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Startup Ecosystems and Game Theory

https://medium.com/futursticvc/the-evolutionary-game-theory-of-a-startup-ecosystem-and-why-it-matters-for-founders-b402c0069a1c

This Medium article written by Christian Jantzen looks at the potential of growth of entrepreneurial ventures and startups through the lens of Game Theory. The article discusses how in evolved startup ecosystems such as can be seen in Silicone Valley, that cooperative behavior from both the founder and investor side gets rewarded and the exploitative and uncooperative behaviors get punished due to transparency and so it is a great system that is able to evolve through a positive feedback loop. It then looks at new startups that are less evolved and describes that these often do not follow the same rules, and so exploitative behavior may not get punished in the same way as it does in the established startup ecosystem. The basic idea, according to the author, then is that as long as there is a small subset (even within a bigger subset of exploitative behavior) of founder-investors who want to cooperate, it will eventually lead to either the exploitative behavior to change or go extinct. The author’s advice to any new founder of a startup in an environment that may not be conducive to cooperation is to find it their responsibility to promote cooperation, which inherently leads to this cooperative-feedback loop where both investors and founders benefit (startup grows and succeed->investors get paid->economy grows->jobs are created->communities evolve, etc.). The way to achieve such cooperation is through transparency and networking both with investors and other founders so as to create this cooperative network where not only your growing company succeeds but others do too and know who to network with.

This is pertinent to our discussion on Game Theory in a Networks course especially as it is relates to the world of Tech Startups. At a school such as Cornell and in departments such as CIS, where it often seems that everyone is very competitive and cut-throat in their career and company growth goals, this game theory lens on how to evolve your startup is a very interesting as it promotes cooperation and a way for success in the long term, a goal of many startups.

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