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Industry Experience Isn't Key
When writing my Master’s thesis, one of the most surprising revelations was that industry experience was negatively correlated to startup success. If someone had spent 10+ years in an industry, they had a lower probability of a positive exit than a founder with 0 experience in the same industry.
On its face, this makes no sense; understanding your market, competitors, industry, and technology, not to mention having industry connections after decades working in an industry, seems like a major advantage. In fact it is so apparent that these should be beneficial that they are major indicators of whether someone raises venture funding.
So why does it not equate to success?
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Companies that revolutionize an industry are the biggest successes in the startup world. A lack of experience can be valuable because it allows one to approach an industry or problem with a new perspective, unencumbered by the ways of the past.
Uber is an excellent example of a company where Mark Cuban (someone who had previously dabbled in similar ventures) passed because he believed there would be insurmountable regulatory hurdles. Travis Kalanick, who didn’t have this experience, was unaware of these risks and was willing to start offering “illegal” taxi services as he put his vision into action. The result is a multi-billion dollar company pioneering the gig worker industry.
If you are a founder without industry experience, your pitch should focus on:
The unique perspective you bring to the industry.
Relevant tangential experience you’ve had.
Past startup/entrepreneurial experience.
A lack of experience in an industry can be a massive advantage, giving you a new way to look at how things are done. Unfortunately, it will stand between you and your financing. Learning to reframe your experiences can increase your chances of raising capital and turning your idea into reality.
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