Posted by David Shen, Director of West Coast Operations

When I say MIT Problem for Startups, it’s probably not what you’re thinking!

The problem I’m referring to goes like this.

You’re in high school. You bust your butt and become valedictorian. You’re at the top in grades, and you’ve proven it through 12 years of school, beating out all your fellow students. You’re at the top of the top and feel great. You’ll probably get an award or two from the school. Maybe you’re Captain of the Math Team or head of Honor Society and gotten awards and/or recognition for that. You’re at the top of your mountain at your school and so you apply to MIT and you get in.

The day you arrive at MIT, you find yourself surrounded by valedictorians. They were all at the top of their class at their respective schools, all scoring 1600 on their SATs, and are all super-duper smart.

The day before you arrive at MIT, you were top of the top in your own world. The day after you arrive at MIT, you’re now…average…amongst your new peers. Everybody is equally smart and excellent, so you’re all now mediocre. And thanks to grading curves, those As you got in high school just turned into average Cs. Was your previous valedictorian greatness enough to get you more than average Cs in a sea of valedictorians?

Boy that sucks, doesn’t it?

This is the problem I’m experiencing with a lot of startups. Everybody says they’re great, except that when I look across all the startups I meet, you’re all kinda average now because you’re all equally great.

That sucks for both you and me.

It sucks for you because there are SO MANY startups and your current greatness is not enough – you have to be even better! This is at all aspects of your startup too. You need to now out-execute more, your product needs to be exponentially better to your customers, you need to out-fund raise everyone else. Everything you do must be even that much more superior to your startup peers. This is even more true against your competitors. Think of all the startups who are doing something that directly or closely competes with what you’re doing, or competes for a little slice of consumer attention – you can’t just be a little better, you need to be a LOT better.

This also sucks for me. My job is to pick which one of you startups is going to win next. But if you’re all great at some level, then even out of the set of greats, you look mediocre. That’s bad! Because for startups at early stage, the failure rate is very high. So no matter how great you really are and/or you think you are, if you are just merely great you blur into mediocrity against all the other startups competing for my investment. This is also a problem from a competitive standpoint since you’ll all have to execute against strong, motivated, super-smart peers. If you don’t become exceptionally great against your startup peers, what chance do you have to convince me that you’ll be the one that will win and not a competing startup?

This is the MIT Problem for Startups and it’s getting worse day by day.