On The Origin of Start-Ups

One of my goals for this year was to read more “Classics”. I recently finished Charles Darwin’s On The Origin of Species. And while part of my idea with reading more classical books was to spend some headspace away from entrepreneurship and venture capital, I couldn’t stop thinking about startups during Darwin’s entire book.

The book begins by stating that species undergo modification and states that he believes in the law of progressive development. Darwin mentions that geographical distribution and conditions of life cause these variations. While Darwin was speaking of pigeons, I could not help myself and think of startups: how have companies modified their business models over time, how entrepreneurship and venture capital have progressed through the course of the years and how they have been key factors in the development of our countries and economies. These changes, as with species, also depend on local conditions: entrepreneurs modify their business models depending on where they are operating their businesses. In DILA we have invested in many companies that have adapted existing businesses in other parts of the world and have modified according to local demographics, language and customs. The result of these modifications has been extraordinary.

The chapter that most caught my attention was Chapter III: Struggle for existence. “We see beautiful adaptations everywhere in the world . . . and they all follow a struggle for life. . . Any variation, if it be in any degree profitable to an individual of any species, will tend to the preservation of that individual.”

“All organic beings are exposed to severe competition . . . Every being must suffer destruction during some period of of its life”.

“Although some species may be now increasing, all cannot do so, for the world would not hold them”.

So, Darwin is telling us that all species are constantly growing and constantly changing and adapting. That those that generate the most profits are the ones that will prosper and keep growing. And given that there are limited resources, not all species can grow alike and some will disappear. The competition for these scarce resources leads to destruction and losses, but it also leads to development and abundance. Isn’t this the exact same case with startups?

“Every single organic being around us may be said to be striving to the utmost to increase in numbers; that each lives by a struggle at some period of its life; that heavy destruction inevitably falls either on the young or old . . . mitigate the destruction ever so little and the number of species will almost instantaneously increased to any amount.”

Couldn’t we switch the words “organic being and “species” for the word “startup” and the paragraph makes perfect sense and resonates with a mindblowing exactitude?

We are living in a time where competition is as fierce as ever and the struggle is as real as always. Startups all around LatinAmerica, and all around the world for that matter, are fighting to survive. The worldwide shutdown and crisis have obligated businesses to change and adapt to new circumstances. We are being forced to analyze the situation and circumstances everyday in order to preserve. Uncertainty and fear are the most common feelings amongst the business community today: business women and men are filled with anxiety as the future of their businesses is held on by a string.

Darwin speaks of the survival of the fittest and of Natural Selection. Let us not forget that in the business world too their is a Natural Selection and a survival of the fittest. In these unprecedented times, I believe that those that are nimbler, those that are faster and those who can adapt to changing circumstances are the ones that will come out stronger in the end. I am certain that those who are offering the best products and services are the ones that will survive. As Darwin says, Selection by Man. “We cannot suppose that all breeds were suddenly produced as perfect and useful as we now see them . . . The key is man’s power of selection . . . Nature gives variations, man adds them up in certain directions useful to him.”

It is important to note that by no means is this post insinuating that Darwin’s theories should be applied to something other than biology. I am well aware of the terrible interpretation of his work that led to “Social Darwinism” and the consecuencia it had on society such as racism and classism. This post is meant to highlight the similarities between Darwin’s theories of the evolution of species and what we have witnessed in the evolution of business, the struggle that startups go through and the constant fight for scarce resources, clients and capital.

Darwin mentions that not all changes are natural. A lot of the evolutions have been caused by man. And man, different from the rest of the species, has a conscience and has reason. These two characteristics allow for changes beyond the natural. In these troubled times we are looking for better products and services, we are looking for businesses that treat us better but that also treat the world better.

Now is the time for these businesses to strive. I believe that the human selection is going to aid those businesses that are more humane, more in contact with their consumer and more conscious of the world around us. Those are the businesses more fit to survive. Those are the businesses of tomorrow.

I will leave you with this final paragraph and hope that as you read you too will feel the similarities between the origin of the species and the origin of the startup and that Darwin’s words will leave you a bit more calm on the current situation:

“Keep steadily in mind that each organic being is striving to increase at a geometrical ratio; that each at some point of its life, during some season of the year, during each generation, or at intervals, has to struggle for life and to suffer great destruction. When we reflect on this struggle we may console ourselves with the full belief, that the war of nature is not incessant, that no fear is felt, that death is generally prompt, and that the vigorous, the healthy and a the happy survive and multiply.”

Alejandro Diez Barroso. General Partner @ DILA Capital, a venture capital firm focused on Latin American and Hispanic startups.