be an angel investor to adopt the idea that your advice is worthy of equity in a company; and, as I’ve hopefully shown above, you don’t need to be a late-stage company to refocus on and prioritize profitability.
The Podcast Conversation
Our podcast continues the conversation, getting into five specific myths that we’re about ready to bust. I won’t ruin what we specifically get into, but phrases like "Web 2.5" and "IPO pricing" and "poetry magazines" certainly make an appearance. It’s the perfect episode for people starting out in tech, or folks who are in the mood to unlearn some of their assumptions.
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The Myths That Need Busting
Let’s get into it! Here are five startup myths that we’re about ready to debunk:
Myth #1: More money means more growth
We’ve seen this myth perpetuated in startups time and again. The idea is that if you have a fat wallet, you can grow your company faster and bigger than ever before. But the truth is, more money doesn’t necessarily mean more growth.
The Reality: Growth comes from a combination of factors, including a solid product-market fit, effective marketing, and strong leadership. Having more money can certainly help, but it’s not a guarantee of success.
Myth #2: You need to be a web3 company to benefit from decentralization
Decentralization is all the rage these days, but do you really need to be a web3 company to benefit from it? The answer is no!
The Reality: Decentralization is not exclusive to web3 companies. Any company can benefit from the growing mindshare around decentralization and alternative assets.
Myth #3: Angel investors only care about equity
Angel investors are often seen as being only interested in getting a piece of the pie, i.e., equity in your company. But that’s not entirely true!
The Reality: While some angel investors may be motivated by the potential for equity, others are more focused on helping entrepreneurs succeed and grow their businesses.
Myth #4: Late-stage companies are immune to failure
Just because a company has reached late-stage doesn’t mean it’s invincible. We’ve seen many late-stage companies fail due to various reasons such as poor management, market shifts, or simply not having the right product-market fit.
The Reality: Failure can happen to any company, regardless of its stage. It’s essential for founders to stay vigilant and adapt to changing market conditions.
Myth #5: IPO pricing is a science
IPO pricing is often seen as an exact science, with companies using complex algorithms and models to determine the perfect price. But the truth is, it’s not that simple!
The Reality: IPO pricing involves many factors, including market conditions, investor demand, and company performance. While there are certainly best practices and guidelines, there’s no one-size-fits-all approach.
Conclusion
We’ve busted five common startup myths that need to be reevaluated. Remember, growth comes from a combination of factors, not just more money. Decentralization is not exclusive to web3 companies. Angel investors care about more than just equity. Late-stage companies are not immune to failure. And IPO pricing is not an exact science.
Stay Tuned
Don’t forget to follow us on Twitter for more mid-week musings and stay tuned for the next episode of Equity, where we’ll continue to unpack the numbers and nuance behind the headlines.
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