Or, 1 Tortoise, 99 Hares. The unfair truth about raising investment and beating your competitors.

Yesterday, I spoke with an Entrepreneur First startup about to start fundraising. This revealed an unfair truth.

They’re good, and this is bad.

Investors don’t invest in good companies. To win, you don’t need to be good. You need to be bold.

This is a story about Tortoises, Hares, and why Uber wins.

Tortoises

Tired of being ridiculed for being slow, the Tortoise challenges the Hare to a race.

The Hare speeds out of sight and, confident of winning, has a nap in the middle of the race. But when the Hare wakes up, his competitor has already reached the finish line. Slow and steady wins the race.

The moral of Aesop’s Fable is don’t go fast if it means you make mistakes.

Good companies are Tortoises. They cover all bases. They address their weaknesses. They avoid mistakes.

There’s nothing wrong with Tortoises, but the best investors never invest in them. They invest in Hares.

Hares often make mistakes. They don’t have all the answers. They have glaring weaknesses. But, whichever way they run, they run fast. Hares aren’t good, but they are bold.

In startups, Tortoises never win the race. And that’s because, in any race worth running, there will be 99 Hares.

99 Hares

In Aesop’s Fable, there’s only one Hare. But startups don’t work like that.

Startups are competing, always. In races worth running, other people run against you. Even if you can’t see your competition, you have to believe they exist, and work like they’re sitting in front of you.

Technology means everyone can access everything, so only the best will do. Second is as good as last — startups are winner takes all.

In competitive winner takes all games, the boldest correct strategy wins. If there are 99 Hares, 98 might make a fatal mistake, but the 99th will find the fastest path, mistakes included.

Most bold strategies fail, but almost all winning strategies are bold.

This is why the best investors don’t like good companies. Good companies are the Tortoise, but the 99th Hare wins the race.

An investor might not be able to explain why your Tortoise will lose but, if you aren’t bold enough, they can still know you won’t win.

Startups can’t spend too much time on their problems — even ones that might turn out to be fatal. You might lose on your weaknesses, but you can only win on your strengths.

Strengths

It’s hard to be bold. It means ignoring problems to focus on a single extreme strength.

The boldest strategies capitalise on one strength to create distance in the race. You make it harder for competitors to catch you, instead of fixing problems you have along the way.

Even the best startups have problems. Management, HR, Sales, Financing — from big to small, companies feel broken inside because these things feel hard even when you’re getting them right.

But what separates winners from losers is how much distance they can create by what they do best, not all the things they do less badly. After all, everything that’s not fatal is fixable after the fact.

Extreme strengths can compensate for horrible problems. Uber’s problems are among the worst: awful culture; haemorrhaging cash; and legal disputes.

But Uber was bold, if not good. They had one extreme strength — growth. And growth afforded Uber resources to withstand the problems they created along the way.

In the beginning, a single extreme strength: an ambitious technology; a pedigreed team; or a compelling vision, is often enough to raise investment. In the end, sometimes growth trumps all.

Like it or not, the winners often look a lot like the 99th Hare.

Thanks to the EF team for reading drafts of this. If you’d like to be the 99th Hare, start here.