There’s a 0.00006% chance that a startup will reach a $1 billion valuation, but Silicon Valley investor Mike Maples Jr. has been an early investor in several startups that have beaten those odds.
Throughout his nearly 20-year career as an investor, Maples has noticed that the startups he backed early on that are now valued at more than $1 billion, like Twitch, Twitter and Lyft, have something in common: They broke the pattern. Rather than competing in a crowded field, successful startups defined the future on their own terms.
“Most people didn’t look at the iPhone 4S and think that the thing in their hand or in their pocket could change the future, but the people at Lyft and Uber did,” Maples said on Thursday’s “Masters of Scale” podcast with LinkedIn co-founder Reid Hoffman.
Maples added: “You have to break the pattern to escape the current gravitational pull, so I would say that great startups must force choice, not comparison.”
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Maples pointed to Airbnb as an example of a startup that has successfully forced choice. According to Maples, Airbnb has turned a status quo strength (the same places to stay anywhere in the world) into a weakness (why not have unique places to stay that reflect your location, for the same price?).
In doing so, Airbnb created a category that was clearly different from what already existed, forcing consumers to choose rather than compare with what already existed.
Maples said Airbnb had another hallmark of a groundbreaking startup: it created a social movement that went beyond money and business. Instead, Airbnb focused on changing society and people’s lives.
“What I’ve noticed is that great startups are often like social movements,” Maples says. “Typically, there’s a minority that’s dissatisfied with the status quo, and they want to change the future.”
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An unconventional, social movement startup idea is controversial and most people won’t like it at first, but Maples says all it takes is a small number of people who think the idea is “brilliant” and can’t live without it to create a movement.
In a separate Harvard Business School profile, Maples explained that when Twitter co-founder Evan Williams pitched him the idea for Twitter, Williams had no roadmap or revenue model.
Williams’ theory is that when he created Blogger, there were one million people blogging, and with a microblogging platform, he could get 10 million people to microblog.
Twitter (now X) was acquired by Elon Musk in 2022 for $44 billion.
Twitter co-founder and CEO Evan Williams (Photo: David Paul Morris/Getty Images)
Why would an investor buy into an idea like Twitter at this early stage, with little data on the startup’s track record of success or the market it’s trying to create? The answer is the founders themselves. In his profile, Maples said he looks for founders who are technically brilliant, driven and tenacious.
Speaking on the Masters of Scale podcast, Maples pointed to an additional quality a founder needs: the ability to find a breakthrough idea and then execute on that idea.
“Time and time again, the products that end up winning are not the products you saw at seed investment,” he said at Masters of Scale. “That was true for Twitter. That was true for Twitch. That was true for Lyft.”
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