Starting a business can be an exhilarating experience, filled with the promise of success and the thrill of possibility. However, the reality of the startup world is often far less glamorous. In fact, it’s a harsh and unforgiving environment where only a select few manage to succeed.

According to Forbes, 80% of startups fail within the first year. This statistic may be surprising, considering that many of these startups are founded by high-pedigree entrepreneurs, who graduated from the best institutions, with plenty of experience under their belts.

So, what’s going on?

The truth is that the startup-VC ecosystem is a complex and unpredictable beast, where even the most experienced players can struggle to succeed. But, surprisingly, this is a good thing. In this post, we’ll explore why no one knows sh*t in the startup-VC ecosystem, and why that helps create a level playing field for every player.

The Myth of the Serial Entrepreneur

In the startup world, there’s a common belief that serial entrepreneurs are more likely to succeed. After all, they’ve been there before, so they know what to expect, right? Well, not necessarily.

According to research by Harvard Business Review, entrepreneurs who had previously failed had a 20% chance of succeeding with their next venture. In contrast, first-time entrepreneurs had a 23% chance of success. This suggests that experience may not be as valuable as we once thought.

So, why do so many serial entrepreneurs fail? One theory is that they become overconfident, believing that they have all the answers. This can lead to a lack of experimentation and a failure to adapt to changing circumstances. In contrast, first-time entrepreneurs may be more open to learning and trying new things, which can give them an advantage.

The Illusion of Expertise

Another factor that contributes to the unpredictability of the startup-VC ecosystem is the illusion of expertise. In any field, there are people who appear to have all the answers. In the startup world, these people are often venture capitalists.

VCs are supposed to be experts at picking winners, but the reality is that they often get it wrong. According to research by Cambridge Associates, only the top quartile of VCs are able to consistently return capital to their investors. The rest are essentially just guessing.

So, why do VCs struggle to pick winners? One reason is that startups are inherently unpredictable. No matter how much research you do, there’s no way to know for sure whether a particular company will succeed. In addition, VCs are often influenced by their own biases and personal preferences, which can lead them to make bad decisions.

Degrees from the best institutions

While degrees from the best institutions can certainly be an advantage in the startup-VC ecosystem, they’re not a guarantee of success. In fact, research shows that pedigree alone is not enough to ensure success in the startup world.

One study by the Kauffman Foundation found that the most successful entrepreneurs tend to have a mix of experiences and backgrounds, rather than a single linear path. They also tend to have a willingness to take risks and an ability to learn from failure.

This is not to say that degrees from top institutions are useless. They can certainly be an asset, providing access to networks, resources, and opportunities. But they’re not the be-all and end-all.

In fact, some argue that too much focus on pedigree can be harmful, as it can lead to a lack of diversity in the startup world. By favoring those who come from elite institutions, we may be missing out on innovative ideas and perspectives from those who come from more diverse backgrounds.

So, while degrees from the best institutions can be helpful, they’re not a substitute for hard work, risk-taking, and the ability to learn from failure. Ultimately, it’s these qualities that will help you succeed in the startup-VC ecosystem.

The Value of Not Knowing

So, if no one knows sh*t in the startup-VC ecosystem, why is that a good thing? Well, there are a few reasons.

Firstly, it creates a level playing field. In a world where even the most experienced players can struggle to succeed, anyone has a chance. This means that startups can come from anywhere and be started by anyone, which can lead to more diversity and innovation.

Secondly, it encourages experimentation. When no one knows for sure what will work, entrepreneurs are free to try new things and take risks. This can lead to breakthroughs and new discoveries that wouldn’t be possible if everyone followed the same playbook.

Finally, it forces us to be humble. When we don’t know everything, we’re more likely to listen to others and be open to learning. This can help us to avoid the overconfidence and arrogance that can lead to failure.

Embracing Uncertainty

So, how can we embrace the uncertainty of the startup-VC ecosystem? Here are a few strategies:

1. Stay Agile: In an unpredictable environment, it’s important to be agile and adaptable. This means being open to changing direction if things aren’t working out, and being willing to experiment with new approaches.
2. Build a Strong Team: One of the best ways to mitigate risk in a startup is to build a strong team. This means surrounding yourself with people who have complementary skills and who share your vision and values.
3. Focus on Customer Feedback: One of the best ways to validate your idea and mitigate risk is to focus on customer feedback. This means getting your product or service in front of potential customers as early as possible and using their feedback to refine and improve your offering.
4. Keep Your Eye on the Prize: Finally, it’s important to keep your eye on the prize. In the face of uncertainty, it can be easy to get discouraged and lose sight of your goals. But by staying focused and persistent, you can increase your chances of success.

Conclusion

In conclusion, the startup-VC ecosystem is a complex and unpredictable environment, where even the most experienced players can struggle to succeed. But, as we’ve seen, this uncertainty is actually a good thing. It creates a level playing field, encourages experimentation, and forces us to be humble.

If you’re starting a business, it’s important to embrace the uncertainty and focus on what you can control. Stay agile, build a strong team, focus on customer feedback, and keep your eye on the prize. By doing these things, you can increase your chances of success in a world where no one knows sh*t.