Capturing luck with "or" instead of "and"

🌈 Abstract

The article discusses how to increase the probability of success for startups by leveraging "or" instead of "and" when considering the various factors that contribute to a startup's success.

🙋 Q&A

[01] Capturing luck with "or" instead of "and"

1. What was the author's experience with the fake stock market competition in elementary school?

• The author won a fake stock market competition in elementary school by putting all their money in a few penny stocks, whose small denomination meant that any fluctuation was a large percentage fluctuation in value. The competition happened to end on an up-day, resulting in the author having the best portfolio.

2. How does the author describe the "high risk, high reward" nature of startups?

• The author compares startups to the penny stock competition, stating that they are "more random" but also need luck in many areas, such as finding the right advertising channels, achieving product/market fit, cultivating a social media presence, hiring the right employees, avoiding competitor moves, having enough market demand, and pricing appropriately. The author notes that this need for success in many areas is why startups fail so frequently.

3. How can startups reduce the "luck" effect and potentially turn it in their favor?

• The author suggests that startups can reduce the "luck" effect by making explicit choices, such as picking a large, growing, and healthy market, competing in a niche where incumbents don't care or can't move quickly, hiring people they've worked with before, building something sustainable without hiring, and generating "Love" rather than just "Utility" or "Coercion".

4. What is the author's main recommendation for boosting the probability of success?

• The author's main recommendation is to leverage "or" instead of "and" when considering the various factors that contribute to a startup's success. By having multiple options for things like marketing channels, product features, and exit strategies, the probability of something working increases, even if the individual probabilities of success for each option are low.

[02] Leveraging "or" instead of "and"

1. How does the author explain the difference between using "or" and "and" when considering startup success factors?

• The author explains that using "and" lowers the probability of success because each factor has its own probability of success, and the total probability is calculated by multiplying these probabilities. In contrast, using "or" increases the number of ways that luck could smile upon the startup, as only one of the options needs to work.

2. What examples does the author provide of using "or" instead of "and" for different aspects of a startup?

• The author gives the example of marketing channels, stating that a startup could try various options like Google Ads, Facebook ads, affiliate sales, outbound sales, SEO, guest appearances, or partnerships, and only one of these needs to work.

3. How does the author contrast the "or" approach with the challenges of marketplaces?

• The author states that marketplaces "almost never succeed" because they have extra "and" clauses - they need to thrive with both sellers and buyers, the costs to build up both sides cannot be too high, and both sides need to realize value. The author argues that by accumulating these "and" requirements, the probability of success is lowered.