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There are only four startup games.

Hi there -

Here is this week’s “1 principle, 2 strategies, and 3 actionable tactics” for running lean…

1 Universal Principle

“There are only four startup games.”
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0.05%. That’s the percentage of startups that receive venture funding. Google’s AI compared these odds to a professional golfer hitting a hole-in-one.

10,000. That’s roughly the number of startup accelerators and incubators worldwide. In 2005, there was just one — Y Combinator.

100m. While a more challenging number to estimate, this is roughly the number of startups that start each year. One startup every 3 seconds.

Glass half-empty or half-full?

While you can interpret these numbers either way, I’m excited and bullish about the untapped potential of the middle of the funnel:

The Startup Funnel

In today’s issue, I’ll be exploring:

  • Different startup games beyond the VC game.
  • The new face of entrepreneurship.
  • How to win as a founder.

2 Underlying Strategies at Play

I. There isn’t a single game in town.

Many years ago, I was about to hit “Submit” on a Y Combinator application for their Winter 2010 cohort when I stopped myself.

I had two toddlers at home and wasn’t about to leave them behind or drag my family to Boston for the three-month program in the middle of winter. What was I doing?

I hadn’t thought this through… I had been swept away by the one-track mindset of “When you have a startup idea, you join an accelerator.”

Over the years, I’ve met many founders accelerator-hopping with uninvestable ideas in the hopes of turning investors’ polite noes into yeses.

Their problem wasn’t getting into an accelerator but getting out.

The VC game is one of many games to play, but it’s counterproductive to play an un-winnable game or a game you think you should play because everyone else is playing it.

II. The persona of the garage entrepreneur has changed.

Another one-track mindset I had sidestepped many years ago was: “When you have a startup idea, you move to Silicon Valley.”

I had opted instead to bootstrap my startup in Austin, TX, which, ironically, many Silicon Valley founders now call home too…

Like Hollywood, Silicon Valley is still one of the hotspots if you’re playing the VC game, but if you aren’t playing that game, it doesn’t matter where you live.

Entrepreneurs today aren’t just two guys in a garage. They look like this:

The new face of entrepreneurship

Today, you can start and grow a business from anywhere.

3 Actionable Tactics

I. Pick the game you want to play.

Most founders skip this step, but this is the most important step that only you can do.  There is no right or wrong game. The only wrong game is an undeclared game.

It’s easy to be swept away by the startup bandwagon effect, where joining an accelerator or moving to one of the startup hotspots seem like the only options.

But this is a fallacy.

Avoid falling into this trap by carefully selecting the game you want to play.

When you break this down, there are only four types of games:

  • Level 1: $100k/year
  • Level 2: $1m/year
  • Level 3: $10m/year
  • Level 4: $100m/year

Level 1 games typically result in solopreneur, gig-economy, or passive income businesses.

All four levels can (and should) be “bootstarted”. BOOTSTART is my play on BOOTstrapping and STARTup and reflects a traction-first versus a build-first or investor-first to building startups.

For more on this, check out my recent webinar on ​The 3 Secrets to BOOTSTARTing​.

Finally, even though all levels can be bootstrapped all the way, most Level 4 startups typically require VC funding for growth.

II. Learn the rules to win that game and ignore other games.

The reason there are only four games is that each game is played with different rules, strategies, and tactics.

Building a $10m/year business is quite different from building a $1m/year business.

The sooner you declare your game, the sooner you can focus on playing it well.

For instance, if you’re set on building a level 1 or 2 business, you should forgo joining an incubator or accelerator.

It is certainly possible to up-level your game once you start playing.

Many unicorn founders, for instance, didn’t set out to build Level 4 businesses but decided to move up to the next level (ride the traction tornado) when the opportunity presented itself.

III. Recruit a team playing the same game.

Startups are a team sport. Once you move past Level 1, you will almost always need a team.

When recruiting team players, make sure they are all signed up to play the same game as you. This will help avoid needless heartache later.

If you already have co-founders, start by declaring the game each of you is playing and ensuring you’re aligned.

That's all for today. See you next week.

Ash
Author of ​​Running Lean​​ and creator of ​​Lean Canvas​

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