Story 1

350 million years ago a tiny insect was sitting high up on the trunk of a Devonian tree, holding on to his dear life.

Hungry predators surrounded it. It had zero chances of survival.

It took a leap of faith and jumped from the tree trunk, almost certain in its gut that this going to be a fatal jump.

But… it survived… though barely. It got wounds all over the body.

How did it survive?

Here is what happened: An extended lobe on this insect’s back enabled it to glide while it jumped. This provided for a softer landing.

It was a Hack.

But… this was also the beginning of a Tiny step towards the evolution of wings in insects. The extended paranotal lobes enabled insects to glide, steer and finally flap and fly.

A small overgrowth on the insect’s back gave it a survival edge in the ecosystem. That overgrowth ultimately got evolved into sophisticated wings.

Isn’t this serendipity of discovering flight beautiful?

Story 2

A few years ago, I started using a productivity app – Forest.

The idea of the app is simple – if you want to stay focused for say 30 mins, then open the app and plant a seed in a virtual forest. In 30 mins the seed will grow into a full-grown tree.

If you switch to any other app in those 30 mins or decide to give up (by clicking a button) then the growing tree dies 🙁 . The more successful focused sessions you do the bigger your forest gets!

I could see myself spending a significantly higher number of focused hours every day using Forest.

It was working. Until.. it didn’t.

I started disliking the fact of needing a gamification app to increase productivity. There was a ‘feeling silly’ about this entire stuff.

It felt like a Hack.

“I should be able to meditate my way into staying focused and shouldn’t be needing a gamification app!” was the inner dialogue.

I ditched the app for a brief period.

Even the act of ditching it made me uncomfortable. Forest was helping me! Earlier I was feeling “impure” but now I was feeling “stupid”. It was conflicting.

There was a ‘bug’ in me.

Until there was a moment of insight…

While taking a walk one evening I got reminded of a recent article about evolution of wings in insects.

And then I was able to connect my *bug* with evolution.

What would have happened to that insect if it would not have embraced its extended paranotal lobes and hacked its way around?

Not only it would have died but it would have also killed the first Tiny step towards flight.

Finally, I was able to get rid of the *bug*. I was back to building my forest.

When you don’t know what to do, have the courage to do what you can. Doesn’t matter if it looks like a Hack.*

This is how nature works.

And we are a Tiny part of that.

Notes

* Small but important caveat – run the Hack by your core values.

This ability to categorise comes in very handy especially when we are attempting hard things like startups.

One categorisation that I have come across and I have not heard other people talk about is – categorising your startups in Asset Class.

An asset class is a group of financial instruments that have similar financial characteristics and behave similarly in the marketplace.

Asset Class has two important characters:

A. Expected Risk

B. Potential Return

“Low Risk / Low Return” are categorised as Defensive Assets.

“High Risk / High Return” are categorised as Growth Assets.

Based on this startups (at any given stage) can also be broadly classified as:

• Defensive startup* (potential to give a return of 5-10x on the initial investments)
• Growth startup* (potential to give a return of 50-100x on the initial investments)

Makes sense?

Now, why is it important to categorise your startup like this?

It becomes important if you are thinking of raising venture capital. Because venture capital is explicitly meant only for one of these Asset classes – Growth Startups (why is that? this is a separate topic that requires a dedicated post).

It makes no sense for Defensive Startups to raise venture capital.

Whenever a Defensive Startup raises a Series A, either of one will be true:

1. VCs hedging lesser than they should (due to the competitive market).
2. Founders doing the above Asset Class categorisation wrong and thinking they fall into ‘Growth startups’ asset class (and then just raising money because they can).
3. Founders thinking they can use capital to move from Defensive to Growth (and then raising money because they can).

As a founder, 1 is not in your control but 2 and 3 are.

So, be as honest as possible about this categorisation.

A defensive startup raising venture money (because of either 2 or 3) could be as lethal as a retired person putting all his life savings in bitcoin (heck perhaps even Dogecoin). It might… just …. work out… but you won’t be able to stomach the volatility of the market.

A quick litmus test to know which category you fall into:

Imagine you raised a $5M Series A today. Do you foresee that you will be able to return $100M+ in a 10 year time frame? Just for quick math: In order to return $100M, you would likely need an exit of $400M+.

Most of the startups are not Growth Startups. A lot of them are not even Defensive Startups.

After reading this, some common objections might come to your mind.

1. Why can I not raise venture capital and use it to move from Defensive to Growth Startups?
You can NOT buy your way through the 0-1 journey. In startups, capital accelerates whatever is already happening. It acts as a Catalyst, not an Alchemist. If you do this, you will likely gamble away your chance of a 5-10x return (more on the ‘why’ of this in some other post).

2. Can a startup move from one asset class to another?
Of course, This is not fixed across the lifetime of a startup. Both internal (change in startups strategy, product, etc) and external (market, ecosystem, etc) evolution can make this happen. As founders, we should reflect on this categorisation every year or so to see if things have changed.

Any more objections? You can reach out to me at m@mayank.ink. I’ll happy to answer.

Notes

* The terms Defensive startups and Growth startups are mapped directly from the classic asset class categorisation.

If ever there needs to be a hook to introduce Gandhi it should be the following:

Private man, 
without wealth, 
without property, 
without official title
or office.

Mahatma Gandhi is not the commander of armies,
Nor a ruler of vast lands, 
he can not boast any scientific achievement 
or artistic gift. 

Yet men, 
government,
dignitaries 
from all over the world 
have joined hands today
to pay homage to this little brown man in lion cloth
who led his country to freedom”

Reporter during Gandhi’s funeral procession in Gandhi (film)

Gandhi has been one of my heroes. A lot can be learned from his life.

For me, two things stand out.

Create your own game

So, if Gandhi was not the commander of armies then how did he fight with the biggest and the most powerful army of the world?

He fought by NOT fighting.

He simply refused to play the game that armies play 🙂

He created his own game. Since he created his own game he had the liberty to set the rules of the game as well. 

The game he created was non-violence, the weapon of choice was disobedience and the rule of the game was – “one who does not fight, will be the one who wins!”

Now, bring your “biggest and the most powerful army of the world” and let’s see who wins 🙂

Suddenly the biggest strength of your enemy becomes his biggest weakness.

How innovative!

In the startup world, we talk a lot about category creation. For me, Gandhi remains the most impactful category creator of the last century.

Knowing what cannot be taken away from you

Excerpt from one of the protest speech Gandhi gave in South Africa (from the film Gandhi):

They will imprison us.
They will fine us.
They will seize our possessions.
But they cannot take away our self respect if we do not give it to them.
… we cannot loose.
We cannot…
They may torture my body…
Break my bones…
even kill me…
Then… they will have my dead body…
NOT MY OBEDIENCE.

Wow! Every single time I hear this speech from the film Gandhi it leaves me in awe.

There is something deep about something so simple. It points me to that inner reservoir of strength that remains untouched by external events, circumstances and people.

Some things can never be taken away from you. So, always draw your strength and inspiration from there. That will never fail you.

I have this little ritual which I do every 2nd October. I just spend some quiet time reflecting on Gandhi and his life. I also listen to and watch some of my favourite songs on Gandhi.

I am always left inspired.

Many more happy returns of the day Bapu!