Book Summary and Takeaways from "Super Founders: What Data Reveals About Billion-Dollar Startups, by Ali Tamaseb"
By Jerry Lee
https://www.amazon.com/Super-Founders-Reveals-Billion-Dollar-Startups/dp/1541768426
Super Founders does not give a roadmap for finding the next billion-dollar start-up to invest in, but it uses data to dispel a lot of myths. For those worried about survivorship bias, fret not, Ali Tamaseb compared billion-dollar start-ups with a control group of random start-ups for every factor. He also did admit that the limitations of such comparisons and possible biases in his research and how he limited or tried to lessen these weaknesses.
Takeaways:
Myths to be trashed:
Billion-dollar start-up founders start at almost any age. The median is 34.
Contrary to popular belief, most billion-dollar founders are more educated than the counterparts in their control group.
As many founders created businesses based on personal problems/frustrations as compared to those who ideate strategically
The high number of pivots in billion-dollar companies also showed that super founders were not attached to their idea or the original problem that they were trying to solve
While billion-dollar start-ups were more likely to have been headquartered in Silicon Valley, half of them were spread out among other tech hubs.
Market creation vs Market existence – 65% of billion-dollar start-ups were already competing in existing markets. But this does not mean that they were more likely to succeed. Those that create market share or start in a small but growing market did well too – e.g Coinbase.
Founders do not need to have backgrounds in the industry they are building a business in. There is an exception in businesses involving the hard sciences though. 75% of founders working in the hard sciences have prior knowledge/experience of the industry they are in.
Some Insights
Lots of billion-dollar start up founders came from tier one companies like Google, Oracle, Facebook, Microsoft, Amazon, Apple, Salesforce. But it could also be due to the personalities of these founders that caused them to join these companies in the first place.
There is a slight advantage in betting on a founder that is starting a business for the second time.
Most founders were already tinkering, working on side hustles, projects way before founding their start-ups. (This was a very consistent pattern in billion-dollar founders.)
Differentiated products and ‘pain killers’ were more likely to succeed. ‘Vitamin pills’ with strong branding or habit formation could work too.
Most of the billion-dollar companies that appeared for analysis were in the productivity space-saving time, 2nd most common were start-ups that saved money. Time to relook at Atlassian & UiPath! (Ahem!)
Being first to the idea is not important – what matters is being the closest to the turning point.
Competition is good – but only if you are facing incumbents. Fighting other well-funded start-ups is bad!
Venture-backed start-ups comprised a larger part of the stock market. Only 10% of billionaire start-ups were bootstrapped or self-financed.
One thing I loved about the book is the interviews that Ali Tamaseb published with legendary investors like Elad Gil and Peter Thiel. Also fascinating to read short accounts of other Super Founders and how they got started.