Things have changed mightily since my first startup in 1989, and all for the better for founders. Here’s a list of the major changes I’ve seen over the decades.
Entrepreneurship was something you did, not something you studied
While I can’t say definitively there weren’t any courses in entrepreneurship in 1989, not having gone to business school, they were rare. Then VCs like Brad Feld and Fred Wilson started blogging about startups and demystifying the process, especially from an investment standpoint, for example explaining what a term sheet was and how it works. They made a real effort to educate founders. They were followed by educators like Steve Blank at Stanford and Bill Aulet at MIT, who wrote books about entrepreneurship and taught courses. Business schools like Babson seized on the subject as a way to differentiate their business schools. Eric Reis documented the lean startup method and all of a sudden the mystery of entrepreneurship was dispelled.
You needed funding to start a business
Unless you were independently wealthy already you needed to raise money to pay for the computers, servers, software, office space, telephone systems (!), not to speak of all the people you needed to hire. Without a million dollars or so you couldn’t get started. Now with a laptop and AWS you can start in your basement or your bedroom. Perhaps you might raise some money from friends and family to build a prototype, get it to early adopters, and you might even be able to finance your company from customer revenue. Today with traction, i.e. evidence of product market fit, you raise money not to start a business but to scale it.
The first thing you needed was a business plan
The received wisdom was that 15 to 20 page business plans were absolutely necessary to get funded by VCs. Of course, few investors actually read these plans, let alone waded through the pages of financials – five year plans were what we were told were necessary to raise money. I don’t remember when it was but all of a sudden people realized that your investor pitch deck was your business plan! And if you got a meeting with investors they would actually listen to your pitch. Business plans went the way of floppy disks.
Keep your ideas to yourself
I never met a founder back in the last century who wasn’t worried about having his (and it was always his, not hers) idea stolen. We were all under the misimpression that ideas were valuable. Somehow we had never come across that quote from Thomas Edison, the greatest idea man ever, that “Invention is 1% inspiration, 99% perspiration.” Finally Bill Gates came out and said in public that “Ideas are cheap. It’s all about execution.” And while Bill said some really stupid stuff, like “I don’t know why anyone would ever need more that 640k (that’s kilobytes!) of memory” he was right about the need to execute. In fact the received wisdom completely flipped to the fact that if you had an idea the odds were good that a dozen other founders were working on the same thing!
Graduates of the top business schools went one of two places: Wall Street or consulting firms, depending which was in favor that particular year. Today students at top schools are dropping out to start businesses and business schools are all desperate for students. Kids once wanted to all be rock stars, today they all want to be Mark Zuckerberg. And they have about an equal chance of that happening as becoming the next Mick Jagger, but that’s ok. Without hundreds of startups mentors like me would be out of a job!