Earning Stripes

This probably comes off more salacious than I'm intending it to, but to cut to it - I've yet to meet a great founder that came from Google or Facebook. I know there are good companies that have come from those places, but ime I haven't seen a really exceptional founder come from a tier 1 company. But I have seen them come from tier 2 companies.

There was an A16Z clubhouse talk the other day and Ben said something like - “working at sales in Facebook isn’t real selling, that’s just taking orders from the customer.” This is my exact experience with these founders. Facebook was too successful. Their employees didn't have to do the hard work of trying to find PMF, worrying about staying alive, recruiting people with no brand or money, etc. They learned how to process & manage an existing success story vs. creating their own.

And to be clear that's not a bad thing, it's a very valuable skill set. But it's great for scaling companies, not for starting them. These folks are great at taking something that is already working and blowing it up. They can leverage an existing brand to hire lots of good people, use an existing customer base to build product 2 or expand into a new geo, etc. Which again, is hard stuff to do and keeping the wheels from falling off of a rocketship is not trivial.

But those skill are just fundamentally different from what is needed to start companies. There's a level of uncertainty that you have to cope with when you're going from 0 -> 1 that is just something else. Building something from nothing, continuing from failure after failure, motivating your team, motivating yourself, the nagging from the sig other, watching your friends get rich in safe jobs, etc...it's hard stuff. I've found that those who haven't done this do not have the self awareness nor the grit to make it as iconic founders.

A place that does seem to breed this mentality are the tier 2 companies. Yahoo is a great example. WhatsApp, Slack, Cloudera, YC, NextDoor etc all came from Yahoo alums. And while Yahoo wasn't an outright failure, it was definitely less successful than Google. But Yahoo has still produced way more great founders than Google has. Those founders had to struggle watching Google eclipse them, dealt with product and biz failures, etc but were ultimately still really good and went into their next thing with intense motivation and the will to succeed. They earned their stripes at Yahoo.

That’s not to say there are no good founders from the classic tier 1 companies. For example dev tools/infrastructure founders are usually pretty good coming from those companies because they’ve been on the front lines of building new things to help with scaling. So they had to invent and build new things to keep the company alive. They know the fear and the grind. Also early people are usually quite good too as they did do the hard work of grinding to find PMF. But if it’s a tier 1 company, the early people are likely rich now and no longer good founder material.

And not every tier 2 company produces great founders. The best founders come from places that got close to the stars but didn't quite get there. Paypal is a good example because while they ultimately had a successful outcome, it was an insane grind all the way through and they were living on the edge all the way to the end. Those founders had the juice and earned their stripes from the years of pain.

I'm not trying to paint with too broad a brush, there are plenty of exceptions. Kevin Systrom was from Google and Instagram has been an insane success story. But zooming out, the conditions for greatness are much greater in tier 2 companies than tier 1 companies.