Founder 101: Suboptimal Decision Making
Whenever I am interviewed about entrepreneurship, everyone always wants a sound bite such as what is the most important advice you could give or what are the biggest mistakes you made along the way. It's tough to say any one lesson, character trait or mistake are the most important as everything in a startup is so interdependent. However, one of the critical things that a founder needs is a very specific type of mindset.
When we talk about a founders mindset, we always hear people talk about grit, hustle, emotional intelligence and the ability to persevere for long periods of time with numerous setbacks. This is all of course essential to the founders mindset but something else that is critical which I don't see enough people talking about is the ability to make sub-optimal decisions and this is especially true for technical founders.
For most of us who work in mid-to-large size organizations, we operate on a day-to-day basis in a very specific way and we make decisions in a very specific manner. For example, if you receive an NDA, you route it to legal through some system and wait for feedback. If you buy equipment, you buy the manufacturers service plan and when it breaks, you call someone who addresses the problem.
People tend to get very used to these systems, processes and support where they have been conditioned to address challenges within this framework. With a startup though, you do not have any of these systems, processes or support and for many reasons, you probably don’t even want it. At the same time, you are financially very constrained and are operating on a time scale where everything is urgent all the time. This creates a situation that is foreign to most professionals which requires the ability to make extremely sub-optimal decisions all of the time. This means changing your perceptions of risk, reward, time and money fundamentally from what you are used to.
So how do you wrap your head around this concept and shift your mindset?
It’s a zero sum game that adds up: Most employees within companies do not fully appreciate that every decision made and every dollar spent is part of a zero sum game. One dollar spent on cybersecurity (i.e., managing risk) is one dollar not spent on sales (i.e., growth) which will mean even less dollars next year for both. For a rapidly growing startup, this zero sum game is even more extreme and self-perpetuating as dollars not put to productive use dramatically reduce the value of a company as the value of a company in its early days is based largely on its growth rate.
Recognize big mistakes and small mistakes: Most professionals have an extremely low tolerance for risk because: A) large organization rely on dispersed accountability (i.e., using consultants, committees), B) no one wants to lose their job for making a bad decision and C) small mistakes can cause large financial or reputational damage. In a startup, risk is not viewed in the same manner and as a founder of a company you alone have unlimited authority and accountability which is a blessing and a curse. It means that you need to really understand which are the risks that will sink your business and which are the risks that are tolerable. For example, if your company will fail if you don’t hit a milestone in six months, do you really care that your employee handbook isn't updated? Dealing with employment lawsuits later is perhaps your best option despite how crazy that might sound. Of course, I am not advocating for shirking your employer responsibilities but in making an omelet, you are going to break some eggs and you need to get comfortable with the idea of living with some risk.
You don’t need to fix all of the problems: Many people assume that every problem in a company should be fixed and the reality is that you don’t have the resources to fix all of the problems within a startup. For large companies, most employees are seldom even aware of these problems within their own company which stay with senior leadership. In a startup, your job is not to solve all of the problems but ultimately to seek a balance between growth (as much as possible), while minimizing all of the other problems. This means that constantly fires will be smoldering in the background and there are problems in the back of your mind which do keep you up at night that you can't and shouldn't fix.
For me, in running a startup what always kept me up at night were power outages and microscope breakdowns. We didn’t have enough funding initially to have dedicated backup generators for all of our critical infrastructure and we sure didn’t have enough funding for service contracts for every one of our microscopes. This meant frequently showing up to the facility at 3AM to plug in generators and fixing $300K microscopes with parts from Home Depot and reddit threads as tech support.
As a founder, the world is a very non-ideal place and you need to recognize one of your biggest assets is actually the ability to make suboptimal decisions. While the big guys are busy reviewing NDA's and discussing things within committees and with consultants, you are plowing ahead a million miles an hour!
