Chris Dixon wrote a great post earlier in the week on how in business of innovation there are really only two different types of people. You have either risked everything on the dream and started a company or you haven’t. As my first mentor said a long time ago it is a lonely road being your own boss and it is probably a lot easier if you crave bake beans on toast for dinner every night.
Another good post on the topic that I read recently was the worst outcome for a startup is not failure — it is mediocrity.
”The reason mediocrity sucks more than failure is very simple: Failure lets you move on, mediocrity stalls you and keeps you from reaching your potential.”
Over the years I have met any number of corporate wizzkids who have dreamed of doing it their way and down on their luck contractors who are in business for themselves simply because they are the only ones interested in giving them a job.
I would always begin my discussions with these people by asking them Why is it the smartest people always seem to operate the dumbest businesses?. As I have said before success is in business can be more about achieving a balance between egos and systems than having a game changing idea.
However having a game changing idea is big, big part of the fun factor that sustains the energy required to fuel a start-up.
Over the years I have come to identify 4 types of players in the innovation game. There are those who know how to play the game and there are those who know how to change the game to their advantage. There are also those who specialise in one industry sector or product category and there are those who recognise the same game can be played with equal expertise across multiple industries.
These are the ones who intuitively see the patterns of profitability in everything opportunity they encounter. Game makers can also be players but rarely do great players make good game makers. The game makers have an appetite for risk that the game players just can’t match.
The players will say show me a winner and I’ll buy into the game. The makers will respond to the challenge by manufacturing the game changing opportunity the players are looking for.
The relationship between the quadrants is symbiotic and each “innovation type” in their own way has the ability to accumulate and alternatively lose great wealth from being involved in the game.
Where do the VC’s, Funds Managers and Angel Investors sit in this matrix? Mostly they are players who have been clever enough to bluff the market into believing they are the market makers.
Where does the first time start-up entrepreneurs sit in the matrix? Most are merely singularity players who have made the mistake of thinking they can become game changers. Every now and then one comes along who proves to be the exception to the rule but most learn the hard way by losing their hand (and perhaps even their shirt) to the more experienced players in the game.
Most make the mistake of thinking almost exclusively about “my ideas, my time and my money”. The more experienced players know the game is best played with other people’s ideas, time and money.
The game is played all aroud the world at many levels. Experience will tell you that despite all the theories the game is largely a complex game of hold’em poker where the ones with the money tend to leverage their influence to game the table.
Of course this strategy does’t always play out. For example every 7 to 10 years or so a new generation of funds managers turn up to try their hand at the game with other people’s retirement savings. This is historically the time when the game enters into the final “winner take all” jackpot round and the “winners become grinners” while the rest of the market is left wondering “why did happen to us?” (again).
Posted on April 29, 2011
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