If the stories of building billion-dollar companies teach us anything, it should be this: the mythology doesn’t always match reality. Data can both dispel the myths and provide a new foundation for understanding the success of these companies.
By taking a closer look at the data, and by listening to the stories of many successful founders and investors, Super Founders provides a clearer sense of what sets billion-dollar companies apart. Here are a few key takeaways from the book.
There are a lot of myths about founders. Forget them. Founders of billion-dollar companies started at any age—half of them were thirty-four or older—and came from all kinds of backgrounds. Age was a nonfactor. For some, being young helped them to ask the right questions and get media coverage. Both technical and non-technical founders succeeded as CEOs (though technical founders had a slight advantage), and solo founders weren’t less likely to build billion-dollar companies. The number of co-founders doesn’t affect success, so feel free to give a recruit the co-founder title to help attract the best core team.
The mythical Ivy League college dropout who launched a company in their dorm room makes up only a tiny percentage of billion-dollar startup founders. Billion-dollar startup founders were, on average, more educated than their counterparts and were more likely to have attended better-ranked schools, but it was a barbell distribution: as many attended top-ten schools as went to schools not even ranking in the top one hundred.
There’s no right or wrong in deciding where to work to prepare you for your own entrepreneurial journey. On average, founders of billion-dollar companies had eleven years of work experience before founding. They were more likely either to have started companies throughout their career or to have worked at brand-name corporations like Google, McKinsey, or Facebook. Surprisingly, the majority did not have domain expertise. You can disrupt an industry you don’t know much about as long as you have acquired the right soft skills and connections. Speed of learning is the more important factor; after that are the abilities to be resourceful and to ask the right questions of the right people.
The ideas that became billion-dollar companies didn’t fit any specific archetype. Some founders acted as missionaries, solving their personal problems, but many startups were the result of deliberate ideation and were opportunity driven. Successful founders rarely tell the stories of the days when they were jumping from one idea to another to find the right one.
And pivots happened very often, a testament to the fact that great founders weren’t emotionally attached to a specific idea and were willing to listen to the market. Completely change your idea if you must until you find the market pulling the product out of you. Remember that YouTube was intended to be a dating website, and Slack started as an online multiplayer game.
Startups with highly differentiated products were more likely to become billion-dollar companies. Painkillers were more likely to become billion-dollar startups, but vitamin pills that created a habit or strong brand worked too. Startups that created a product to save their customers time or money were more likely to become billion-dollar companies than those going after convenience or entertainment.
Competition is good, or at least not an extinction risk; over half of billion-dollar startups competed with large incumbents at the time of founding. It’s good to compete with incumbents or compete in fragmented markets; they are easier to beat than a highly funded startup with the same idea. The rise of Zoom tells the story of competing against incumbents like Cisco and Skype by focusing on the quality of the product and attention to customers. Billion-dollar companies created defensibility through engineering—the expertise and amount of time and work needed to build a product—but also through network effects, scale, brand, and intellectual property. Those with network effects were more likely to become billion-dollar companies.
On Venture Capital
Venture capital is relatively new in the history of financing new businesses, but it has an outsized impact. Venture-backed startups have created trillions of dollars in shareholder value and comprise a large proportion of the stock market. About 10 percent of billion-dollar startups were bootstrapped or self-financed. GitHub, Atlassian, UiPath, and Qualtrics all bootstrapped for at least four years.
Many successful founders become angel investors, and they tend to have a higher chance of spotting future billion-dollar companies. When fundraising, how you pitch, how beautifully crafted your deck is, and how comprehensive your materials are carry less importance than the backgrounds of the team members. Think deeply and be thoughtful about what exactly is the problem you are solving and for whom. In your pitch deck, less is more. Use your energy, money, and equity to convince the best people to join you and to sign up customers. Spend your time putting your company in a better position so that VCs can’t ignore you, rather than spending time on convincing them.
If there is one takeaway from this book, it should be that the path to a billion-dollar startup often begins with a bug for creating. The best preparation for starting a wildly successful company is starting a company. If you have never started a company, the best preparation for doing so is to start something, maybe a club or side hustle. The Cloudflare CEO had started Honey Pot, a nonprofit community to report spam emails, and the Confluent founders had started Kafka inside LinkedIn as an open-source project. Tom Preston-Werner created Gravatar, globally recognized avatars, and sold the source code to WordPress for a small amount before launching GitHub. Many billion-dollar founders had already started successful or unsuccessful companies before they created the billion-dollar one.
We should also acknowledge the role that luck, privilege, and access played in the success of many of these founders. Even the smartest people with the best ideas got lucky somewhere. What is important, though, is that these founders kept building until their luck came through.
Forget all the myths. Keep on building. Ideate, build, sell, repeat—and you will be on your way to becoming the next Super Founder.