You wouldn’t marry your first crush: The same goes for founding your startup.
While the above statement might seem obvious to some, the underlying dilemma remains: How do you know whether your idea is the right one to commit to? You can’t know for sure, but a bit of mathematical reasoning might help in your reflection…
Founding a startup is a big commitment, involving making sacrifices and investing a huge amount of time and money. It’s not to be taken lightly. You might come across many startup ideas and test a few of them with varying results. But once in a while, you might think you’re onto something big. And then comes the time to seriously ask yourself the big question: Should I go for it?
Because if you do, you’re going balls to the walls — nothing held back. And hopefully you picked the right one because you won’t have many chances in life. Startup failures can take a while to recover from, as they often leave founders with little financial capital. (Not unlike many divorces, mind you.)
And although we can’t be certain of our decision, we can certainly improve our chances. How? By rejecting enough opportunities to have a good baseline to make the statistically optimal choice.
Optimal Stopping Theory
At 7 minutes 30 seconds in the TED video “The mathematics of love”, the speaker explains how Optimal Stopping Theory can help decide when it’s the right time to settle down for marriage. I find it can apply to founding startups just as well.
For the sake of the argument, we’ll simplify the rules of the dating world to:
- You can’t know whether there’s a better match for you in the future.
- You can’t go back on your decision.
Given those rules, what’s the best strategy?
So the math says that in the first 37 percent of your dating window, you should just reject everybody as serious marriage potential. And then, you should pick the next person that comes along that is better than everybody that you’ve seen before. Now if you do this, it can be mathematically proven, in fact, that this is the best possible way of maximizing your chances of finding the perfect partner.
This behavior was observed in certain species of fish who will systematically reject the suitors of the first 37% of mating season. Of course, this is all to be taken with a grain of salt when it comes to applying it to our complex human lives, but this theory intuitively makes sense since we do tend to naturally adopt this behavior.
Applying Dating Theory to Startup Founding
I can certainly see a parallel between the two dilemmas and so it makes some sense to reject the first 37% of startup founding opportunities. However, the premises are a little different for startups so there’s room for improvement.
The 2nd rule, which was “You can’t go back on your decision” needs to be adapted for startups. In the dating world, once you dump someone that’s it. You can’t go back to them years later and say “OK, I’m ready now! You’re my best choice!” Startups on the other hand are different. For example, you might initially judge that an idea is ahead of its time so you put it on the back burner and try other startup ideas in the meantime. If years later you haven’t locked down on anything else yet and the original idea is ripe for the market, you can go back.
Given this little difference, how does this affect Optimal Stopping Theory in the decision of founding? While the threshold was initially set at 37% the fact that you can go back on your rejections should push you to reject more than 37% of your startup ideas.
So the remaining question is how do you know you’re at 37%? How can you approximate the number of startup opportunities one will encounter? First, let’s consider the range of time that you have for “startup dating”. In his book The Founder’s Dilemmas, Noam Wasserman says your “fitness to found” peaks at 25 years of experience. After that it’s downhill. So perhaps you can set your time range to be about 25 years.
So, assuming you maintain a constant rate of new startup ideas you seriously consider, you shouldn’t take the leap before your first 9.25 years of experience. Now, I wouldn’t take that number too seriously, but one thing is for sure, if it’s been a few years that you’ve been wanting to startup and haven’t fully committed yet, then you’ve got nothing to worry about.
And the worst thing you can do is to go all-in with one of your first startup idea. It’s like marrying your high school sweetheart…
Without having looked at many startup ideas, how can you make a wise decision? It’s too easy to be infatuated with your initial ideas (I’ve been there). The better strategy is to get good at identifying the startup ideas that are the perfect match for you, similar to how in your dating life you learn to identify the kind of partner you want for life.
Personally it filled me with doubt seeing how quickly I jumped from one startup idea to another, never sticking with any of them for more than a few months. Persistence is one of the most respected qualities of an entrepreneur, and from the looks of it I didn’t have it. Honestly, when an acquaintance asked me how my project was coming along, I was embarrassed to have to admit that I had moved on to something else.
But I don’t feel so weak for quitting anymore. At every new business idea, I pushed it far enough to learn from each experience. There’s a time for perseverance and there’s a time for moving on to something else. And in your first 37%, it’s most likely the latter.
:-P
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