Startup VS Restaurant

Let's say you want to start your own restaurant. What are the first few things that cross your mind? Think and jot down a few points before you scroll down.






I'm sure many of the following points have crossed your mind ...

  • How much is it going to cost me.

  • What's my menu.

  • How is my menu different from the competition.

  • What are my prices.

  • How many customers can i serve every day.

  • How many customers do i need to serve everyday to break even.

  • How do i attract footfalls.

  • What's my brand going to be.

  • What's the look and feel of my restaurant.

  • I'm going to lose a lot of money if it doesn't do well.

  • What am i going to do if it fails.

Great. Let's move on.

Now let's say you want to launch your own tech startup. What are the first few things that cross your mind? List them down.





Well, you must have thought of similar questions but related to your tech startup type. However they are not with the same grit, determination, and attention to profitability as when you were thinking about starting the restaurant. In all probability, your first thoughts must have been, "How do i launch fast and raise some money."

Compare both of your thought processes - The Restaurant, and The Tech Startup.

Why are they so different?

Here's why.

RESTAURANT: With a restaurant you tune your mind from day-one that you have to be profitable to survive. And to be profitable, you have to work on bettering your product day-in-day-out. If you don't do that the losses are immediate and you die almost instantly. It keeps you on your toes. It makes you lean and attentive. You take no bullshit - because the consequences are immediate. You know you will not be able to raise outside investment, except from maybe friends and family. You feel more responsibility to this kind of money than regular VC money. You know very well that a restaurant isn't going to make you a millionaire, let alone a billionaire. You're unconcerned with that thought. In other words your expectations are grounded.

STARTUP: The current thought process about tech startups is about two things. First is that founders are fixed that raising outside money is a 'rite of passage' that they NEED to be successful. Even if you are a 'just-about-decent' startup you will be able to raise some outside money. This kicks in the second thing - the investor wants you to become big, REALLY BIG, UNICORN BIG. He makes his dreams your goal. This in turn kicks in the need to raise more money. Once you raise money you will only survive by raising more money. Now it's all about finding bigger fools. The cycle goes on till someone calls it a day. This process rarely guarantees success. Because it is not a true goal.

IN EFFECT, with a restaurant, if you do not pay attention to day-to-day profitability, you die almost instantly. With a tech startup, there is no such immediate death. This makes you more relaxed about profitability. This is THE mistake.

I guess you get the drift of this article. The takeaway is, "Whatever business you want to start, think of it like starting a restaurant."

Here are some pointers that will work.

  1. First, don't call yourself a 'Startup'. The very name induces a wrong thinking pattern. Call yourself a 'Company'.

  2. Don't ever think of raising outside money till you are profitable.

  3. Don't aim to be a unicorn. YOU NEVER WILL BE. Always aim to build a company that will make you your basic living expenses to start with. Having a small but reliable source of income that meets your monthly bills will make you a strong negotiator in case you have to deal with investors. Imagine a situation where you are negotiating with an investor and in the back of your mind you have those monthly bills weighing you down. You will most likely accept a shitty valuation because you just want to get rid of monthly bills.

  4. It is better to own 100% of your company that makes you a decent living than 20% of an unprofitable company that is valued at one billion. Valuations are like Chinese Lanterns. They look awesome and rise high. But invariably they burn out and fall to the earth. Owning 100% of your company gives you more than just money. It gives you FREEDOM. You will be the master of your time.

  5. The best time to launch your company is when you are still in college. Because you don't have the financial burden of an adult with a job. Look at college as a sunk cost where you have already paid for food and lodge. Once out of college you will be burdened with a job because you need regular income to pay off that student debt. Also you may not recognize it but college is the 'only' time when you have loads of 'spare time'.

  6. And finally, work towards things that make you the master of your time. This is true FREEDOM. This is SUCCESS.

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