This video debunks startup myths. It challenges the glamorous portrayal of founders, revealing the reality: long hours, potential pay cuts, and the complexities of funding and valuation. Success isn't guaranteed, and fame doesn't equal fortune. The video emphasizes that execution, not just ideas, is key to startup success, and realistic expectations are crucial. The Indian startup landscape has drastically changed, with a shift from the traditional businessman image to the glamorous startup founder. Myths surrounding startups include the idea of being your own boss with flexible hours, but the reality involves 24/7 work and numerous responsibilities. Founders often face mental health challenges due to the pressures of running a company. Raising money involves understanding liquidation preferences, which can significantly impact founder earnings. Higher valuations increase risk. Fame on LinkedIn or in the media isn't directly correlated with business success; it can even be detrimental. A unique idea isn't enough for startup success; execution and product-market fit are crucial. Persistence and adaptability are key skills for navigating the challenges of running a startup. Success in startups depends on a combination of factors including timing, market conditions, team, and capital. Founders should have realistic expectations, aligning their goals with their life aspirations. Here are some common misconceptions about starting and running a startup discussed in the video: Myth 1: Quick Riches: Many believe founders earn millions of dollars shortly after starting their company. However, significant financial returns often take much longer, potentially 10, 15, or even 20 years, and this timeline is considered normal. Myth 2: Funding Solves Everything: There's a misconception that raising large amounts of money automatically resolves all business challenges, enabling easy hiring, extensive advertising, personal wealth, and access to invaluable investor insights. The video suggests that focusing solely on raising millions is misguided. Myth 3: The Idea is Paramount: While a good idea is necessary, the video implies that the idea itself holds little intrinsic value. The crucial element is execution and perseverance, the ability to keep going despite inevitable setbacks. Based on the context provided and general startup knowledge: What it is: Liquidation preference is a clause in investment agreements that dictates the payout order when a company is sold or liquidated. How it works: Investors with liquidation preference (typically venture capitalists) get their initial investment back, and sometimes a predetermined multiple or return, before founders and employees holding common stock receive any proceeds from the sale. Impact on Founders: It ensures investors recoup their capital first, reducing their risk. However, if the company is sold for a lower valuation than expected, the liquidation preference can mean that after the investors are paid, there might be very little or nothing left for the founders and common shareholders, even if the sale price seems substantial on the surface. Based on the video clips: The most crucial factor for startup success isn't the initial idea, which the video states has "zero value" on its own. , Instead, execution is highlighted as being "worth everything." This involves managing numerous elements effectively. Alongside execution, perseverance or the skill of "never giving up" is emphasized as vital, because founders will inevitably face numerous challenges and setbacks. Success often requires many factors to align (like the right people, timing, capital, product-market fit, distribution, etc.), and sustained effort over a long period is necessary to navigate this complexity. , Startup dream = Freedom + Fame + Funding? myths and the expectations. Let's start with myth number one you are your own boss which means you can come in whenever you feel like you can sleep in the afternoon, take 2 hour long lunch breaks. If you don't feel like working today it's fine. You are the boss. There's no KPI no Kras, No one to report to you lead the life. You feel like this is completely wrong when you're running a business you have to do everything. You are the salesperson, the receptionist, the designer, the coder, the person looking at the customers taking care of them also offering refunds fighting with vendors. Also hiring people your role in the startup is everyone and you go from 9 to5 to 24/7. In fact there was a study where they surveyed the mental health of founders and it's pretty crappy. i've been running companies for 10 years Now this company is the fifth and I have to tell you a lot of the times I have to walk in the office with a smile because if I don't other people will get upset and scared And this is also part of my job. I am the lead cheerleaders Mix number two founders earn a lot of money. cuz. They are the owners. Of course they're worth billions of dollars. have a private jet, a nice car. I mean we've seen all those photos on the internet but that's a wrong expectation. The reality is quite different. Most founders take a pay cut when they join. Now when you start startup and let's say you raise some money, the investor does not want you to take a high salary because you need to be aligned with the investor you own equity and so does the investor you need to grow the business to increase the valuation. So the short--term cash flow doesn't matter. The long--term business matters. I too have been running companies for a really long time and this is the fifth, the fourth company at the highest peak. I was taking home 3 lakh rupees a month which was a lot of money even back then. But when we shut that down for whatever reason and started this company I had to start with 60,000 rupees for the first couple of years. Now I don't think founders need sympathy over here. That's what they've signed up for. My point is all founders have the exact same journey. So if you want to earn millions of dollars with your startup, think again, it won't happen in the first five, 6 years, It may happen in the first 10 years, 15 or even 20 years, and this is completely normal equity. that's just how it grows myth. Number three, you'll be able to raise tons of money And once you have tons of money, it solves all your issues. You can run ads, You'll be able to hire a team millions of dollars in account which means you also make some cash. You will also be able to get the insights from the actual investors because they have so much experience and network. In fact, starting a company, the goal is to raise millions of dollars. This cannot be further from the truth. I probably could talk about this for 30 minutes but I'll do it really quickly. One the money, that comes is not yours. Nothing goes to the founder, it goes to the company to run the business, rent your office, hire the right people. Money usually doesn't solve anything. Imagine the problems. A lot of money. boots one, you cannot solve culture and retention. You cannot attract a lot of good talent for a long period of time because that is money. ign, tic. People want a nice place to work place that they can grow, etc, etc. You start making PPs and projections and starting new lines of business losing. focus in your main business spread to thin. And one day you find out that because you didn't have focus, none of the businesses are working too much money is actually not a good thing. Now let's talk about raising a lot of money, then selling the business for a lot of money and earning, Well, a lot of money. it's something called liquidation preference. So let's suppose an investor agrees to invest 50 CR rupees in your business and the business is valued at 100 crores. Now let's say he owns 50% and you own 50%. Now say for whatever reason something happens and you sell the business for 50 CR rupees. So you're selling it at half of what you originally valued it at. But it's okay 50 CROR is a lot of money right? Yes. Yes. 50 crores is a lot. And you own 50%. So you should get 25 crores. but with the liquidation preference stack the founder in this case makes nothing because the original 50 CR that was invested first goes to the investor and whatever was left which in this case is nothing. nothing goes to the founder. This means every time a founder raises money at higher valuation. The risk is exponentially increasing for him as well. i'm not saying this is bad, You should just know that this exists. In fact, when startups raise money from institutional investors, there are a bunch of VC terms that most founders agree to, If you'd love for us to do a video on it. tell me in the comments if we get 50 likes, we will do an entire episode on it. let's move to the next myth. Now let's come to myth number four, fame on Linkedin You'll put founder and CEO on the internet. people will know you as a founder, you'll go on different podcasts and say, Yeah, I didn't have money. Now you know the business is doing pretty well. All these things will happen. You might even get on the cover and all those ATIa who said you won't be able to do anything in life. will say, wow, this guy is awesome. The reality is quite different. All the famous founders you see are doing it to actually help their business. If your fame is public, your meltdowns are public too. The media is also a horrible industry. When you raise money, they will plaster it all across the headlines because they get clicks. And when the startup doesn't do well, they will equally go after you with a pitch for saying what a bad founder, Come on guys running a business is hard and the media makes it worse. But there's another reality too. In the last many years of running businesses, I've met famous people, not so famous people, billionaires, millionaires And I've noticed a lot of people who have a lot of money aren't famous and a lot of people who are super famous have absolutely no money. So fame and money may not have a direct connection. They're two different journeys and you should select them just because you're successful. doesn't mean you'll be famous and vice versa. Myth number five, all you need is a unique idea. Come here, Let me tell you a secret. last night. I was thinking about this new startup idea where, oh someone's already done it. Have you ever felt that that you're discussing something with a friend or thinking in the shower and after a few days, you see the exact same product And you say I had thought about the exact same thing if you had write down the product in the comments below and at that point you feel if I had money, some time and one of these things I would have been able to run that successful startup because the idea came to me always. and the reason this happens is that you actually got 10,000 ideas. There are a billion people in the country each with a billion ideas, and someone is going to execute something because we're all thinking the same things. Ideas are worth exactly. Zero rupees, exec. ution is worth everything. And when you actually want to build a startup, you have to have all these different things work out for you. The industry should be growing. You have to have the right people, right? time, right? Place enough capital. Focus only build stuff that people will use, product, market, fit, distribution, run the company operations, the list goes on and on. So that's why if you do it for a long time, Kabby Kabi. Luckily, all these planets align and things work out. The idea has zero value. This is why one of the biggest skill skills of starting and running a business is never giving up, because everything wrong will happen. But you have to keep going. Dancing to your own tune for decades. And one day you might hit it big. So, in conclusion, running a small business or a large business or a highflying valuation business is not wrong. The only wrong is your expectation. And I hope this video gave you the right expectations. And you can go in the path you want. You should ask yourself, what do you want from your life? What do you want from the next 5 years?