Working in Big Tech and starting your own venture can feel like a natural progression. Here are stories of two friends who started up, only to face surprising blind spots.
Story 1:
One friend was a top performer at a Big Tech firm, working on moonshot projects. Inspired, he decided to start a lending venture catering to gig workers. He built a beautifully designed prototype with an exceptional UX! The flow was intuitive, and the interface was polished.
When I reviewed his venture, I realized he had overlooked the riskiest aspect of the business: underwriting! In lending especially subprime, the success hinges hardly on UX but on the ability to assess and manage credit risk effectively. Without addressing it innovatively, even the most impressive user experience would be irrelevant.
Story 2:
The second friend decided to build a B2B SaaS product. He aimed to raise $3 million in funding to develop the first version. The challenge? Investors rarely commit such a significant amount without validation unless you are already a seasoned founder. Moreover, not a good idea to spend a couple of years burning $3 million to realize that the idea is not working. He felt stuck.
Why Did This Happen?
Both friends were incredibly smart and successful in their respective roles at Big Tech firms. So, what went wrong? Here are a few thoughts:
1. The Halo Effect
Success in one domain often creates a cognitive bias where we assume our expertise will easily translate into other areas. My friends, accustomed to solving large-scale problems in Big Tech, believed their skills would naturally apply to startups. But entrepreneurship demands a different skill set—one that prioritizes validation, resource constraints, and rapid iterations.
2. Lack of Lean Startup Mindset
While Big Tech emphasize innovation, their approach is far removed from the lean startup methodology. At Google or Microsoft, releasing a rough, minimal product for public feedback could be seen as risky or damaging the brand. This mindset can carry over when starting up – leading to over-engineering or an aversion to launching imperfect solutions.
3. Lack of breadth
Big Tech roles have a deep but narrower focus compared to startups. One would hardly get a chance to work on multiple functions even over a decade-long career. Not acknowledging this limitation can create problems while starting up.
4. Transitioning from Corporate Safety Nets
In Big Tech, teams work within a structured environment with ample resources and safety nets. As entrepreneurs, my friends were suddenly responsible for every decision and every rupee spent which required a shift in mindset and approach.
The Turning Point
Thankfully, both friends showed a growth mindset and adjusted their approaches:
- The fintech founder paused his startup and joined a fintech company. There, he immersed himself in understanding the intricacies of lending, gaining hands-on experience before planning to relaunch his venture.
- The SaaS founder redefined his MVP, focusing on the most essential features. Instead of seeking funding, he began bootstrapping and validated his idea with initial customers.
Lessons Learned
These stories underscore some valuable lessons for anyone transitioning from Big Tech to startups:
- Start with the Core Problem: Always focus on the fundamental issues that define your business’s success. For lending, it’s underwriting and collections; for SaaS, it’s proving demand.
- Embrace Iteration: Start small, validate hypotheses, and iterate quickly. A polished product is less important than solving the right problem for the right audience.
- Seek Feedback Early: Build feedback loops with potential customers, mentors, and industry experts to challenge assumptions. Having a cofounder with a startup background can help immensely.
- Learn the New Game: Entrepreneurship operates under different rules than BigTech. Investing time in understanding these—through reading, mentorship, or joining early-stage startups (or even accelerators) —can bridge the gap.
What other shocks does one face when starting up after working in Big tech firms? Please write in the comments.
