A look at entrepreneurship through the lens of uncertainty.
Alice laughed. “There’s no use trying,” she said: “one can’t believe impossible things.”
“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
Next month is my 2 year anniversary of quitting my job to work on Winnie. I’m not going to lie — I had no idea what I was doing. It wasn’t unlike becoming a mother, actually. You can talk to people who have been there and try to understand it academically, but until you’ve actually done it… you simply don’t know what you’re in for.
One thing has always been important to me, however: I wanted to be intentional in my practice of entrepreneurship. I read up on psychology, economics, capitalist theory — whatever I could get my hands on to understand the mindsets of people who build something from nothing.
What follows is a summary of what I’ve learned and how I apply it to my daily process. NB: These notes are adapted from a presentation I’ll be giving at the upcoming Release Notes conference in Chicago. Hope to see you there!
Entrepreneurs are a little bit crazy
When I say that, I don’t mean they are obsessive workaholics; you’ll find people like that in any type of job, and it’s certainly not unique to entrepreneurs.
What I mean instead is that they have a unique relationship with reality. Entrepreneurship is defined by risk. Founders are risk-takers who put their financial security, their careers, and their reputations on the line in pursuit of something as insubstantial as an idea.
Admit it — you’ve had a moment where you looked at this behavior from the outside and thought it was a little bit insane. I know I’ve had mine. In the summer of 2008 when I was working as a webmaster at Google, a guy named Joe Gebbia reached out to me looking to recruit a web developer for a startup he was building called AirBed&Breakfast.
It pains me to admit that the first thing that went through my head was these guys are crazy. Who would pay to stay on someone else’s couch? Who wants to give strangers access to their home? I sat there and thought of a million reasons their idea wouldn’t work, and shot back a cordial email stating that I was happy with my job at Google.
I think about this experience whenever I’m in a position to evaluate whether or not an idea is good or even possible. When the odds of success seem far-fetched but are impossible to know, you have a choice. You can approach it negatively (it’s impossible), or constructively (what needs to be done to understand if this is possible?). I now understand that the former is more practical, while the latter is more entrepreneurial.
Airbnb is an outlier in many ways—recently valued at $31 billion— but this irrational pursuit of an idea that no one else believes is possible is a perfect example of entrepreneurial insanity. What Joe and his co-founders were doing was so big and so different it was almost impossible to imagine it could work.
It’s not risk tolerance, it’s uncertainty tolerance
Let’s take a brief detour to discuss risk. There are three types that are relevant in this context (via Wikipedia):
Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls)
Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but an unknown number of white balls)
True uncertainty or Knightian uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose contents are entirely unknown)
Most entrepreneurship, and certainly the case of Airbnb, involves true uncertainty. While many successful businesspeople in organizations of all sizes are good risk-bearers, what is unique to entrepreneurs is their ability to be uncertainty-bearers. Not only are they willing to take risks, they are willing to take risks in the face of totally unknown and unpredictable outcomes.
The most likely explanation for this is also the simplest: they just don’t believe that what they’re doing is actually that risky.
That’s it. What if entrepreneurs aren’t really defined, as we may think, by long hours, obsession, or even genius? What if the most atomic piece of the entrepreneurial mindset is above-average tolerance of true uncertainty due to a lowered perception of risk?
In short, they believe impossible things—that other people don’t.
The daily practice of believing impossible things
Founders are known for their big visions, for the wild and crazy ideas they chase that no one else will. But this is only one piece of the puzzle. What’s far more important is the daily practice of questioning the reality we perceive.
It’s not enough to believe in your impossible idea. You must also believe in impossible execution. You must actively seek out the most audacious things you are capable of doing. Remember that your best opportunities are in the spaces other people have decided are impossible.
Realizing our vision for Winnieinvolves an impressive number of impossible things. Here are just a few examples:
- Score the family-friendliness of every business in the world
- Know where every single daycare is, and which of them have open spaces
- Have detailed information on every place for children to play
- Have the answer to any parenting question
If you feel exhausted reading that list, imagine how we feel every day! But here’s the magic trick: instead of figuring out how to do the impossible, you instead focus on making impossible things merely uncertain. As you move forward and learn more, uncertainty will make way for ambiguity, and eventually risk.
This is the process that makes a massive vision tractable.
Managing the flamingo in 6 easy steps
- Have a seemingly impossible goal.
- Assume that is it in fact possible.
- Rule out the truly impossible (or highly improbable) ways forward—solutions that take infinite time, defy the laws of physics, etc.
- Find something to try that you have no idea if it will work—and then try it.
- Evaluate. Did it work? What did you learn?
- Repeat steps 4 & 5 until you have enough data to create a new statistical understanding of something that was previously uncertain.
Once you have that statistical understanding, you should be in a workable position to make progress. This approach is particularly helpful for scaling things that “don’t scale” — if you know that your non-scaling solution is 100% effective, but you identity a solution that is 40% effective at 20X the scale, then it becomes a simple numbers game.
Thinking about things this way is addictive. Where you may once have felt daunted, you start challenging yourself to think bigger. You develop a spider sense for the in-roads that allow you to chip away at a big problem. You begin to think anything is possible.
That said, it’s simply not the case that all crazy ideas are good ideas. If your idea is truly an uncertainty, then it’s impossible to know what your odds of success are. They could be zero. Your job is not to proceed on pure faith, but to proceed with the intention to transform your uncertainty to ambiguity. In other words, press on until you have enough data to make a probabilistic assessment of your odds of success.
The thinking is magical, but the process is not
I want to conclude with the most real truth I’ve learned since starting on this journey: starting a company takes real work. Contrary to popular startup narratives, nothing of real value is built overnight. It takes time and it takes blood, sweat and tears.
The ability for a entrepreneur to be visionary is very important, but what’s equally as important is her ability to keep coming back to work.
So take care of yourself. Take care of your loved ones. Work hard but sustainably. Take a vacation sometimes.
And practice believing impossible things for 30 minutes every day.