I read somewhere that 90% of all startups die and the success stories we see now are the only survivors left in the startup battlefield. We think its easy because we only see the success stories. That’s survivorship bias. And I think that makes sense.
Think about it, the very nature of startups means the founders are doing something different. Startups are contrarian by nature. If it was such an obviously good idea someone else would’ve probably gone and done it. You need to be fundamentally different from everything else in your immediate region to really capture market share and win in the game.
That also means that people who get excited with less risky ideas will not be keen on funding your weird, funky, contrarian, disruptive internet startup. Why should they do it? Funding a car workshop gives them immediate returns. Starting a local cafe? Can’t go wrong. People gotta eat. Running a pharmacy? Same idea. These are your traditional businesses that have been ran since the beginning of time. Risk averse investors are more likely to take bets on these companies than go the long haul with a risky internet startup.
If you look at US vs the rest of the world, the number of successful startups per capita varies by orders of magnitude. Now if you try drilling it down deeper and sort US cities by population, the number of successful startups per capita varies like crazy as well!
Why is this the case? Don’t startups die by default? What’s making places like Silicon Valley startups so disproportionately successful?
My thoughts on the #1 reason for this? Ecosystem/Environment.
In most places, people treat you like you’re unemployed if you tell them you’re starting a startup. No, I’m not saying people in startup-friendly locations will automatically be impressed and interested with you just because you’re running a startup, but they almost always want to find out more about your funky ideas. No matter how inexperienced you seem or how stupid your idea sounds at first, because they’ve all seen inexperienced founders with weird ideas who a few years later were billionaires.
This is just me speaking from my experience speaking to startup-people in Singapore vs Malaysia. The ecosystem in Singapore is so much more supportive, even to new, unvalidated ideas.
With a strong environment, it’s also easier to meet great entrepreneurs who has been through most of what you’re going through right now. It’s 10x easier to find a relevant mentor to support you. Extra points on “relevant”. Running an internet startup is very different from a traditional business so the types of advice could be very different too depending on the mentors you get.
And when the ecosystem is great and thriving, more entrepreneurs come in, more support is provided, more successful exits happen in the region, more investors come in, more ideas get funded and the cycle continues.
This is what we’re building at Hustle Hub!
What do you think?
