Two Types of Reasons

When starting a company or any other big endeavor, you should have two different types of reasons ready when you tell people about why you’re doing what you’re doing:

The idealistic reason

The first type of reason should appeal to human emotion. You need a moral high ground that people can rally behind, a sense of inevitable progress, or a cause they can feel proud to support. This higher sense of meaning is what creates the true believers, ardent missionaries, and optimists that will forcibly push something out into the world.

Will people feel good when they tell their friends and family about using your product, working at your company, or investing in your startup?

The realistic reason

The second type of reason should be grounded in cold hard facts. You need a rational basis that makes the initiative technologically plausible, logistically achievable, or financially feasible. This practicality is what turns an idea from a pipe dream to a tangible and viable set of things that a group of people can take action on together.

Can people easily explain why your product or service makes things cheaper, better, or more convenient, or how your startup has a chance to succeed?

A few examples

Amazon

  • Idealistic reason: Create the best customer experience in the world by obsessing over having the lowest prices and fastest shipping for any product.
  • Realistic reason: The market size of physical goods is in the tens of trillions of dollars globally, so a company with razor thin margins that is able to capture enough market share can still be immensely valuable.

Airbnb

  • Idealistic reason: Create a world where anyone can belong anywhere.
  • Realistic reason: Consumers are increasingly demanding unique and differentiated experiences in the $7 trillion travel market, and the platform that is able to aggregate that demand will be hugely profitable.

Coinbase

  • Idealistic reason: Create an open financial system to bring more economic freedom, innovation, efficiency, and equality of opportunity in the world.
  • Realistic reason: As more of the world’s wealth shifts into cryptoassets, the most trusted place to buy, store and interact with cryptocurrency will become massive.

You probably have many reasons why your company should exist. But you need at least one powerful one of both types in order to generate strong initial interest, gather sufficient momentum, and create lasting support from customers, employees, and investors.


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Alvin Hsia

Written by

PM, previously design at Airbnb. I <3 technology, economics, and cognitive science.

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