Is Your Startup Philosophy Failing You?

Science is eating startups. We need a philosophy that's built for the challenge. Precisely. One. Philosophy.

The Hall-of-Famer Ted Williams said, “Baseball is the only field of endeavor where a man can succeed three times out of ten and be considered a good performer.” I guess he wasn’t well acquainted with entrepreneurship. In this game, if you succeed one time out of ten, you’re outperforming the field.

Both hitters and entrepreneurs must embrace failure

Why do startups fail at such an alarming rate? Most explanations are anecdotal, induced from founder stories. We pool together the biggest successes and the biggest flops, and distil patterns to best practices. A small industry of blogs and podcasts transforms these experiences into a mountain of knowledge. Indeed, a search for “Why Startups Fail” returns almost 100,000 results!

If this knowledge truly lights the path to success, it’s only by the slightest flicker. Those that have succeeded in the past perform only marginally better than those that haven’t. We long thought that the collective experience of teams outperforms the performance of the lone founder, but that notion doesn’t survive scrutiny either. Despite a mounting effort to teach entrepreneurship through a common curriculum, we’ve yet to see a significant difference in startup success. Even the most well-advised and vetted startups struggle on an individual basis. 

This lack of repeatability is why success has come to be associated with “bets” averaged over large numbers of startups. Aptly, big successes are considered mythical unicorns. As presently practiced, entrepreneurship seems largely a matter of luck and wishful thinking.

This may offend our culture of founder worship (and most investing strategies), but it should come as no surprise. We’ve long known that this experiential path to knowledge is problematic. Nothing guarantees that some pattern from the past will persist in the future. Yet we cling to this inductive approach, these sage stories and their generalizations, for the perceived lack of anything better.

I raise this philosophical problem with startups because our problem, at its core, is philosophical. Philosophy sharpens problems and makes them precise. Yet we lack a shared and precise understanding of the problem of startups: why they exist and how they work. Rather than shared, we have as many philosophies as mission statements. Rather than precise, we have taglines, motivational placards and pitch decks.

But the character of startups is rapidly evolving. Science is eating startups. As problem-solving organizations, we’re becoming more aware of our connections to other problem-solving institutions. We’re drawing more intentionally from these deeper traditions. And we see more explicit linkages, proto-philosophies if you like, in shared methodologies and principles such as the lean startup.

The question is turning from What is your philosophy? to What common philosophy unites us?

On Principle

As every blog-weary entrepreneur knows, an imprecise problem undermines the most committed and well-intentioned team. But how do we know it?

Well, we don’t really. It’s just a guess. We have many such guesses. Some are elevated as principles, the higher order commitments that constrain our decisions. Like the conservation of energy, money is the lifeblood of a business. Like entropy in closed systems, operations tend to disorder. Perhaps the most important and widely held principle is the centrality of customers. Jeff Bezos made this point in his 2016 letter to shareholders: “There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.”

For many, the lean startup has become synonymous with startup philosophy. Although we’re wanting for evidence that lean methodologies ultimately translate into startup success, many endorse this school on principle: Lean must be right because its principles are right. Shared principles become the basis for a shared philosophy. Or at least a template to tailor.

Principles of agile development and lean startup (Source: US Navy)

On an individual level, we package up and prioritize our most cherished principles as our founder’s philosophy — if not for the world at least for our little fiefdoms within it. Rather than unifying us in a common struggle, startup philosophies express our varied and subjective beliefs, faiths, credos, and ideologies. Much like horoscopes, this mishmash of principles and anecdotal evidence leaves startup philosophies infinitely malleable and resistant to criticism. They give us plenty of room to roam.

And to return to our problem, they leave us with plenty of room to fail.

On Method

It’s for this reason that schools of management science have focused on methods of execution to shorten our philosophical leash and improve outcomes. From the turn of the 20th century, Taylorism emphasized experimentation. Process improvements such as Six Sigma focus on measurement, repeatability, and quality standards. Up to the present, lean and agile methodologies evangelize customer experiences, rapid iterations and empirical testing in real-world settings.

Methods of execution: Taylorism, Six Sigma, Lean Startup

Each of these methodologies represent progress as codified problem-solving. But methods find their limits when principles must be weighed and adjudicated, such as the competing needs of customers and internal stakeholders, or trade-offs in revenue and profitability. In other words, methods inevitably succumb to the complexity of the real world. Problems don’t give up their solutions so easily.

Consequently, problem-solving institutions employ a vast and diverse landscape of techniques and methodologies. Contrary to popular belief, problems aren’t solved through a single method. There is no such thing as the (singular) startup method, just as there’s no such thing as the (singular) scientific method. As Steve Blank emphasized, “It’s not the methodology,” he said, “it’s a methodology, and like most things, hopefully something better and more efficient will come out of it.” The lean movement was transformative, not as a method, but as a massive shift in thinking.

Blank is right: Startups are evolving into something better. But they’re not evolving out of the lean methodology, the lean methodology is evolving within a much older and deeper tradition.

On Progress

We can accelerate this process by more explicitly connecting startup philosophy to deeper problem-solving activities in the sciences. To be clear, this does not mean that everything in startups is science. Rather, science and startups (and many other endeavors) are united as the reasonable pursuit of solutions. We can adopt the problem-solving values and behaviors of scientists even if not all our subject matter is scientific. And this pursuit is made much more precise through the philosophy of science.

Science and startups share a common heritage in problem-solving

Consider again the lean startup in more overtly philosophical terms. While it’s frequently celebrated for its focus on the customer, the philosophy of lean is much older and more general. It’s rooted in empiricism, the theory that knowledge is induced from experience. Lean inherits from this idea, displacing “our experiences” with “our interpretations of our customers’ experiences.” The principles highlighted may vary depending on your values: the customer perspective, rapid iterations, market pull, and so on. But all these principles share a foundation in their empiricism.

And this deeper connection to empiricism in turn explains why lean is contentious as a shared proto-philosophy. Lean principles such as experiment over planning and customer input over vision mirror the struggle between rationalism and empiricism. Peter Thiel, for example, raises rationalist conjectural concepts, such as quantum leaps and intuition, in his criticisms of lean. “I'm personally quite skeptical of all the lean startup methodology. I think the really great companies did something that was somewhat more of a quantum improvement that really differentiated them from everybody else.” He continued, “I do think we're way too focused on iteration as a modality and not enough on trying to have a virtual ESP link with the public and figuring it out ourselves.”

Whether you agree with Blank or Thiel or any other startup savant, philosophy offers a way to sharpen your criticism and draw from a deeper — and much more precise — pool of knowledge. It’s why leaders like Thiel, Reid Hoffman, Marissa Mayer, Mike Krieger, and Paul Graham emphasize their philosophical training. Hoffman, for example, found it conferred advantages in “a technologist’s precision in solving non-technological problems.” Problem-solving precision is a powerful competitive advantage. It’s why Silicon Valley has embraced philosophy, and why giants like Apple are trying hard to keep their philosophers a secret.

We’re evolving a more precise understanding of startups as problem-solving organizations. Progress won’t be achieved solely through new methodologies (although we’ll continue to codify what we learn). It won’t be spun from anecdotal experiences or vague notions of wisdom (although we’ll continue to share stories). It won’t be induced from large datasets and predictive models (although predictions will figure prominently in our criticism and testing). Rather, startup philosophy will draw directly from the traditions that rigorously explain problem-solving more generally.

It’s a new mountain to climb, quite unlike the mountain of personality cults, mother wit, and groupthink we’re scaling now. It may not make success any easier, but it will make it explicable. And that’s progress.


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