Startups Should Be the Purview of the Psychology Department

Where to find your next co-founder

Current theory of startups

The current theory of startups goes something like this:

In the old days, massive resources were squandered to deliver products and services that people simply didn’t need. The most important thing the modern founder can do, according to this theory, is identify actual customer needs and service them. Once the founder has identified a need, the means to service it effectively, and the product-market fit, then they should start to see “explosive” (somehow that’s the adjective of choice) growth and they can seek out funding if they choose.

I take it to be uncontroversial that this is the popular current theory of how to go about founding a startup. An incomplete list of famous people who espouse a variation of this theory would include Paul Graham (and pretty much everyone coming out of Y Combinator), Marc Andreessen, and the entire Lean Startup movement (so Steve Blank, Eric Reiss, and affiliated parties).

There is some opposition to this theory from famous quarters. Steve Jobs was fond of quoting (supposedly) Henry Ford: “If I had asked people what they wanted, they would have said faster horses.” Peter Thiel is also opposed to a variation of this methodology, and there might be others.

If you don’t believe this theory, I am curious to know why and what your arguments are - so reach out and let me know.

The various versions of this theory emphasize the market research aspect of product management: reach out to your users early and often, and get their feedback. On this view, this activity is the distinguishing feature of startups. Finding the set of features that satisfy the customer need is the raison d’etre of the startup, and asking customers for feedback is how you find those features.

If you do hold this theory, then you may have been ignoring what ought to be the single most important discipline in launching a startup: psychology.

Psychology as a discipline

If the word makes you think of Freud and couch confessions, you’re not thinking of the discipline that is actually taught in the psychology department today.

Consider the skills taught in psychology departments, you learn how to:

1. Design an ethical experiment involving humans
2. Recruit people, run the experiment, create stimuli and collect responses
3. Calculate how much data you need to collect
4. Analyze the data so you won’t get fooled if the results are not significant or if the effect size is too small, at least where they teach the proper interpretation of P-values
5. Write up the results, and communicate them to other people
6. Question if the results really mean what some people say they do, for instance if there is a self-reporting bias, or other human bias
7. Ask why the first study was subject to the bias, reformulate the study to eliminate it, and run a follow up experiment

(Some readers may point out that #3-#5 apply to the scientific method and other scientific fields. That is true, and perhaps other sciences should also be included.)

These skills are rare enough that they are often the primary skill to be advocated for in entrepreneurship education. Dave McClure is credited with pointing out that a startup team is composed of a hacker, a hustler and a designer. I’ve heard many variations of this including hacker, hustler, and visionary, or the more alliterative hacker, hustler, and hipster. Everyone agrees that someone has to create the product (hacker), and someone has to sell the thing (hustler), but the role of the person who decides what the thing is seems vague (visionary? designer?). I propose that this person should be in touch with what the customer wants, and is essentially running psychology experiments.

A few modest suggestions

In closing, I would make a few suggestions:

1. To the various campus accelerators, incubators, startup weekends, and hackathons — I suggest that, in addition to the business school and the engineering department, you add the psychology department to your mailing list.
2. To the psychology department — I hope this doesn’t strike you as too mercenary or at odds with the academic work you are doing. It gives your students more options, and we know they can’t all end up in academic research.
3. To the psychology students — I hope you consider yourself first class citizens of the startup ecosystem. If you are so inclined, please sign up for the accelerators, incubators and other entrepreneurial exercises that sound good to you.
4. To the non-psychology students — You know how you like programming, fund raising, presenting and so on, but you need someone to actually test the product, and recommend the new features? Get a student from the psychology department! Problem solved.

The psychology department offers some crucial skills, and psychology students have more options than they believe.