Embrace Contradiction
Or why you shouldn’t seek simple explanations and easy answers
Uninvent is a series of essays by Gladly co-founder and Point Nine Capital Advisor Michael Wolfe.
Uninvent helps startup founders with the most important factor in their success: their team. We help founders manage their own motivation, productivity, health, and relationships with co-founders. We’ll discuss hiring and managing great people, building a strong culture, and keeping people aligned and working on the right things. You can follow the full series at www.uninvent.co.
In this chapter, we’ll talk about how startup founders are bombarded with so much advice that it’s not clear who you should list to, if anyone. We’ll offer a few tips on how to filter advice that might be relevant to you from advice that probably isn’t.
“Where did truth stop? Where did error begin? I was all adrift among a thousand contradictory hypotheses, but I could not lay hold of one.”
— Jules Verne, Journey to the Center of the Earth
“Contradictions do not exist. Whenever you think that you are facing a contradiction, check your premises. You will find that one of them is wrong.”
― Ayn Rand, Atlas Shrugged
“There are no solutions, only trade-offs.”
— Thomas Sowell
Uh, make up your mind
Your new startup will sell products to insurance companies. You’ve never worked in the insurance industry, but you’ve interviewed two dozen insurance executives who were effusive about your prototype. They say if you could build what you showed them, they’d buy. The product is complex and requires time to build, so you start to research what it will take to raise money.
You find a blog post from a prominent investor who says his firm’s thesis is to invest in founders who are experts in the industries they are disrupting. He shares stories of founders who spent years working in the trenches of industries like manufacturing, energy, and, yes, insurance before leveraging their hard-won knowledge and connections into a successful startup selling back into those industries.
You then listen to a podcast from a top investor who says her firm loves backing industry outsiders. She cites companies like Netflix, SpaceX, Tesla, and Stripe, where founders who never worked in those industries spotted opportunities thousands of industry veterans missed.
What do you do with this information? Will investors accept that you are entering an industry with fresh eyes and can disrupt stodgy incumbents, or will they think you are out of your depth? Would it be better to work for an insurance company for a few years before pursuing this startup?
The investor you are pitching wants to increase the size of your Series A funding round from $5 million to $7 million. They like your startup, want to own more of it, and think you’d benefit from having more money in the bank to give you time to achieve critical milestones before you need to raise the next round. You ask a few other startup founders for their advice.
One founder says you should almost always accept more money when it’s offered. Her company took longer to get traction than she expected, and the extra year of cash prevented a premature, highly dilutive series B. She was able to focus on her product and customers instead of scrambling to raise money and could make better decisions without the looming fear of going broke.
Another founder tells you the opposite. He says his startup raised too much money too early. They gave away a big chunk of the company and developed bad habits, throwing money at acquiring customers without first validating they had product/market fit. They burned through their cash quickly and then had to raise the next round on poor terms.
Both seem credible, so whom do you listen to? Do you raise at the high end of your range to give yourself more cushion? Or keep the round small, give up less of the company, but have less runway in case things go wrong?
Your Director of Product Marketing is doing a great job, and you plan to promote her to VP of Marketing and have her build out your marketing team.
One of your two angel investors is supportive. His best investments had founders who were talented at investing in their people’s careers and giving them more responsibility as the company grew. Those startups kept their best people for many years and built reputations as great places to build a career.
Your other angel investor is disappointed. The founders at her best investments were wizards at attracting senior talent. They recruited “unrecruitable” stars who raised the talent level across the company, bringing along their networks of top-quality recruits, customers, and partners. She recommends you look at external candidates for the marketing role.
Should you launch a long and expensive search for a VP of Marketing, possibly losing your best team member while you do it? Or should you invest in her career and reward her for the hard work and loyalty she’s already shown?
Congratulations! Intelligent people are willing to share advice with you. That advice probably doesn’t feel very useful, though, since it’s leaving you more confused than when you started.
Whom, if anyone, should you listen to? To figure that out, you need to embrace contradiction.
The contradiction contradiction
If you are like most startup founders, you are bombarded with advice from the “Startup Advice Industrial Complex.” You get opinions from books, blogs, podcasts, incubators, investors, advisors, and, if you live in a startup hub like San Francisco, random hipsters you bump into at Burning Man or over the kombucha tap at WeWork. Here at Point Nine we curate great resources for founders, connect them to each other, and put on an amazing annual Founder Summit.
And because Uninvent is offering more advice to throw onto that pile, we want to offer some meta advice on advice.
If you pick any topic, double-click on it, and go down the advice rabbit hole, you’ll find great people giving intelligent, well-considered opinions that perfectly contradict. Some of the most common are:
Ideas — “You can’t win without a great idea” vs. “Ideas don’t matter; execution is everything.”
Product — “If the product is great, anyone can sell it” vs. “Distribution beats product every time.”
Co-founders — “You really don’t want to start a startup as a solo founder” vs. “Uh, Jeff Bezos?”
Hiring — “Hire sales reps with experience selling into your market” vs. “Hire sales reps with experience selling for startups at your stage and average contract value.”
Spending — “Don’t lose the market because you are too timid to raise money and invest aggressively” vs. “Don’t confuse fundraising with success. The best startups don’t raise much money.”
Burnout — “You’ll work 80-hour weeks and have no life for five years” vs. “Your startup will suffer if you are unhappy and unhealthy at home.”
Product — “Validate that people want the product before you build it” vs. “Customers don’t know what they want until you show it to them.”
Talent — “Hire the most qualified people you can find and raise enough money to pay them” vs. “Hire raw and undiscovered up-and-comers.”
Authenticity — “Be authentic and vulnerable with your team” vs. “If the team sniffs out any doubt from you, they’ll lose the faith.”
This conflicting advice should not be too surprising because:
Every team is different
Some founders are passionate about their market, while others are more passionate about the process of starting and running a startup itself, independent of their market. Some founders are introverts and do their best thinking in isolation, and some are extroverts, who function best collaborating with co-workers. Some founders are product-focused engineers and designers, and others are more customer-focused salespeople and marketers. Some are early in their careers, and others are veterans. Unsurprisingly, what works for one team won’t work for another.
Every market is different
Some markets are already large but cluttered, so traction requires beating incumbents in competitive deals. Some markets are nascent and require a more evangelical approach, where the goal is to get an early lead and ride the market up as it grows. These markets require different skill sets and strategies to attack.
Every product is different
Some products require unique technical or scientific expertise and a large amount of funding to build. Others can be built by any competent engineer with a few months to spare. Most are somewhere in the middle. Where you land on that spectrum determines how much money you raise, who you hire, and how long you give your startup to get traction.
The financial markets always change
Sometimes the funding market is flush with cash, and rounds get done quickly at high valuations. Other times, funding is scarce, may require months to obtain, and the terms might be painful to accept. Your strategy has to take today’s funding environment into account, not last year’s.
Correlation is not causation
Successful founders often share what worked for them, but they can’t know if their startup worked because of specific decisions they made or if they would have succeeded anyway. It’s impossible to rerun history with a different set of inputs, so founders can be quick to assume causation that isn’t there.
Luck and timing matter
Although you should never count on good luck or blame bad luck, luck and timing impact your success. Some startups seem to do everything right but fail, usually because of bad market timing, while others succeed despite mediocre execution after stumbling upon an urgent market need.
Why so spurious?
It’s tempting to let yourself be surprised or frustrated by conflicting advice, write off the advice giver as clueless, throw up your hands, and just make things up as you go along since no one has the answers anyway. Don’t go that far.
Instead, try to adopt the attitude that advice from well-meaning, intelligent people is a gift, and you appreciate their taking the time to give it. You don’t have to follow the advice, but you can almost always learn from it once you learn how to filter and digest it.
Think of each piece of advice as an ingredient you can stash into your pantry. In the worst case, it will sit on the shelf. In the best case, it might find its way into a future main course alongside other yummy advice morsels you have collected.
This requires you to have criteria you use to evaluate advice, where you can ask a few questions to weigh how relevant that advice is. We’ll talk about a few questions you can ask to vet the advice, where the more times you can say “yes,” the more likely it is the advice is relevant.
Keep asking “why” until you get the answer
High-level advice, even when correct, is usually too superficial for you to put into action, but if you take the time to dig a few levels deeper, you may uncover some nuggets of wisdom you can use. You do this by asking, “Why?” as many times as you need to until you’ve dug down into the core of what you are hearing.
For example, if a founder tells you, “Don’t trust venture capitalists,” ask why. Maybe they tell you that an investor from their last startup tried to remove them from their own company. Ask, “OK, why did that happen?” and keep asking why until you get the full story.
You might learn that the founder chose a notoriously skittish VC who is prone to panicking and replacing founders at the first sign of trouble. OK, now you’ve found a nugget you can use: when you raise venture capital, pick an investor who isn’t like that (like, ahem, Point Nine). Make as many reference calls as you need to to check out a potential investor. The lesson isn’t, “Don’t trust VCs.” The lesson is, “Don’t trust this VC.”
Or you might discover that his startup was not doing well, he stopped sharing information with the board or asking for their help, so they lost faith and tried to replace him. OK, now you’ve learned you should always communicate with your board instead of keeping them at arm’s length, especially when things aren’t going well.
In the worst case, asking a few why’s can reveal that the person giving the advice doesn’t even understand it. They might just be repeating something they heard elsewhere. That doesn’t make it wrong, but it does make it a platitude.
Consider the source
A good filter for advice is to ask who is giving it. Consider what experiences the advice-giver has gone through and how they led them to their conclusions. Ask what role they have and what incentives and biases come with that role.
For example, a founder who has started one successful startup will sometimes be quick to tell other startups to follow the same playbook his company followed (that’s me, circa 2001). This founder is at the peak of the “Startup Advice Conviction Curve,” where they’re convinced they cracked the startup code and are eager to share the secret playbook with others.
Whereas a founder who has been through several startups (and has probably been soundly beaten up as a result) can better apply more nuance to their advice, having seen that different situations need different solutions.
Or consider the advice you get from potential investors, who often feel pressure to prove they can “add value” since their value-add serves as the rationale for why you should take their money and for why their limited partners gave it to them. Investors, especially junior ones, can feel pressured to give smart-sounding advice, delivered confidently, in situations where the right answer is, “I don’t know.” Investors who have already proven themselves show humility when asked their opinion and are slow to dispense advice until they fully understand the situation. This is how we try to operate at Point Nine.
Also, consider whether the person has invested time in getting to know your situation. Do they know you, or did they just meet you? Did they spend time asking thoughtful questions about your product and market? Was it clear they would have given different answers based on what they learned, or did they just start dispensing the same advice they probably give to every startup they meet?
Pay attention to your industry, not “The Startup Industry”
As a startup founder, you operate in two industries. The first is the industry in which you are competing for customers. The second is the “Startup Industry” itself, which is the land of incubators, conferences, co-working spaces, and venture capitalists.
Some founders spend most of their time in the startup industry, probably because it’s easy and fun. And, sure, this is a good way to build a support network and learn about fundraising, getting to product/market fit, recruiting, culture, and the dozens of other things you need to know to run a company. Uninvent is all about the startup industry, and Point Nine operates here.
But the advice you really need often comes from the industry in which you are selling. These are the people who will use and buy your product, the partners you’ll work with to reach customers, and the suppliers who will provide critical components. These folks can be harder to track down since they are less likely to be in your social circle or hanging around your WeWork. You often need to hunt them down in unsexy, dingy places like the Columbus Airport Hilton during their annual industry trade show.
Beware, however, that industry insiders can also be a source of terrible advice. If you had asked a taxi company about Uber, a Hollywood executive about Netflix, or a General Motors VP about Tesla, you would have gotten a long list of reasons the idea would never work, punctuated by eye rolls and condescension.
Don’t hold out for the “right answer”
If you were training to be an air traffic controller or a brain surgeon, expert instructors would train you on your discipline, including procedures and checklists to handle any scenario thrown at you. If you’ve ever flown on an airplane or undergone surgery, you were thankful the pilots and surgeons weren’t just winging it and making it up on the fly.
Some founders assume startups work the same way. They find the long list of startup books, incubator programs, and university courses, and they assume entrepreneurship is an established and respectable profession, like being a lawyer or accountant. It’s not, and thinking it is can cause a few problems.
One is that founders can assume there is a body of knowledge they have to obtain as a prerequisite to starting their startup. This can provide a distraction, or even an excuse, from just getting started. You don’t have to read every startup book. You don’t have to get an MBA. You don’t have to spend years applying to incubators. Yes, an incubator might help you, but it’s not law school for startups, and there is no bar exam anyone will ask you to pass. Most incubators will tell you that their best startups would have been successful without them.
Once founders get their startup going, they can over-research and over-analyze important decisions, assuming there is a clear-cut correct answer to the question of the day. This is rarely the case and can cause analysis paralysis and frustration.
The best founders tend to be a bit willful and stubborn. They may seek advice from people they respect, but they don’t take a vote for every decision nor look for consensus. When they hit ambiguity, they plow forward anyway.
Yes, you should take advantage of the resources available to you, but most startup learning happens on the job and is situational. As challenges pop up, you quickly gather whatever help you need, make a decision, move forward, and then fix it later if you need to.
Beware “happy ears”
We all suffer from “confirmation bias,” [1] which is the tendency to focus on evidence that confirms what we already believe and to discount evidence that would force us to change our beliefs. If you’ve ever worked with someone who perked up every time they heard an anecdote that supported their arguments but developed hearing loss for stories that didn’t, you were lucky enough to work with someone suffering from confirmation bias. That person may have even been you.
Human nature is also to discount information that would require us to accept tough realities and make hard decisions. We don’t like to hear feedback that we need to fire someone on our team. We don’t like to hear that we need way more traction to raise a round of funding. We’ll ignore 10 customers who dismiss our product and latch onto the one who says they love it. (We’ll talk more about this in “Facing the Abyss.”)
This does not mean you should toss out your hard-won beliefs at the first sign of trouble. The bar for pivots should be high. But you can’t discover the truth if you aren’t really looking for it.
Most of all, you have to evaluate advice relative to the kind of company you want to build, which we’ll talk about next in “Choose Abundance” (coming soon).
[1] Confirmation Bias is one of many from a long List of Cognitive Biases that, while useful to anyone, seem to pop up especially often for startup founders.
