Should Founders Follow Trends?

Hey y’all — should founders follow trends?

Being a founder is often associated with being contrarian — different, but right.

Ironically, most founders try to capitalize on trends.

Remember how everyone was starting crypto companies a few years ago? And now AI.

This is, for the most part, organic — people get exposed to genuinely new tech, and there are natural opportunities.

But is it a good strategy?

Does it lead to the largest outcomes?

Let’s find out…

On the Pod: Adam Renklint

What would you do if you raised $137 million for your startup, only to realize the business was better off as a cashflowing entity, rather than trying to reach venture-scale?

How would you keep your team excited and motivated?

What would you say to your investors?

These are the questions Adam had to answer when he and his co-founders decided to change course with Pitch.com.

When we chatted he was candid about Pitch’s journey (and also gave his best advice for designing your own pitch deck).

Check it out below on YouTube, Spotify, or Apple Podcasts.

Should Founders Follow Trends?

I imagine some people reading this will think “of course founders shouldn’t just blindly follow trends.”

But, in truth, there’s more nuance to the decision.

Sam Altman says founders should spend much more time than they often do choosing what to work on.

And, if you’re him and have no limit to your exposure to good, forward-thinking ideas, he’s right.

But not everyone is Sam Altman. So, is there some value to riding the hype train?

I broke it down into a few areas:

• The likelihood of a good outcome

• Founder life

• Hiring

• Fundraising

• Go-to-market

Good Outcomes

Wealth is the reward of a good startup.

And building a startup in a hot space makes you much more likely to have parties interested in acquiring you. More net positive acquisitions happen in hot spaces, where big players are looking to make a splash.

That can mean life changing wealth in a short period of time. Databricks paid $2 billion for a startup with $1 million ARR.

But, more often than not, these aren’t billion dollar acquisitions and the largest companies actually don’t get started during hype cycles. Check this out.

This is a chart from Rex Woodbury, who writes Digital Native and founder of Daybreak Ventures:

You can argue the jury’s still out on some of the more recent years, and you can argue AI was already getting hot in 2022 (but mostly towards the end of the year).

This is anecdotal evidence of an intuitively true phenomenon:

The ideas with the largest potential have time to mature in uncompetitive spaces that look too niche to outsiders.

By the time the tourists get there, there are more clear opportunities but the best ones are already being worked on. The space only became hot because those other pioneers have proven the case for similar startups.

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