What childhood can teach us about entrepreneurship
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More and more, I think early stage entrepreneurship is just one big, nested explore–exploit problem. And strangely enough, childhood might offer us some solutions.
For those that aren’t familiar, the explore–exploit tradeoff is perhaps best explained by the multi-armed bandit problem. Put simply, imagine a gambler standing in front of a row of “one-armed bandits” (a.k.a. slot machines). The gambler seeks to maximize his or her earnings. Each machine has a unique payoff distribution. What should the gambler’s strategy be? Should the gambler stick with one machine (exploit)? Or pull other levers (explore)? In what order?
To make this even more like early stage entrepreneurship, imagine the gambler has only, say, 100 pulls until he or she runs out of cash (and can pitch a nearby investor on their plan for how an infusion of slot machine tokens will yield a positive return…). What would you do?
It’s uncanny how often conversations with entrepreneurs, especially in the earliest stages of starting a company, are often just shades of the explore–exploit dilemma.
- Should we double-down on our existing go-to-market channels or explore different avenues?
- Should we implement changes to the onboarding flow now or should we experiment to see if there are better ways to improve activation?
- Should we scale up the sales team now or experiment with different processes first?
Of course, solving the explore-exploit tradeoff is computationally intractable in realistically complex environments. But we intuitively know the broad strokes. Start by exploring. If you go too narrow, you may find a “good enough” solution, but miss out on genuinely new ideas. If you go too wide, you may waste valuable time. To make the decision on how narrow or wide to go, we rely on heuristics. Perhaps you derive inspiration from Jeff Bezos and optimize for “regret minimization.” You could also employ dual track development on the engineering side, or “Validate, Commit, Scale” on the go-to-market side, just to name a few.
But what makes this dilemma particularly challenging for early stage startups is the ticking clock. As money dwindles, the urge to shift to exploit-mode, however suboptimal the existing solution, grows.
For this reason, it was with great interest that I read Alison Gopnik’s June 2020 article titled “Childhood as a solution to explore–exploit tensions” from the journal Philosophical Transactions of The Royal Society B.
Did I read that title right? Could children somehow be the solution to this intractable problem?
In the article, Gopnik makes two arguments. First, she argues that children are exceptional learners because they are exceptional explorers. Children may lack the sort of intelligence generally valued by adults (as Gopnik writes children “lack ‘executive function’ abilities and capacities for focused and directed attention and are notoriously bad at long-term planning and deferred gratification”), but they are learning sponges. A child’s brain is more flexible, sensitive and plastic. Many more new synaptic connections are made in early life than in adulthood. Before they even go to school, children learn about “objects, people, animals and plants creating intuitive theories of the physics, biology and psychology of the world around them.” Indeed, children are especially good (even better than adults) at exploratory ‘active learning’ that involves the pursuit of information about the world. Exploration is key to the way that children learn.
Second, she argues that human childhood has unique characteristics (that may in fact be an evolutionary advantage). Human childhood is “distinctively long and protected,” which allows for an extended period of broad exploration. This exploration phase, Gopnik writes, is particularly important for humans because we exist in “variable and dynamic environments.” If we relied solely on “cultural learning” (lessons passed down from one generation to the next), we’d risk getting stuck on local optima, and miss out on the novel, abstract features of our changing and evolving environment. Children enable us all to adapt and uncover new opportunities to exploit.
In other words, children, with their protracted and protected childhood, are our inadvertent solution to the explore–exploit tradeoff as a species.
Is there any inspiration early stage founders can take from this? Well, it appears that the distinctive characteristic of human childhood is a critical differentiator here. So my first thought is to ask: how can founders provide a “long and protected” exploration phase for their company? How can founders encourage their teams to keep “plastic” minds? And how can founders keep some of that exploratory DNA around for as long as possible?
Here are a few ideas:
- First, identify the critical questions you need to answer to get your business to the next phase and raise enough capital to provide sufficient time to truly explore. Give yourself 6+ months buffer at least. Assume wrong turns and false starts. (As we’ve learned, any genuinely new ideas depend on them.)
- Second, become default alive as soon as you can. The ultimate protection is profitability, especially in an uncertain market like the one we are entering into in 2022.
- Third, as you scale and shift to exploit-mode, consider how to maintain the magic afforded by exploration. Perhaps that means implementing some sort of 20% time, a la Google. Or, to use Reid Hoffman’s analogy from Blitzscaling, perhaps that means sending your “marines” to new beaches.*
These are just a few ideas to get us started. What else comes to mind? Maybe playing with your kid/niece/nephew/cousin/sibling/etc might provide some much-needed inspiration…
*In explaining the shift in company composition as a company grows, Reid Hoffman writes:
“One metaphor I use to explain this shift is to take an analogy from military history: the marines take the beach, the army takes the country and the policy govern the country. Marines are start-up people who are used to dealing with chaos and improvising solutions on the spot. Army soldiers are scale-up people, who know how to rapidly seize and secure territory once your forces make it off the beach. And police officers are stability people, whose job is to sustain rather than disrupt.
The marines and the army can usually work together and the army and the police can usually work together, but the marines and the police rarely work well together. As you scale, you may need to find new beaches for your marines to take rather than ask them to help patrol the existing ones.”