The wrongness of relativism


Instagram had 13 employees when they sold for a billion dollars. Was there any startup founder who didn’t feel depressed when that happened? Yes, depressed. All those years of toil and sacrifice, the pain of scaling a complex organization and a complex product, scratching and clawing for revenue growth month after month, and you’ll never have that sort of exit, and 26-year-old Kevin Systrom did it in only 2 years, with 13 buddies, with $0 in revenue, never having had to worry about gross margins or hiring at scale or making sales calls or running out of money.

“It’s not fair,” we all said to ourselves.

That was before WhatsApp sold for 19 billion dollars, with 55 employees. That’s $345m per employee, compared to Instagram’s paltry $77m per employee. That’s so much better than those chumps at Instagram. Well, at least they had to toil for four years instead of two. Still…

Now Slack has been valued at over a billion dollars, less than a year after launch, every month adding more than a million dollars of annual recurring revenue. They’re next! Another collective sigh shudders through the ranks of startup founders, as we grumble over our trifling grindstones.

Oh, but don’t worry, the pundits have wasted no time perpetuating this emotional insanity back onto the founders of these very companies! As IronFire VC Eric Jackson put it:

You know, Kevin, minimum. It’s your turn to be depressed, and dammit you had better take your turn!

Of course you can see through this psychosis. You mustn’t judge yourself with the yardstick of other companies, particularly not against the rarified few who dwell in the extremities of reality.

Measuring yourself against the average or median isn’t much better. What does it actually mean that metric X is better than average and metric Y is below? For any such condition, I can find you another company in worse condition, who is more successful then you, or yet another company without that condition who is less successful by metric Z, and each of you would envy each others’ strengths while ignoring your own, all the while getting increasingly depressed. Sometimes, benchmarks aren’t healthy.


The right thing is to ask: “What is the best thing I can do for my company, with the specific challenges and benefits that I have in front of me?”

It doesn’t matter whether we’re talking about valuations, growth rates, retention rates, NPS scores, early-stage uncertainty, ratio of revenue to employee, CAC, cash-burn, LTV, gross margin, or selling your company.

The question isn’t “What did some other company do,” but rather, “Am I happy with this metric, and if I change it at the expense of other metrics, or of innovation, or of my lifestyle, or of my happiness, is that the right trade for me, for the company, for my customers, and for my employees?”

If you can answer in the affirmative to all that, you have your answer.

If you’re not even sure how to reason in this manner, that is your next big challenge. Because, if you’re not confident in reasoning about yourself, you have no choice but to compare your worst fears (exaggerated negative) with the public façade of other people (exaggerated positive), and to the absurd extremities that are (rightly!) the darlings of the news media, and this is not a path to finding good answers.

You’re the captain of this ship, and you’re navigating your own waters. Don’t forget it.

2,532 responses to “The wrongness of relativism”

  1. Great post! Heh, it made me think…”business yoga” (don’t worry that the person next to you is able to bend themselves into a pretzal while standing on their head, concentrate on yourself and your own ‘practice.’)

    Thanks Jason for cerebral perspectives to entrepreneurship! :)

  2. You make a very refreshing point. Unfortunately, most if not all of the attention in the media goes to the “Cinderella Story” multi-squillion dollar exits. We live in a Hollywood society that just loves that stuff and we eat it it up without a reality check. If the big payout is the founders main goal then that is where disappointment can easily set in. However, if the goals are more balanced, such as building a sustainable business that has a meaningful purpose for society then there is much less risk of feeling depressed.

  3. ..yes, valuations are just made up Monopoly numbers anyway… sooner or later, you are GOING to actually have to make profits…

  4. Love it Jason!
    I definitely feel trap to comparing myself against others when I started my entrepreneurial journey. I was always looking what others did and felt bad about not being able to keep up with them.

    It took painful months to understand that I’m the owner of my business and I don’t need to compare myself against others. It’s worthless to worry about outperforming others as long as you stay true to your vision and goals.

    Thanks for sharing that lesson with us!

  5. “An often-referenced study from 1978, comparing 22 major lottery winners with people who did not win, found no difference in happiness levels between the two groups.”

    I have been part of a company that “won the acquisition lotto”. While I wasn’t one of the founders that struck it rich, it was very clear that we had lost our soul. It was painful.

    *Even though* we’d negotiated autonomy, when someone pumps a bunch of cash into your company, they expect that you will deliver what they want, which is cash. If you aren’t making that now, everything about your company changes. Goals change, personas change. The culture changes. It’s very hard to mask to your existing employees what is happening, which is, you sold out. End of story.

    While I won’t doubt that there is comfort in knowing you can pay your bills, there’s not much comfort in knowing that from product decisions to ad campaigns, what you’ve built is no longer yours to influence. You sold your baby, and have to come to terms with that.

    • That’s true, but you also have to compare that to the alternative. No startup remains a startup forever. Whether it grows and grows and thus changes in fundamental ways, or it doesn’t grow much and stays independent it also changes, or it sells, or a decade passes and key people naturally leave, no matter what, things will change and it won’t be like it is now. There no exceptions to this, that I’m aware of.

      Thus, an outcome in which on top of that alteration, the people involved can enjoy some monetary upside, can easily be viewed as better than a change which doesn’t involve that.

      I think what you’re saying is that a sale can cause that change “before its time.” That is, there’s more of the “magical” time ahead, yet it was taken off the table in exchange for money. That’s true too, but with all investments it’s typically better to sell too early rather than too late, and it’s impossible to know what would have happened.

      So, maybe it’s worth being a little more charitable towards those companies who decide to sell. No one knows what could have been!

      • Wil Shipley gave the best talk at Code Conf. Seriously, I had a tear in my eye, it was that good.

        He gets very tired of investors insisting on exits. When people ask him an exit strategy, he says “code until I die”. He cites Larry Page, Sergey Brin, and Jeff Bezos as people who took this strategy. If you have a vision, and it’s something people actually want, why is it almost a prerequisite that you sell that vision short? It doesn’t happen with every acquisition of course, but it does happen a lot.

        I guess I came into this business working for a software company that just so happened to be small. We were profitable, and we grew. It took me a year in the Bay Area to realize people were often out to pump and dump.

        If the culture and capital of an acquisition is good for your customers, good. If new blood is what a company needs, good. I guess I get weary when an acquisition will clearly take a company’s focus off the paying customers it has, and on to customers who have more money but very different needs. It’s just sad to watch and be a part of.

        • I think it is pretty well documented that many in the startup biz in the bay area are out for pump and dump (and maybe many outside SV, but less successfully).

          It can be equally soul crushing when a company has no liquidity for anyone, and misses the opportunity to sell (IPO or acquisition) and lays everyone off. You hope that people make the best decision they can given the circumstances. But it helps to understand the mindset of the owners and investors in a company so that you can set your expectations accordingly.

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