Why start-ups matter?
Let many ships set sail
I was looking for a valuation in-elastic, liquidity independent sustainable reason. And…i came across a body of thought from different sources which seemed to make an argument that resonated with me.
Start-ups matter because they create choice, or to use a fancier word — optionality.
What goes up in value when uncertainty goes up?
Finance theory will say Options. Higher vols imply higher value (all things equal). Start-ups create alternatives to incumbents.
Why do options matter?
Because we can follow a different path — to build, to fix, improve and not just be compliant or hit the escape or snooze/ignore button.
When I was growing up, and if you were not super rich or elite then there seemed to be two choices domestically in India — (a) to pursue existing growth pathways (aside: some called it rat-race in a derogatory way; i dont fully subscribe to it but i do acknowledge the perspective) or (b) drift. For a few open to migration, there was another option which was to exit or migrate.
Having a vibrant start-up ecosystem creates a third domestic Indian option. To Build! If you have a better idea, energy and risk appetite…and you don’t want to join the status-quo… You do have a choice to build your vision.
For the customer and builders — this could be truly up-lifting (it can be frustrating for some other reasons…but thats for another post).
For the economy / nation — this creates optionality. When future is unclear — having many paths to success is most valuable.
Next steps: i will try to find an economic model for this line of argument. If i do, i will enrich this post.
PS: views are personal
