I am curious to hear what your definition of a startup is. The book brought this question up and really had me questioning what my understanding was due to the overuse of the word across varying business backgrounds. The author had a very different definition than what I had, and the more I thought about it, people I have had conversations with over the years have had differing opinions from mine and the author’s.
The author brought up the following characteristics for Startups:
The company is privately owned.
The company does not measure it’s revenue by the hour or project.
The company needs outside investors to realize its vision.
The company is addressing a meaningful market opportunity.
The company is controlled by the founder(s), a small group of executives, and an outside board of directors representing investors (Bessalel, pages 3-4).
Out of this list of characteristics, 3 and 4 were the major characteristics in my understanding of startups; I had never really heard or focused on the other three characteristics until reading this chapter.
When I started thinking about my idea of a startup, I went down the rabbit hole of thinking about Kickstarter and Shark Tank. This chapter kept me on that train of thought when I read the section about Angel investors. I have personally never heard of different kinds of investors, so down the rabbit hole I went. While the book explained what Angel investors are, I needed more to fully wrap my head around this. I was able to find an article from the National Bureau of Economic Research, which defined Angel investors as follows:
“Angels — wealthy individuals who often are actively involved in the startups they back, and who typically are not professional investors — have surpassed venture capitalists as a funding source for startup enterprises in the United States.”1
Laurent Belsie, NBER Digest
The article mentioned above was a summary of the findings of “The Globalization of Angel Investments: Evidence Across Countries” by authors Josh Lerner, Antoinette Schoar, Stanislav Sokolinski, and Karen Wilson2. I highly recommend reading this paper if Angel investors is a topic that interests you as well.
Chapter 2: The Cast
The author compares working for a start-up to trying to go see the Broadway Musical Hamilton without knowing any of the context of the story. For those of you who are not familiar with the story, the musical is based on an Alexander Hamilton biography by Ron Chernow (Garber, Atlantic Times).3 If you aren’t careful, you can miss a lot of small, “hidden”, details throughout the story if you don’t prepare beforehand.
Think of when you interview for a job, typically you will see everyone on their best behavior and trying their best to win you over and make you want the job. It takes you showing up to work to truly understand the company culture, who is who in the zoo, how resources are allocated, the internal conflicts, etc. The author made a great point about how a startup differs from the musical Hamilton:
“There is no playbill to read before you join a company. The script for the play hasn’t been written yet, and the actors come and go over time. Nonetheless, understanding who the founders are, who the investors are, who controls the board, and how decisions are made provides a foundation for evaluating their interplay” 4
(Bessalel, page 24)
Bessel explains the psychological and strategic mindsets necessary for working at a start-up. The mental and emotional approach involves resilience in the face of uncertainty, frequent changes, and potential setbacks. By developing self-awareness regarding your risk tolerance and motivations for joining a startup, you can begin to cultivate the strategic mindset needed for such an environment.
The strategic mindset encompasses how you think and make decisions within the startup, the decision-making frameworks you utilize, your adaptability in pivoting your skills and expectations, and understanding how your role and contributions fit into the broader vision of the startup, as well as your personal trajectory.
Lerner, Josh, et al. The Globalization of Angel Investments: Evidence across Countries. NBER Working Paper No. 21808, National Bureau of Economic Research, Dec. 2015, https://doi.org/10.3386/w21808. ↩︎
15 thoughts on “The Startup Lottery: Your Guide to Navigating Risk and Reward – Chapters 1 & 2”
Hi Meaghan,
Thanks for your reflection! As someone who is always trying to relate business concepts back to my own line of work, I found the section on angel investors interesting. I have never heard of “Angel Investors” until this class and began researching the concept myself. In the grant world, we often see something similar with Cooperative Agreements, where the funder (like a federal agency or nonprofit) is not just providing financial support but is actively involved in the execution of the project or research. It helped me visualize angel investors as more than just financial backers; they are strategic partners, which is an important distinction.
I also found the breakdown of the five characteristics of startups interesting. Like you, I’m familiar with numbers 4 and 5, but number 3 (the idea that startups require external funding) stood out to me. While I understand most startups need outside capital, I can’t imagine this applies universally. I’m curious, do you agree with all five characteristics, or do you think the book provides a strong justification for number 3?
Also, I am wondering if “external investors” include bank loans. They are not what I typically picture when I think of investors (my mind goes to Shark Tank), but technically, banks do take a risk and expect a return through interest. I would love to hear your thoughts on that.
When I went down my Shark Tank train of thought, I started remembering the Sharks commenting about how they’re hopeful to help it grow and discuss ways “we” could grow, etc. I had never considered that they would do more than just throw money at the business, but I loved the aspect of being a strategic partner or mentor to the startup business. The book went into more detail about how startups could outgrow the angel investors after the time of teaching and mentoring has passed, and that they would focus on more capital funding investors later in the growing stages.
To answer your question. I don’t think I agree with the 5 characteristics being a requirement of startups. I am not super familiar with startups to begin with, but my overall idea of them did not equal to what the author was saying. Like you mentioned, what is the true definition of external investors. That could encompass so many different ways to gain funding. I think we can all acknowledge funding is a requirement, but I don’t know if “external” only is the only way. I do think banks can be considered investors, they need an asset of yours as a liability if your business doesn’t perform well. Also, if you take out a loan, do you consider that “yours” by going out and getting money in your name from a bank while not relinquishing a percentage of ownership to an outside investor.
I personally feel like the 5 characteristics section has given me a lot to think about, but I would like to gain more information from other sources. I have never been one to deep dive into investing for the fun of it prior to this class, but I am curious if there are others who have different characteristics for startups.
Thank you for sharing your reflections on Chapters 1 and 2 — your curiosity really shines through, especially with how you dug deeper into how the term “startup” is understood so differently across people and contexts. I’ve also noticed how the word gets thrown around, sometimes even applied to small businesses that don’t really match the criteria Bessalel outlines.
Your mention of Kickstarter really stood out to me. Having explored that space quite a bit myself — especially the ecosystem around running campaigns — I’ve come to see Kickstarter as almost its own category within entrepreneurship. Campaign creators often behave like startup founders in how they pitch vision, rally early supporters, and seek external funding to validate a product or idea. But what’s interesting is that many of these campaigns don’t go on to become full-fledged startups in the way Bessalel describes.
Kickstarter success often leads to a sustainable small business or a product line, not necessarily a company that’s aggressively scaling with investor backing. That’s a crucial difference. In Bessalel’s framework, the expectation of outside investment, long-term scalability, and addressing a meaningful market opportunity are essential traits. Many creators on Kickstarter are chasing product-market fit and funding — but without the intent (or structure) to build investor-controlled, high-growth organizations. It’s a different kind of ambition.
Still, the mindset overlaps — especially the early hustle, storytelling, and willingness to take big risks on unproven ideas. I think Bessalel’s startup lens and the crowdfunding model can inform each other in interesting ways. It’s almost like Kickstarter is a proving ground: some campaigns transition into startups, while others find success by staying independent and lean.
Again, I really appreciate your post — it helped me clarify where crowdfunding sits in the broader conversation around startups.
Thank you for commenting Freddy, I am so glad to have someone who has more knowledge about startups providing feedback!
I like how you mentioned Kickstarter was kind of in it’s own category compared to a typical definition of a startup company. It sounds like they have found their niche, whether it be intentional or unintentional, to gravitate towards smaller businesses or product campaigns. As a consumer, I have seen so many interesting products that need x amount of purchases to put the product into production. When I look at those businesses, they don’t come from a larger company and it is those small businesses or small fundraisers creating the product. I am curious to see what other overlaps there are in startups and crowdfunding, especially in terms of the mindset and actions they take.
For your Chapter 2 reflection, I connected with the statement, “If you aren’t careful, you can miss a lot of hidden details throughout the story if you don’t prepare beforehand.” What a spot on statement! We can go into situations without preparation and experience it that way, but just think about how much richer our experience can be if we have some type of knowledge ahead of time. This knowledge could help make the experience sink in better, catch our senses in a deeper way, make our connections stronger, and spark other ideas in us.
We will encounter all kinds of situations in life that we could not be prepared for, even if we tried, but if the opportunity exists to “study up” a little beforehand, why not? For example, if someone is going on a vacation, they could just pick some place and arrive “in the dark” without knowing what all opportunities are in the area (therefore miss some really great experiences possibly), or they could pick some place based on certain activities and places to visit in the surrounding area and then arrive somewhat “in the light”.
This brings me to another example: starting a business. Someone could think they could start a business and succeed based on their interest and desire only, without having researched important aspects like the competition, the market, the need, the value proposition, the costs, etc. and then possibly soon after they start their business, go out of business. Preparing themselves by doing some research and networking ahead of time could help them avoid great losses or even help them with the decision of whether or not to even open their business in the first place.
I love that you brought up not preparing or studying before opening a business! Chapter 3 mentions an example of a cloud storage business the author invested in, it ended up not working out due to the business being too ahead of the market. Another company started with a more approachable product, then worked up to cloud based storage when they had a consumer base but also a customer that was more aware of their storage options! The author mentioned that exactly, how they weren’t listening to the needs of the customer and didn’t make a product that met the customer’s needs. Yes, they had a million dollar idea, it was just too early for people to buy into.
Hi Meaghan, I really enjoyed reading your reflection—it made me pause and reconsider how I’ve defined a startup too. Like you, I had mostly focused on outside funding and market opportunity, but the other characteristics Bessalel includes add a much fuller picture. The point about startups not billing by the hour or project was new to me, and it really shifts how I think about startup structure and scalability.
Your comparison to Hamilton and the idea that there’s “no playbill” for startups was such a great analogy. It’s true—so much of the experience isn’t visible until you’re actually in it. I also appreciated your curiosity around angel investors and how you went beyond the book to explore it more deeply. Your reflection gave me a lot to think about as I continue shaping my own entrepreneurial path
I sometimes question if my curiosity will get the better of me or not some days in this program, so I am glad to see it encouraging others to look deeper or to learn more! I selfishly chose this book because of how little I know about the startup genre of business and knowing that risk is not my forte. I am excited to be learning more about the topic and hopefully encouraging others along the way!
First, I just have to say—I love how visually appealing and structured your blog is. It made your insights even more enjoyable to read!
I really appreciated how you brought up the overuse and varying interpretations of the term startup. Like you, I was surprised by some of the characteristics listed—especially the emphasis on private ownership and board control. I also associate startups mostly with early-stage funding and innovation, so this chapter definitely broadened my perspective.
Your exploration of angel investors stood out to me because the book I’m currently reading is teaching me so much about the angel investing world—especially how these individuals often bet on people and ideas before they’re fully proven. It was helpful to see how your post and that book connected in reinforcing how significant a role angel investors play in shaping startups, and how they differ from VCs in terms of involvement and risk.
And I loved the Hamilton comparison in Chapter 2—such a creative way to highlight how chaotic and unpredictable startups can be. That quote about there being no script or playbill truly resonated. It really drives home the point that adaptability, self-awareness, and strategic thinking are essential in those environments.
Your blog is a great space for us to continue learning and reflecting alongside one another!
When I first created this blog, I feel like I spent weeks trying to get the look and layout just right. I want to try and add some of the cool features/layouts I’ve seen from other blogs such as yours but am scared I may break something!
I am so happy to hear that this post was able to help you get more insight into your book as well, after reading the other book reflections I have been tempted to add some of these books to my reading list.
The point about not measuring revenue by the hour or project really challenged my perspective. It made me think about how fundamentally different startups are from traditional service-based businesses, even if they are both in early stages. That distinction between scalable revenue and time-based income was something I had not consciously considered before, and it helped me better understand why certain companies attract investors while others rely on client work to grow more gradually. Also, it is so interesting how media representations of entrepreneurship shape our understanding, usually highlighting the pitch, the product, or the “big break,” but rarely showing the deeper mechanics like investor types, equity structures, or governance.
I’m really glad that distinction between scalable revenue and time-based income resonated with you—it’s something that stood out to me too when I first started looking at startups through that lens. It completely shifts how you think about what growth looks like and why certain companies seem to scale quickly while others have to be more incremental.
The way entrepreneurship is portrayed in the media definitely skips over the less flashy but super important stuff like how funding actually works or what it means to give up equity. It’s almost always about the big pitch or the overnight success, when in reality, there’s a lot of strategy and structure behind the scenes that rarely gets mentioned. I think understanding those mechanics makes the whole landscape way more interesting (and realistic).
Meaghan, this was such a rich and reflective post. I really appreciate how you brought your natural curiosity into the conversation—it not only made your writing more engaging, but also invited your readers to question their own assumptions about what a startup really is. Like you, I had focused primarily on market opportunity and outside funding, but the other characteristics Bessalel outlines, especially the idea of not measuring revenue by the hour or project, added a whole new layer of understanding for me.
Your dive into angel investors was especially helpful. The distinction between financial backing and strategic partnership is so important—especially for those of us who may have only seen the Shark Tank version of investing. I also loved how you drew a connection between startups and platforms like Kickstarter. Your observation about the mindset overlap—even when the structures are different—was incredibly insightful.
And that Hamilton analogy really stuck with me too. There’s so much about entrepreneurship that you simply can’t prepare for through a script. But your approach—doing the research, asking questions, and keeping an open mind—shows you’re building the resilience and perspective that startup environments demand.
Keep exploring, questioning, and sharing—your voice adds real value to this conversation.
I am glad that you like my style of reflections and found this one helpful! I tried to pick a book for this course that would not only keep my interest, but also make me want to learn more about the topic.
The Hamilton quote rattled me in a sense but you said it best, there is so much that goes into entrepreneurship that you can’t read through a book or script to know exactly what to do for every situation. But I think based on everyone’s skill and growth I have seen throughout this program, that they’ll be able to utilize the tools they have learned to help them figure it out when they don’t know where the script will take them next.
Explore Entrepreneurship & Innovation 
Hi Meaghan,
Thanks for your reflection! As someone who is always trying to relate business concepts back to my own line of work, I found the section on angel investors interesting. I have never heard of “Angel Investors” until this class and began researching the concept myself. In the grant world, we often see something similar with Cooperative Agreements, where the funder (like a federal agency or nonprofit) is not just providing financial support but is actively involved in the execution of the project or research. It helped me visualize angel investors as more than just financial backers; they are strategic partners, which is an important distinction.
I also found the breakdown of the five characteristics of startups interesting. Like you, I’m familiar with numbers 4 and 5, but number 3 (the idea that startups require external funding) stood out to me. While I understand most startups need outside capital, I can’t imagine this applies universally. I’m curious, do you agree with all five characteristics, or do you think the book provides a strong justification for number 3?
Also, I am wondering if “external investors” include bank loans. They are not what I typically picture when I think of investors (my mind goes to Shark Tank), but technically, banks do take a risk and expect a return through interest. I would love to hear your thoughts on that.
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Thank you for commenting Samantha!
When I went down my Shark Tank train of thought, I started remembering the Sharks commenting about how they’re hopeful to help it grow and discuss ways “we” could grow, etc. I had never considered that they would do more than just throw money at the business, but I loved the aspect of being a strategic partner or mentor to the startup business. The book went into more detail about how startups could outgrow the angel investors after the time of teaching and mentoring has passed, and that they would focus on more capital funding investors later in the growing stages.
To answer your question. I don’t think I agree with the 5 characteristics being a requirement of startups. I am not super familiar with startups to begin with, but my overall idea of them did not equal to what the author was saying. Like you mentioned, what is the true definition of external investors. That could encompass so many different ways to gain funding. I think we can all acknowledge funding is a requirement, but I don’t know if “external” only is the only way. I do think banks can be considered investors, they need an asset of yours as a liability if your business doesn’t perform well. Also, if you take out a loan, do you consider that “yours” by going out and getting money in your name from a bank while not relinquishing a percentage of ownership to an outside investor.
I personally feel like the 5 characteristics section has given me a lot to think about, but I would like to gain more information from other sources. I have never been one to deep dive into investing for the fun of it prior to this class, but I am curious if there are others who have different characteristics for startups.
LikeLike
Hi Meaghan,
Thank you for sharing your reflections on Chapters 1 and 2 — your curiosity really shines through, especially with how you dug deeper into how the term “startup” is understood so differently across people and contexts. I’ve also noticed how the word gets thrown around, sometimes even applied to small businesses that don’t really match the criteria Bessalel outlines.
Your mention of Kickstarter really stood out to me. Having explored that space quite a bit myself — especially the ecosystem around running campaigns — I’ve come to see Kickstarter as almost its own category within entrepreneurship. Campaign creators often behave like startup founders in how they pitch vision, rally early supporters, and seek external funding to validate a product or idea. But what’s interesting is that many of these campaigns don’t go on to become full-fledged startups in the way Bessalel describes.
Kickstarter success often leads to a sustainable small business or a product line, not necessarily a company that’s aggressively scaling with investor backing. That’s a crucial difference. In Bessalel’s framework, the expectation of outside investment, long-term scalability, and addressing a meaningful market opportunity are essential traits. Many creators on Kickstarter are chasing product-market fit and funding — but without the intent (or structure) to build investor-controlled, high-growth organizations. It’s a different kind of ambition.
Still, the mindset overlaps — especially the early hustle, storytelling, and willingness to take big risks on unproven ideas. I think Bessalel’s startup lens and the crowdfunding model can inform each other in interesting ways. It’s almost like Kickstarter is a proving ground: some campaigns transition into startups, while others find success by staying independent and lean.
Again, I really appreciate your post — it helped me clarify where crowdfunding sits in the broader conversation around startups.
Best,
Freddy
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Thank you for commenting Freddy, I am so glad to have someone who has more knowledge about startups providing feedback!
I like how you mentioned Kickstarter was kind of in it’s own category compared to a typical definition of a startup company. It sounds like they have found their niche, whether it be intentional or unintentional, to gravitate towards smaller businesses or product campaigns. As a consumer, I have seen so many interesting products that need x amount of purchases to put the product into production. When I look at those businesses, they don’t come from a larger company and it is those small businesses or small fundraisers creating the product. I am curious to see what other overlaps there are in startups and crowdfunding, especially in terms of the mindset and actions they take.
LikeLike
Meaghan,
For your Chapter 2 reflection, I connected with the statement, “If you aren’t careful, you can miss a lot of hidden details throughout the story if you don’t prepare beforehand.” What a spot on statement! We can go into situations without preparation and experience it that way, but just think about how much richer our experience can be if we have some type of knowledge ahead of time. This knowledge could help make the experience sink in better, catch our senses in a deeper way, make our connections stronger, and spark other ideas in us.
We will encounter all kinds of situations in life that we could not be prepared for, even if we tried, but if the opportunity exists to “study up” a little beforehand, why not? For example, if someone is going on a vacation, they could just pick some place and arrive “in the dark” without knowing what all opportunities are in the area (therefore miss some really great experiences possibly), or they could pick some place based on certain activities and places to visit in the surrounding area and then arrive somewhat “in the light”.
This brings me to another example: starting a business. Someone could think they could start a business and succeed based on their interest and desire only, without having researched important aspects like the competition, the market, the need, the value proposition, the costs, etc. and then possibly soon after they start their business, go out of business. Preparing themselves by doing some research and networking ahead of time could help them avoid great losses or even help them with the decision of whether or not to even open their business in the first place.
LikeLike
Thank you for commenting Jenny!
I love that you brought up not preparing or studying before opening a business! Chapter 3 mentions an example of a cloud storage business the author invested in, it ended up not working out due to the business being too ahead of the market. Another company started with a more approachable product, then worked up to cloud based storage when they had a consumer base but also a customer that was more aware of their storage options! The author mentioned that exactly, how they weren’t listening to the needs of the customer and didn’t make a product that met the customer’s needs. Yes, they had a million dollar idea, it was just too early for people to buy into.
LikeLike
Hi Meaghan,
I really enjoyed reading your reflection—it made me pause and reconsider how I’ve defined a startup too. Like you, I had mostly focused on outside funding and market opportunity, but the other characteristics Bessalel includes add a much fuller picture. The point about startups not billing by the hour or project was new to me, and it really shifts how I think about startup structure and scalability.
Your comparison to Hamilton and the idea that there’s “no playbill” for startups was such a great analogy. It’s true—so much of the experience isn’t visible until you’re actually in it. I also appreciated your curiosity around angel investors and how you went beyond the book to explore it more deeply. Your reflection gave me a lot to think about as I continue shaping my own entrepreneurial path
LikeLike
Thank you so much for your kind comment Bridgett!
I sometimes question if my curiosity will get the better of me or not some days in this program, so I am glad to see it encouraging others to look deeper or to learn more! I selfishly chose this book because of how little I know about the startup genre of business and knowing that risk is not my forte. I am excited to be learning more about the topic and hopefully encouraging others along the way!
LikeLike
Hey Meaghan!
First, I just have to say—I love how visually appealing and structured your blog is. It made your insights even more enjoyable to read!
I really appreciated how you brought up the overuse and varying interpretations of the term startup. Like you, I was surprised by some of the characteristics listed—especially the emphasis on private ownership and board control. I also associate startups mostly with early-stage funding and innovation, so this chapter definitely broadened my perspective.
Your exploration of angel investors stood out to me because the book I’m currently reading is teaching me so much about the angel investing world—especially how these individuals often bet on people and ideas before they’re fully proven. It was helpful to see how your post and that book connected in reinforcing how significant a role angel investors play in shaping startups, and how they differ from VCs in terms of involvement and risk.
And I loved the Hamilton comparison in Chapter 2—such a creative way to highlight how chaotic and unpredictable startups can be. That quote about there being no script or playbill truly resonated. It really drives home the point that adaptability, self-awareness, and strategic thinking are essential in those environments.
Your blog is a great space for us to continue learning and reflecting alongside one another!
LikeLike
Thank you so much for your kind comments Aamiya!
When I first created this blog, I feel like I spent weeks trying to get the look and layout just right. I want to try and add some of the cool features/layouts I’ve seen from other blogs such as yours but am scared I may break something!
I am so happy to hear that this post was able to help you get more insight into your book as well, after reading the other book reflections I have been tempted to add some of these books to my reading list.
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The comment above is from me, Aamiya Smith! I just realized it didn’t save my name with my comment. 🙂
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Meaghan,
The point about not measuring revenue by the hour or project really challenged my perspective. It made me think about how fundamentally different startups are from traditional service-based businesses, even if they are both in early stages. That distinction between scalable revenue and time-based income was something I had not consciously considered before, and it helped me better understand why certain companies attract investors while others rely on client work to grow more gradually. Also, it is so interesting how media representations of entrepreneurship shape our understanding, usually highlighting the pitch, the product, or the “big break,” but rarely showing the deeper mechanics like investor types, equity structures, or governance.
LikeLike
Thank you so much for the kind comment!
I’m really glad that distinction between scalable revenue and time-based income resonated with you—it’s something that stood out to me too when I first started looking at startups through that lens. It completely shifts how you think about what growth looks like and why certain companies seem to scale quickly while others have to be more incremental.
The way entrepreneurship is portrayed in the media definitely skips over the less flashy but super important stuff like how funding actually works or what it means to give up equity. It’s almost always about the big pitch or the overnight success, when in reality, there’s a lot of strategy and structure behind the scenes that rarely gets mentioned. I think understanding those mechanics makes the whole landscape way more interesting (and realistic).
LikeLike
Meaghan, this was such a rich and reflective post. I really appreciate how you brought your natural curiosity into the conversation—it not only made your writing more engaging, but also invited your readers to question their own assumptions about what a startup really is. Like you, I had focused primarily on market opportunity and outside funding, but the other characteristics Bessalel outlines, especially the idea of not measuring revenue by the hour or project, added a whole new layer of understanding for me.
Your dive into angel investors was especially helpful. The distinction between financial backing and strategic partnership is so important—especially for those of us who may have only seen the Shark Tank version of investing. I also loved how you drew a connection between startups and platforms like Kickstarter. Your observation about the mindset overlap—even when the structures are different—was incredibly insightful.
And that Hamilton analogy really stuck with me too. There’s so much about entrepreneurship that you simply can’t prepare for through a script. But your approach—doing the research, asking questions, and keeping an open mind—shows you’re building the resilience and perspective that startup environments demand.
Keep exploring, questioning, and sharing—your voice adds real value to this conversation.
Warm regards,
Brent Parker
Owner – Resilience Repurposed LLC
Graduate Student – WCU (M.E.I.L.E. Program)
https://blog.resiliencerepurposed.com
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Thank you for the comment Brent!
I am glad that you like my style of reflections and found this one helpful! I tried to pick a book for this course that would not only keep my interest, but also make me want to learn more about the topic.
The Hamilton quote rattled me in a sense but you said it best, there is so much that goes into entrepreneurship that you can’t read through a book or script to know exactly what to do for every situation. But I think based on everyone’s skill and growth I have seen throughout this program, that they’ll be able to utilize the tools they have learned to help them figure it out when they don’t know where the script will take them next.
LikeLike