Why founders ‘need to keep running’
Are you a seed stage founder building a unicorn?
NFX Founding Partner James Currier wants to save you some time: startups that grow into billion-dollar companies have three basic forms of resilience.
- Network Effects: Your product becomes more valuable as more people use it.
- Embedding: Integrate your services so deeply that customers can’t take them out.
- Data loops: collect, process and act on real-time data.
“This is really just about world-changing, big-ass, high-impact companies that could be worth a billion dollars or more,” he said at australiabusinessblog.com Early Stage last month. “We’re investing in that. And what I’m talking about today is just for the people who want to build those kinds of companies.”
After giving a presentation he’d previously given at Harvard Business School, Stanford, and MIT, Currier outlined the mental models used by unicorn founders and offered candid advice to aspiring entrepreneurs.
“Don’t take a market risk – find things people want and just do better. That’s the most common way to get into a unicorn company.” James Currier, Co-Founder, NFX
“This idea that it’s 99% perspiration and 1% idea is not correct, because the right idea has power in it,” he said. “The right idea at the right time will attract you the right talent, it will attract you the capital – OK, it will attract you the press which will then attract you more talent, more capital.”
Pop culture and technology journalism are the lions of founders shooting for the moon, “so most people think of having ideas,” Currier said, pointing out that unicorns like Lyft, Meta and Alphabet were simply “copying” existing companies. In doing so, they traded market risk for execution risk, which is much easier to manage.
“Don’t take a market risk – find things people want and just do better. That’s the most common way to get into a unicorn company.”
According to Currier, who was an angel investor in Lyft, DoorDash and Patreon, NFX reviews about 8,000 deals each year, but only invests in about 30. “dead zone” – this area will waste your life energy if you pursue the bad ideas.
