Venture Startups Are Olympics

Shaan Puri shares a critical perspective on venture-backed startups, comparing them to the Olympics - both being high-sacrifice pursuits with very low probability of success. He argues that entrepreneurs often get tricked into this path, sacrificing their lifestyle and earnings for a small chance at a massive outcome.

Key Points:

• The Venture-Backed Startup Trap:

  • Only 1% of startups achieve billion-dollar outcomes
  • Median result is essentially zero
  • Entrepreneurs typically underpay themselves 50-75% below market salary
  • Requires 7-10 years of harder work and worse lifestyle

• Only Two Valid Reasons to Choose This Path:

  • It's your genuine calling - you stumbled into a real problem that requires a massive solution
  • Ego-driven desire to prove you're the "toughest, smartest entrepreneur"

• The System's Enablers:

  • Media cheers you on because your sacrifice provides their content
  • Investors celebrate you while going home at 4pm to their Atherton houses
  • Portfolio approach works for VCs but not founders

• Better Alternative Approaches:

  • Build nimble, small, lightweight businesses with immediate cash flow
  • Buy existing businesses instead of starting from scratch
  • Focus on lifestyle-friendly businesses that provide returns from year one

• The Reality Check:

  • Logic heavily favors cash-flow businesses over venture path
  • Venture path is "sexy" but often irrational
  • Most entrepreneurs get tricked by the system, not by any individual's malice

• The Venture Game is Similar to Olympics:

  • Society tricks people into giving up their life
  • Turns people into specialized tools
  • Massive sacrifice for trivial rewards (medals) or rare massive payoffs (billions)