Focus On What Could Go Right (Not Wrong)

Aug 4, 2023

In startups, focus on what could go right instead of wrong.

Startups are call options in more ways than one. The extreme downside is capped at zero — the startup fails. You’ve lost time and effort, but the company wasn’t worth much (if anything) in the nascent stages. The fewer users you have, the fewer that will remember the product even existed.

This is a tangible advantage startups have over large companies (maybe one of the only advantages). The cost of a bad launch can be extremely high for an established company — Apple launching products in a new vertical, Google killing yet another product, or disrupting your own business model. Products might need backward compatibility or long deprecation policies. Brand damage can hurt a core business. There’s a lot more at stake.

In startups, there’s a lot more that can go wrong.

A few risks are more existential for startups (i.e., that wouldn’t be otherwise): Limited resources amplify bad hires. Bad moves might not just mean a bad quarter but the death of the company. There’s little institutional knowledge (and maybe even expert knowledge), so even obvious mistakes happen frequently.

But most other risks have capped downside. A bad launch is quickly forgotten (if anyone saw it in the first place). A broken product will either not be used or used despite the friction (friction can be a proxy for value). Experiments (or features) can be shelved without repercussions. Entire organizations can be overhauled. Entire markets can be pivoted.

Why focus on the upside? The upside is uncapped (and often, hard to grok). Stepwise jumps are not only possible but are more common than steady growth. When things work, they work. Swing for home runs.

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