Game Theory for Startups

by Jamie Johnson
September 24, 2012

Game Theory is a topic that I have applied many times as a startup.  If you are not familiar, Game theory is a study of strategic decision making, and is applied in many ways without people knowing it.  I think people that are innately good at SEO are probably a natural at game theory.  

There are some classic examples of game theory, including prisoner's dilemma and nash equilibrium.  I like to consider all of my startup comrades and I are engaged in our own game theory strategy; product pricing, competition, monetization of platforms, search, and all kinds of other important strategy decisions.  

However, when competing against each other, startups are not involved in something called a zero-sum game.  This means that we are all competing together, but not necessarily against eachother.  If one of us succeeds, it doesn't limit the success of others.  In fact, I think the opposite is true.  The more of us that do succeed, the greater the opportunity for others to follow in Chicago.   

While we are often competing for funding, access to incubators like The Impact Engine and Excelerate Labs, and office hours (I have my own game theory equation when signing up for office hours at 1871), each success of our peers should only help all of us.  This is my take on the Chicago approach at entrepreneurship, which feels much different to me from East and West Coast approaches. 

I have been inspired by many of the startups around me, including MyServistaUncorkd, and Proongo.  The founders behind these companies have helped me in ways that are incredible - and often seem illogical.  They have opened up their network for me to access, making introductions that have helped This Cleantech Company grow and benefit immensely.  In fact, one of my most promising customer leads just happened this week through one of those founders.  I think that most of these founders themselves were given help from the startup generation before them, including GrubHub and Groupon.  I know for a fact that Andrew Mason was helped by the generation before him, as I tried to unsuccesfully talk him out of dropping out of grad school to start The Point (possibly the worst advice ever, by the way).

I met a new startup founder last Friday at 1871 and introduced him to three people that were in his industry over the next few days.  I saw him today and I think he was wondering what I was trying to get out of him, but he will soon see that this was just a normal part of the Chicago Way, or perhaps the Chicago Code.  Each success among other founders is a success for all of us, and I guess you could say that we are all equity holders in eachother's startups.    

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