A couple of days ago, I ran across a blog post asking how unknowns could compete with celebrity entrepreneurs. It’s a common question, and becoming more relevant as the expansion of the startup ecosystem (including trade press like TechCrunch and Mashable, who act as our version of paparazzi) and the relative paucity of IPOs in comparison to acquisitions has generated a surge in the ranks of serial entrepreneurs.
In his post, Justin Krause relates how he and a neighbor built and launched virtual message board SkyChalk, only to see it fizzle out. Then he notes that Caterina Fake’s latest startup, Pinwheel, is doing the same thing, and with a slightly envious tone, concludes that “connections and money may be more important than the product itself.”
To put in bluntly, this is balderdash.
Yes, celebrity entrepreneurs have a major advantage when all other factors are equal. But all other factors are seldom equal.
Take Silicon Valley’s three most valuable companies: Apple, Cisco, and Google. All three were founded by unknown, first-time entrepreneurs. Even the current crop of hot companies fails to demonstrate the dominance of celebrity entrepreneurs. While there are a number of successful serial entrepreneurs like Zynga’s Mark Pincus, the single biggest hit is Facebook, whose founder Mark Zuckerberg was an unknown college dropout.
In some ways, unknown entrepreneurs have an advantage. Their efforts aren’t subject to unrealistically high expectations (e.g. Color), and have time to build momentum. (Small comfort, I know, when you’re an unknown entrepreneur desperate for anyone to pay attention, but an advantage nonetheless)
Another advantage is that a lack of resources forces you to attack opportunities that others overlook. When you have overwhelming advantages in terms of being able to raise money and generate press, the temptation is to attack known markets where you feel certain of a good payoff. Yet the most valuable companies result from disruptive innovations that create new markets.
Of course we’d all rather be celebrity entrepreneurs than unknown guys in coffeeshops. It’s a lot more comfortable to start a company when all that’s at stake is your reputation, and not your life’s savings. But if you are an unknown guy or gal in a coffeeshop, your best strategy isn’t to lament your fate–it’s to find an opportunity that the celebrity entrepreneurs have overlooked.
By the way, that’s exactly how those celebrity entrepreneurs achieved their initial success. Each of them started off as an unknown guy or gal in a coffeeshop, including Caterina Fake (who was certainly not appearing on the cover of Newsweek when she was an Art Director for Salon).