Seven Fund Essay Competition 2012

The most important thing that the constraints on a normal business protect it from is not competition, however, but the difficulty of coming up with new ideas.

If you open a bar in a particular neighborhood, as well as limiting your potential and protecting you from competitors, that geographic constraint also helps define your company. Whereas if you want to start a startup, you're probably going to have to think of something fairly novel.

The distinctive feature of successful startups is that they're not.

Ideas It might seem that it would always be better to start a startup than an ordinary business.

If you write software to teach Tibetan to Hungarians, you won't have much competition.

If you write software to teach English to Chinese speakers, you'll face ferocious competition, precisely because that's such a larger prize.Writing software is a great way to solve (b), but you can still end up constrained in (a).If you write software to teach Tibetan to Hungarian speakers, you'll be able to reach most of the people who want it, but there won't be many of them.But I also mean startups are different by nature, in the same way a redwood seedling has a different destiny from a bean sprout.That difference is why there's a distinct word, "startup," for companies designed to grow fast.If all companies were essentially similar, but some through luck or the efforts of their founders ended up growing very fast, we wouldn't need a separate word.We could just talk about super-successful companies and less successful ones.But in fact startups do have a different sort of DNA from other businesses.Google is not just a barbershop whose founders were unusually lucky and hard-working. To grow rapidly, you need to make something you can sell to a big market. The problem for a barbershop, as for any retail establishment, is (b).Millions of companies are started every year in the US. Most are service businesses — restaurants, barbershops, plumbers, and so on. When I say startups are designed to grow fast, I mean it in two senses.These are not startups, except in a few unusual cases. Partly I mean designed in the sense of intended, because most startups fail.

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