The ‘new girlfriend’ fixation in startups

Photo credit: Ape Lad.

When I quit Wipro to start my first business (in 1998), many people around me were very excited about how I will now “be doing something new”, “be my own boss”, “make my own choices”, “decide which day is a holiday” etc.

While the accuracy of their assumptions is another story altogether, I found it interesting how the concept of starting something new was so fascinating.

To borrow a phrase from my friend and co-founder of SportzVillage, Jayashankar, this is the “new girlfriend” fixation. Excitement about something new. The potential of the infinite.

The “new girlfriend” fixation

1. Team

I got to meet people I would probably never have met otherwise. Many very interesting people reached out and offered help. Many of them offered to join the venture, become a partner, consult, and provide free advice. Some of them joined the journey.

Suddenly, hiring was not a problem. Finding enough roles, opportunities – and money – for the great people who wanted to join was.

2. Investors

Since the early stage capital is “high-risk, high-return” capital, investors want to invest in something new.

The cost of capital or the source of capital drives an investment behavior that requires startup game changers. Ideally, something that has never been done before. Something that has the potential to change the world. Something that has a hockey-stick growth curve. At least the potential for a 100X return.

In reality, if it gives 10X, it is a great deal. And if it doesn’t work out, hey, it was high-risk capital anyway. The investment thesis assumed that 1 out of 10 will work. So investors flock to really unique business ideas.

3. Market

Early adopters in the market love knowing about new products and services. They are keen on trying stuff out and are willing to bear the pain of purchasing an evolving product or service. They reach out to the startup entrepreneurs – thereby getting them critical early revenue and learning experiences.

4. Media

Then the “old girlfriend” syndrome starts setting in.