Too many startup founders, not enough employees

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This year’s Startup Muster report highlights an issue that’s been on my mind for some time: too many people in Australia’s tech startup community are first-time founders, with no prior experience being a tech startup founder and no prior experience as a tech startup employee.

  • 54.6% of Australian tech startup founders and 71.6% of people who identify as “future founders” have never done it before.
  • A further 25.4% of founders and 16.9% of future founders have only done it once before.
  • 73.8% of founders and 75.7% of future founders have never worked for a tech startup before.

Great to see the industry expanding so fast — why should that be a problem? Because it adds even more risk to a tech startup journey which is already more than risky enough!

Experience counts because speed of execution matters, and a short runway doesn’t allow for many wrong choices.


Advice that works in any industry

Whenever I get too big for my boots, I dream about starting a café or a restaurant — pure vanity exercise. But I know that before I get to write anybody a cheque I have to run it past my financial advisers. I’ve been a client of Paul Manka and Ellen Ferris since 1998! They are the second-highest financial authorities in my world (the first is my wife). And you can trust their advice.

Paul and Ellen’s advice is always the same: I should go work for a restaurant or cafe owner before I start my own.

I’ll get to learn the difference between my dreams and what it’s actually like to own a café or restaurant; I might learn a few bits of hard-earned advice from a successful owner which might save my own business one day; and not insignificantly, I’ll get paid a modest salary while I learn.

Twice I’ve ignored Paul and Ellen’s advice, and twice I’ve failed: once with a baby product idea I got carried away with (I was a first-time father at the time) and once with starting a music label (basically I think I just wanted to hang out with cool people). I’ll never make that mistake again, and neither should you if you care about your money, your time and your relationships.

Accelerator programs like BlueChilli’s are a great way to learn everything you might learn working for other startups, because the curriculum is written — and delivered by — experienced entrepreneurs-in-residence like me who’ve done this before.

A startup accelerator program is primarily an opportunity to learn from (and avoid) the mistakes of the startup founders who’ve come before you.

That doesn’t mean you won’t make mistakes — a startup by its definition is trying to do something new for the first time, so there will be mistakes but they will be different mistakes.

A startup accelerator is also an opportunity to learn whether there are any significant differences between what you think the founder job is like, and what it is really like.

Like working for the owner of a successful restaurant, without the long nights and aching back. (OK, probably with some of the long nights, but definitely with less time mopping floors).

Startup accelerator programs are also an opportunity to accelerate the whole startup journey into a shorter period of time. By doing so, it may reduce the financial and career cost of choosing the startup path.

An accelerator requires you to commit more time and energy than you might do otherwise, and the limited program duration with a capital-raising goal at the end will encourage you to stop wondering, start building a business, and convince others to join you.

But places in accelerators are limited and the competition is intense. How can you improve your odds of selection?

Go work for another startup for a year. Founders with prior experience working at other startups have a huge advantage in accelerator selection.

As you just heard, less than 27% of Australia’s startup founders have any prior experience working for a startup.

Take Paul and Ellen’s advice. I’ve already paid for it!