Should established companies create startups?

What a great topic! Many larger companies feel that they lack the mentality of companies that start in their garage with some unshaven guy who has superior technological knowledge, an unbreakable spirit, and a dream. Big companies tend to be very stable and slow to adapt. But, with all of the successful startups and technological change, sometimes traditional thinking doesn’t win the game.

So, perhaps established companies should have strategies for change and growth that make sense. It is common for big companies to invest in smaller startups that are in their industry or related industries that are promising. That way if the startup does well and the big company loses ground, they will end up even. Long term stability is very important if you are a big company as the shareholders’ retirement rests on your good decision making. So, a particular percentage of your holdings need to be invested in startups. But, which ones?

On the other hand, instead of investing in other people’s startups, you could create your own as semi-external organizations with budding entrepreneurs (preferably who don’t shave and have a really large garage.) It is hard to know who to invest in or who will be successful. But, there are some pointers that I would like to share.

1. A successful entrepreneur is someone who will fight until the end to be successful. They might not understand everything in the beginning, but they will find out. They feel their back is to the sea, and if they fail, their meaning of life will fail with it. If the entrepreneur has something to fall back on when the going gets rough, they might be less likely to succeed.

2. A successful entrepreneur needs to have a good IQ, at least for the types of tasks they will be involved with. However, since there are so many tasks associated with entrepreneurship and startups, it is hard to be smart at all of them. Perhaps there needs to be an entrepreneur IQ test specifically designed for those who want to be in this field. It could include managing difficult situations, finance, hiring, firing, logistics, and creating systems that work, not to mention dealing with clients and more…

3. A good entrepreneur needs to be a loner to an extent. Yes, they should have some social skills. But, if their social skills are “too good” they might feel comfortable in society which could lead to a lack of drive to succeed. Many successful entrepreneurs feel they have failed at attaining group acceptance, so to achieve self-worth, they have to succeed in some other way. Ways to identify this type are easy — unshaven, social awkwardness, a tendency to talk too much or too little, and a very socially inept wardrobe. I’ll leave the rest to you to figure out!

If big companies invested in many startups that were under their control from the seed level, if they become successful, the mother company already knows what’s going on in all ways which removes a lot of the risk of buying mature startups. In a sense it is like having a huge orange tree that produces fruit and planting seeds for other orange trees. You don’t know which seed will produce a fruit producing tree, but if you don’t plant seeds, you are sure not to get one. You could also plant apple seeds. But, then we would be comparing apples and oranges — and we can’t have that!

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