An Analogy for VC’s, Startup’s, Established Companies and the People Involved

I am a particularly big fan of analogies – I find they make almost anything easier to understand and explain.

So, this morning I was thinking of how best to phrase my thoughts of how to compare working for a big company, working for a start-up, striking out on your own, and all the people involved – and here is the best analogy I have come up with to date.

Ships, Financiers, Captains, Crews, Known and Unknown Lands

Picture the world in the early 1400’s – the age of exploration and discovery. This is what I would equate the entire corporate ecosystem to – let me draw the parallels for you.

Explorers/Captains: these are the modern day CEO. They might be determined to explore and discover new lands; they might be set on running routine expeditions. However in order to do so, they need two things: a crew and a ship.

Crews: this can be anyone who would work for someone else. Not all jobs a crew member could take are the same – they could join a risky expedition, one that might never return, or a much safer one, perhaps to somewhere close by or already known.

Financiers: someone needs to pay for the ships – and this is where the financiers come in. They are the ones that will foot the bill to buy, build and equip the ship with the necessary goods for the exploration ahead.

Existing Trade Routes: these are the areas already known. Perhaps it is down the coast, perhaps it is a little further  – there were known trade routes that were frequented by the more risk adverse captains. Although there still is potential for catastrophe, it is much lower than trying to pursue an unknown trade route. These would be sustaining innovations.

Unknown Trade Routes: these are areas currently unknown. It might be as simple as ‘heading west’, or it might be an educated guess – the key here is that these areas are unknown, and thus must be discovered before they can be monetized. These would be disruptive innovations.

The Example

Imagine yourself, freshly graduated from sailor school, ready to make your mark on the world. Your goal should be one of two things: get under a great captain, or try to get your own ship. Depending on your timing, skill, network and a plethora of other factors, finding your own ship might be hard – and you might want to learn a few things first. In that case, you need to find a crew to join.

Joining a company is like joining a crew – your goal should be to learn everything possible from that crew. Also, the more audacious the expedition you are joining, the more you will learn. It takes a much more skilled crew to explore undiscovered lands than it does sail a routine trip. You will learn a lot more exploring unknown trade routes than you will running routine expeditions.

However, if you have ambitions to one day captain your own ship (or run your own company), you will have to decide sooner or later where the value you might get from venturing out alone outweighs the value you are getting staying where you are. It’s fantastic to be on an expedition to discover a new continent (which may or may not be successful), but you only learn so much by scrubbing the floors – even though you will get a great experience from just being involved.

At some point, it might make more sense to find a small sail boat, leave the warship you were previously on, and venture out on your own.  Sure, it might be a little less comfortable, a little less glamorous, and a little more work, but you will also learn much more. Rough seas make good captains, not good floor scrubbers – and it’s the captain that takes the lion’s share of the experience and knowledge from the expedition.

Also, as an up and coming captain, you need to understand how to deal with financiers – those paying for your ships, crews, and supplies. It would be a difficult task to try to finance and captain a 40-gun Man o’ War, with a crew of 200, as you first engagement – it would be a hard sell telling people that you plan on discovering a new continent right away – after all, you have no experience!

The better bet is to gain a few quick wins. Perhaps discovering a few small islands off the coast, or maybe something on the same side of the ocean – by achieving these initial small victories, the financiers (or venture capitalists) will have more faith in your ability to achieve audacious goals – like discover a new continent (or create a new industry), and so will a potential crew.

Don’t underestimate the importance of crew morale. I am sure many a captain has had their crew mutiny just shy of success. What if Columbus’s crew had mutinied off the coast of North America? Your crew needs to have faith in your ability and your vision – so never underestimate the importance of sharing both.

Finally, it only counts if you do it – I am sure there was many a sailor who had dreams of one day captaining their own ship – but they remained just that: dreams. I am sure there were many sailors who dreamed of one day exploring unknown lands – but they got accustomed to running routine expeditions. Whatever your dreams and goals are, they only count if you are able to act on them – no one ever received credit for being the first person to think about it.

After all, as Jim Rohn says, it is the set of the sails, not the direction of the wind that determines which way we will go.

Blair Livingston

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