The Great Winnowing of World Cup & The Startup Ecosystem

Picture I took in 2002 of WC stadium Daegu, South Korea

Picture I took in 2002 of WC stadium Daegu, South Korea

Those of you who know me are probably aware that I’m a rabid soccer (football) fan.  I’ve been a devoted fan of Arsenal for nearly two decades, former MLS season ticket holder (both San Jose Earthquakes when I lived in the SF Bay Area and New England Revolution here in Boston), attended World Cup 2002 in South Korea, and was fortunate to see both gold medal soccer matches in Bejing 2008 Olympics (US women’s victory, Argentina men’s victory).  Every four years the whole world gets to celebrate this great game and our shared passion for it with the World Cup.

Success in the World Cup, just like success as an entrepreneur, depends on a mix of skill, hard work, and luck.  Virtually every sovereign nation on the planet fields a squad in an attempt to qualify for one of the 32 spots at the World Cup itself and of course only 16 progress to the knock-out phase and only 1 will ultimately lift the cup in victory.

The winner of the World Cup will play only 7 matches in the span of a couple weeks which doesn’t seem like a lot.  Yet the tournament winnows the field in a fairly deterministic and consistent fashion.  Luck (good or bad) impacts nearly every team at some point in the tournament, and some squads make it farther than their skill might predict through sheer effort and will.  But no country has ever won the World Cup on the basis of luck or hard work.  Ask England how they feel about their bad luck in 1986 when Diego Maradona’s “Hand of God” goal knocked them out of the tournament.  Yet anyone who’s seen a meaningful chunk of the 1986 World Cup will tell you incontrovertibly that Maradona was the standout player of the tournament and Argentina’s overall victory was well deserved.  You’d be hard pressed to say any of the winners in the tournament’s 80+ year history hadn’t earned their triumph.

The ecosystem of tech startups is a similarly efficient winnowing machine.  As a tech entrepreneur you know that the odds are long from the outset, that most startups are ultimately unsuccessful.  Luck plays a role and with the benefit of hindsight, there are obviously startup outcomes that benefit from bull/bubble markets or seemingly irrational behavior.  And hard work and perseverance does sometimes help some companies seemingly overachieve what otherwise might have happened.  At times it may feel as though just a little more hard work can manufacturer success or the success of other startups feel like flukes.

But at the end of the day, the marketplace and the World Cup are both ruthlessly efficient.  Just as a select few nations have truly earned the right to call themselves World Cup Champions, only a select few transformative and enduring companies will emerge from the startup ecosystem.  The Microsoft’s, Google’s, Facebook’s, and other startup champions have earned their success just as Brazil, Italy, Germany, and other World Cup Champions have.

Enjoy the drama, splendor, and excitement of World Cup 2014!

Lee Hower

I’m an investor, entrepreneur, and helper of technology startups. I’m currently a General Partner of NextView Ventures, an investment firm focused on seed stage internet-enabled businesses.  I co-founded NextView in 2010 with my partner Rob Go and David Beisel. I started in the VC business as a Principal at Point Judith Capital, an early-stage firm.  I joined PJC in 2005 and served as a Principal at the firm through early 2010.  During this time I co-led investments in FanIQ, Sittercity, and Multiply and sourced investments in Music Nation and NABsys. Prior to becoming a VC, I was a startup guy myself.  I was part of the founding team of LinkedIn, and served as Director of Corporate Development from the company’s inception through our early growth phases. Before that I was an early employee at PayPal, and worked in product management and corporate development roles through the company’s IPO in 2002 and subsequent sale to eBay later that year. I went to college at UPenn, and received degrees from both the School of Engineering and Wharton School of Business.

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