Joshua Liu

Working at Google, Facebook or Amazon today is a dream job for many. But that certainly was not the case their first year or two in existence when a startup’s future is very uncertain.

If you trace a startup’s employees in reverse timeline back to its founders, I suspect the closer you get to the startup’s origins and its early employees / founders, the more irrational those people appear to be.

In other words, the origins of a startup tend to attract people who are seemingly irrational.

What’s interesting is that being seemingly irrational is probably necessary for a startup to be massively successful.

1. Being contrarian

For one, successful founders tend to have hypotheses or perspectives about the industry that are very different from everyone else.

“At a start-up, or early-stage project, the only really massive early-stage projects are where you’re contrarian and right.”

– Reid Hoffman

In other words, the most successful startups often stem from ideas that seemed silly and irrational to everyone else but were actually correct.

2. Unwavering optimism

Running a startup is hard because by nature of being contrarian, there will be many smart people who will say you are wrong: wrong to be doing a startup, wrong in your approach, wrong in how you think about the future.

And statistically speaking, more likely than not, your startup actually is wrong.

So in order to be one of the few that succeed, and succeed massively, you not only need to be contrarian and right, but you need to have the conviction to pursue your seemingly irrational beliefs wholeheartedly. You must have unwavering optimism and conviction in the path you are taking.

This level of optimism can seem incredibly irrational to many, but it’s important because the highs and lows in the early stages of a startup are so massive that you won’t survive without being unwaveringly optimistic.

As such, startups in the early stages tend to self-select for people with incredible optimism. I’ve noticed that many startup founders see the glass half full more than most – they see opportunity in adversity.

3. Mission driven

Finally, successful founders tend to be very mission driven, which results in incredible financial risk-tolerance early on, which is financially irrational.

Consider that 1.) the opportunity cost for founding a startup is often very high and yet 2.) the best founders often are averse to selling their company.

When you consider what really drives the most successful founders, it shouldn’t be surprising that Larry Page/Sergei Brin (Google), Mark Zuckerberg (Facebook) and Jeff Bezos (Amazon) didn’t sell their companies. 

“So they (companies who wanted to buy Google) wanted us, but we were like, “Why are we going to work with this place that doesn’t believe in search?” That’s not going to cause anything good to happen. So ultimately, we didn’t sell for that reason… But I think ultimately, for me – search seemed pretty important. It was about actually wanting to do something in that area, and it didn’t seem like that was going to happen in these organizations.”

– Larry Page

A few times I’ve met people who accuse us of doing a startup to “strike it rich”. Of course, as a startup we both want to create and capture a significant amount of value. But if I were to look at my expected financial outcome (i.e. expected value) of our startup vs my alternative financial expectations as a physician, it should be fairly obvious that doing a startup is an irrational financial decision. 

What’s fascinating is that from the perspective of the startup founder, these decisions are not irrational at all. As Larry demonstrates, rationality is in the eye of the beholder and depends on what you value.

For many startup founders, I suspect mission, challenge and impact are bigger drivers than money. Perhaps we are fortunate that the most seemingly irrational are able to capture the most value, and continue to invest in a better yet seemingly irrational and improbable future.