Why NVIDIA is a shitty model for a startup

🌈 Abstract

The article discusses the flaws in the common practice of startups and small businesses trying to emulate the strategies and practices of large, successful tech companies like NVIDIA and Amazon. It argues that the lessons from these multi-billion dollar companies rarely translate well to early-stage startups due to differences in resources, market conditions, and unique circumstances.

🙋 Q&A

[01] The Scaling Fallacy

1. What is the "scaling fallacy" mentioned in the article?

• The "scaling fallacy" refers to the belief that there are principles that can be universally applied to every company, regardless of size, industry, or context. The article argues that what works for a global technology company does not necessarily work for a startup operating out of a garage.

2. How does the article criticize the tendency to apply the wisdom of large tech companies to startups?

• The article states that there is a "fundamental flaw" and "cognitive dissonance" in this line of thinking, as the lessons from multi-billion dollar companies rarely translate to early-stage startups. It argues that this advice is "misguided" and relies on the "scaling fallacy."

3. What are some examples provided in the article of this misguided advice?

• The article cites examples such as:
  • Applying the "wisdom of Steve Jobs circa 2005 to the problems of Steve Jobs circa 1976"
  • Touting Amazon's logistics as the solution to problems of scale for 2-person companies
  • Advising startups to "find their niche" and "bet big on emerging technologies" based on NVIDIA's success

[02] The Dangers of Survivorship Bias

1. What is the "survivorship bias" mentioned in the article?

• The "survivorship bias" refers to the tendency to study and glorify the companies that made it big, while forgetting the thousands that failed along the way. This creates a distorted view of what leads to success in business.

2. How does the article argue that this survivorship bias leads to oversimplified advice?

• The article states that by focusing only on the winners, a false narrative of inevitability and replicability is created. This leads to oversimplified advice that ignores the role of timing, luck, and unique circumstances in a company's success.

3. What examples does the article provide of this oversimplified advice?

• The article cites examples such as "innovate like Apple" or "disrupt like Uber," which it argues are "platitudes" that ignore the complex realities of building a business from the ground up.

[03] Embracing Startup Advantages

1. What advantages do startups have over larger companies, according to the article?

• The article states that startups have the benefit of agility, allowing them to pivot quickly, experiment with new ideas, and adapt to market changes faster than their larger counterparts.
• Startups also have the advantage of deep, personal connections with their customers and communities, which they can leverage to solve specific problems for their immediate market.

2. How does the article suggest startups should approach their constraints, rather than trying to emulate large companies?

• The article argues that startups should embrace their constraints, recognizing that limited resources can breed creativity and force efficiency in ways that bloated corporate budgets never could.
• It suggests that startups should focus on fundamentals like cash flow, customer satisfaction, and sustainable growth, which are universal principles that apply regardless of size.

3. What does the article say the next great startup success story will come from?

• The article states that the next great startup success story will come from an entrepreneur who understands their market deeply, responds to their customers' needs creatively, and builds a business that's uniquely suited to its time and place, rather than slavishly following the playbook of today's tech giants.