Sweat parity and the success disequilibrium
By Adil Wali , 1st Aug 2011

Startups are a funny thing.  The amount you learn in the first 24 months after inception is enormous.  You discover all the best kept secrets about entrepreneurship that no one  teaches you about when you are first starting out.  One of my favorites is a thing I call ‘sweat parity.’  While some of us understand the concept intuitively, few of us ever talk about it.  So I’m setting out to change that.  Here goes:

Do you know any dumb, lazy entrepreneurs?

Entrepreneurship isn’t for the feint of heart.  It’s for people who have the guts (and irrational drive) to attempt the impossible.  The confidence, passion, and sheer determination that these people posses didn’t come from nowhere.  We spend years of our lives developing the core of who we are.  While each of us fire-starters has a different background, we are the products of an upbringing that breeds hunger.

Hungry people aren’t lazy.  We work hard.  We get addicted to the problems we are solving, and as such, get accused of ‘working’ 18 hours a day.  But for the true-blooded entrepreneurs out there, we’re never really working.  We are just doing what we love.

Not only are entrepreneurs passionate and hard-working, but we’re often smart.   Here’s why: the core competency of starting companies is learning.  Period.  The one thing you are guaranteed of when you start your company is this: it won’t go as planned.  You need to learn and adapt quickly or you won’t survive.  Dumb entrepreneurs don’t last long in this game.

All sweat is created equal.

What I’m getting at is this: Every founding team I meet is hard-working and smart (with very few exceptions)!

Founding teams pour a ton of sweat equity into their startups.  We incept the idea, immediately start sketching it out together, and our energy multiplies.  We decide that our new concept needs to be made a reality.  Yesterday.  We start designing and coding right away.  And before we know it, we can’t stop.  The weeks to come are a flurry of interaction flows, wireframes, test cases, code, deployments, and private beta invitations.  It looks a little something like this:

Here’s the thing: As much as we don’t want to admit it, other entrepreneurs are often just as smart and hard-working and we are.  What I’ve found in my experience is that, generally speaking, startups are in ‘sweat parity.’  That is to say that their sweat is roughly equivalent to the sweat of other startups.  (The incremental difference, when it exists, is often minor.)  Most of us that have a professional network of folks in the entrepreneurship game know this to hold true intuitively.

Sweat parity looks something like this:

But success isn’t.

The cold cruel reality of startups is this: even though sweat is mostly created equal, success is not!  If we look at a random sample of a 100 startups that are 6 months old, we’ll most likely see the story unfold the same way.  The companies are in sweat parity.  But most companies will have a mediocre outcome, at best.  A majority of the group is likely to get no significant traction.  People just don’t care as much as the founding team thought they would.  Or maybe they do care, but the solution doesn’t actually alleviate the core pain point.

One of these companies, however, will take off like a rocket ship.  Word spreads like wildfire, and people all over the internet begin to use the product.  Barring no major mistakes, things will continue to compound, and the company will continue it’s ascent to greatness.

I call this the disequilibrium of success, and it looks kind of like this:

I don’t have a great answer to why this happens, but a few things seem clear:

  • We can’t see the future.  And we must not be that good at predicting it.  If we were, there’d be more rocketships and fewer mediocre companies.
  • Clearly, some of the value of the opportunity or space is beyond our control.  There are things like market interest, market timing, and macroeconomic factors that are at play.

Sweat equity + Disequilibrium of success ==  Waste

This may seem obvious, but it’s worth noting anyway.  When most startups have really smart and passionate people and few of them will be successful, the net result is a lot of wasted potential.

This is something I think a lot about because I really don’t like seeing it happen.  Perhaps more importantly, I know that I’m going to pour at least 2 years of blood, sweat, and tears into what I do next.  I don’t want that potential to be wasted.  I want to have a big impact.  I’m not the only one, am I?

About the Author

Hi, I’m Adil Wali. I became a Microsoft certified professional at age 14 and started my first web development company. That led to a career as a serial entrepreneur, advisor, and startup investor. I got my first “real job” at 33, and I’m now a FinTech executive with a passion for the markets.