When You Assume…
After having coached over 100 founders (and counting) at the 1871 startup incubator, I’ve seen every possible level of unpreparedness, rationalization, and delusion. There are simply some realities that an entrepreneur must assume when starting a business if they want that business to survive.
In fact, I’ve seen the same misconceptions recur so many times, I developed a special class for the 1871 PYROS program specifically to help these startups survive their initial misconceptions.
One of the main concepts I discuss in my free guide to building an antifragile startup (a business that grows through contact with stressors) is that founders often secretly think that the rules-based reality of our educational and corporate experiences will follow them into entrepreneurship. “Sure, it will be hard and slow,” they tell themselves, “But if I DO EVERYTHING RIGHT—If I read about Lean Startup methodology, if I participate in an incubator, of I make smart decisions—then my business will be successful.”
Life is too slippery for surefire startups. Certainly, we would not respect entrepreneurs as much as we do if they simply followed an obvious path.
To build a startup is to play golf in a hurricane. It is much more volatile than any other business arena, specifically BECAUSE we have stripped away the institutional guardrails that keep us shielded in more established companies. Success in this domain is power-law distributed (winner-take-all) and completely dominated by rare, high-impact events. The stressors you will meet will be utterly unpredictable.
However, if you nurture a mindset that questions everything, that loves change, volatility, and adaptation, you may just be able to find your own way. This guide will start you out.
What must an entrepreneur assume when starting a business?
Based on the collected wisdom of all my mentor conversations with founders, here are the things an entrepreneur must assume when starting a business:
1. An entrepreneur must assume…that there is no straight, logical path to success
You will be shocked at the amount of random interactions that will thrust you forward or knock you back.
Here is a perfectly feasible example scenario:
Let’s say that you launch a product. Through some good social media tagging, an influencer sees it and loves it. They give a shoutout, and your sales start to surge. You ask yourself, Could it really be this easy? But because you assemble your products yourself, the surge creates a bottleneck in delivery. You start making mistakes because you’re rushed. It takes you three months to hire a qualified assistant, by which time you’ve amassed a number of bad reviews that sit like a black eye on your product’s information screen.
But your assistant is very bright, and gradually, you start ramping your production back up and generating some word-of-mouth. Everything seems to be getting back on track for growth, and then an important supplier discontinues a needed component right as your assistant gives notice. The stress of all this has been eating away at you for months, and now you feel yourself starting to get sick…
That startup outcomes are not straight lines.
An unusually large number of events (both with good and bad impacts) will seem to come out of nowhere. The graph of startup success is not a straight line up-and-to-the-right, it’s a roller coaster.
2. An entrepreneur must assume…that no one will care about their product
I’m exaggerating, but only slightly. Everyone assumes more demand for their idea than they will receive.
To be fair, if you’re going to survive as a founder you need a pretty solid belief in your idea. There’s nothing wrong with that; confidence, and even a little over-confidence, can be helpful assets.
But most all new founders fail to understand that their audience will require convincing. We’re all busy people. It costs us something in time and mental space to bring on one more platform to log into. Or (God forbid), one more social media platform wannabe to post our stuff to.
You will not get the kind of adoption you want simply by assuming that any visitor to your website will be so swept up in the coolness of your idea that they’ll instantly want to try it out.
This is usually a fantasy. They will probably have to come back to your site several times. They will have to see evidence that other people are using your product. They may have to be incentivized to try something, even for free.
Assume you will have to do an extraordinary amount of heavy lifting to make people care.
3. An entrepreneur must assume…that they will never arrive at a final steady-state of product-market fit
This is often a big issue. Founders tend to view their product-market fit more or less like picking a lock. Once they have the right combination of font size and button color, everything will just click and they will experience a rush of freshly tapped demand.
A core concept in my curriculum on building an antifragile startup is that successful entrepreneurs PERMANENTLY devote a healthy chunk of their time and resources to robust testing and tinkering.
That your product isn’t as important as how you KEEP TESTING your product.
They understand that the “steady-state” is a myth; they do not expect to ARRIVE anywhere. They expect that their company will become a permanent, quasi-Darwinian testing regime—discarding what doesn’t work, and creatively replicating what does.
People who have read a little bit of Lean Startup methodology generally think I am talking about “pivoting.” I’m not. If your company has to pivot, which is to say, make a sudden, panicky lurch into untested territory, you’ve already failed at something. The point of robust testing and tinkering is to let market forces intelligently mold and refine your selling proposition little by little.
4. An entrepreneur must assume…that the “Lone Visionary” founder cliché is a myth
First of all, successful founders don’t typically work alone. Multi-founder companies are less fragile than single-founder companies because of the sounding-board effect. Ideas become stronger if the company has an inner brain trust who can poke holes in it. And the whole point of business incubators is to pool community knowledge.
The “hero founder” stereotype (Zuck, Bezos, Jobs) is fool’s gold. It makes your business fragile in any one of a number of ways.
Number one, people who see themselves as lone visionaries are usually very susceptible to confirmation bias. They will cling obstinately to their “grand vision,” rather than having the discipline to let market forces shape it.
They also lash their business to a single point of failure: themselves. If they get sick, become indisposed, get busy, burn out, or are otherwise unavailable, the business stalls.
Successful founders bring in the smartest, wisest, most driven people that they possibly can, and then aggressively delegate and cross-train.
5. An entrepreneur must assume…that they need more cushioning than they think
A lot of what goes into winning a poker or a chess tournament outright is not getting knocked out in the early rounds. A player has to survive until they control enough resources to be able to make the kinds of bold plays that the game is known for.
Players who survive don’t go crazy betting all their resources.
In probably 90% of my mentoring conversations with founders, I spend my time doing two things: getting them to keep a hold of their time, and keep a hold of their money.
These are the two resources that are hardest for founders to renew. Of the two of them, time is actually the more important.
Founders have funny ideas about marketing. They think they are going to either put a bunch of time into blogging for search traffic or put a bunch of money into Facebook ads for paid traffic. Which is to say, as anyone in digital marketing can tell you, to burn through all their runway as quickly as possible.
When we talk about fragile versus antifragile businesses, we’re essentially talking about how to ensure survival through good risk positioning. The key to success is survival. The key to survival is making your mistakes small. And that means not pushing all-in on every hand.
Thinking About Launching a Business?
If you’re read this far and haven’t been scared off, here is where you should start your journey:
My free guide, “Building an Antifragile Startup,” is a one-of-a-kind look at how to build a business that actually grows from the stressors of the market, rather than getting weakened by them. This material is taken directly from a class I teach at 1871 and distills many of the ideas that come up in my mentor sessions.