I spent more than a year agonising over one of my first startup ideas. Endlessly putting my ducks in a row. I didn’t know it at the time, but I was a victim of the sunk-cost fallacy.
One of the key tenets of the lean startup method is to continually ask yourself as a founder: do I pivot or persevere? Do I keep going, or do I stop and try another direction?
This sounds great but how do you decide? How can you be sure whether it’s worth carrying on, or whether it’s time to throw in the towel and try something else?
In practice, I’ve found the answer is rarely obvious. The lean gurus for all their insights offer little in the way of guidance on this point.
This week however I came across a fantastic post by James Clear (who I’ve been following online for years).
James describes a framework he calls The Three Stages of Failure. The purpose of the framework is to answer the question: how do you know when to give up and when to stick with it?
The 3 stages are: 1) tactics – HOW mistakes, 2) strategy – WHAT mistakes, 3) vision – WHY mistakes.
He (as do I) finds that most people don’t bother to think through strategy. Meanwhile, almost no-has a clear vision to account for why they do what they do.
They behave like a football coach who sends his players onto the pitch, pats them on the back and tells them to kick the ball around until the ball goes in. A few random tactics perhaps. But no strategy. And no vision. Good luck with that!
His point is that you may be failing at tactics despite have a sound strategy and vision. So you give up unnecessarily.
Or, you may have great tactics (and maybe even a clear vision) but a lousy strategy. So you plough on for too long.
Or, you might have great tactics and a sound strategy but the wrong vision, or no vision! So you persevere unhappily and despite your gut.
The key is to be aware that there are 3 possible stages (or levels) to failure. Consciously evaluate them, and correct course accordingly.
This approach is the best I’ve seen for answering the age old question of whether to keep going or try something else.
The method applies equally to life outside of business too. Quite brilliant.
Outrun The Giants
Jeremiah Owyang outlines 11 ways startups are outrunning established corporations. In sum: 1) Make decisions faster, 2) Embrace failure, 3) Attract high-risk/reward workers, 4) Attract skilled talent, 5) Younger & unencumbered staff, 6) Access to risk-tolerant VC funding, 7) Privately held & more nimble, 8) Can focus on growth before revenue, 9) Willing & able to tackle niche markets as beach-heads, 10) Can out-run regulators, 11) Ship product fast & frequently.
Tomasz Tunguz shows how public SaaS companies can be used a proxies to derive a SaaS startup valuation. The results are surprising.
SlideShare for Growth
SketchDeck analysed over 50 different presentations that received between 500,000 and 6 million views and reverse-engineered some rules of thumb for how you can create a SlideShare deck to build your brand, boost your search results and the bottom-line.
41 FinTech Accelerators & Incubators
LTP walk us through 41 leading accelerators and incubators that cater to fintech startups.
Raising Money Online
Cash Burn: Good or Bad?
Cash burn is bad, right? Or is it OK? Sometimes? If so, when? Aswath Damodaran is Professor of Finance at the Stern School of Business at NYU. He explains what cash burn is, when it’s OK and when it’s not. This is from an investor’s point of view, but well worth understanding as a founder – if you want to avoid driving your startup into the ground. Excellent.
Tech Giants Favour Ripple Over Visa
In this interview, Ripple CTO Stefan Thomas, argues why Google and Apple are about to adopt Ripple’s Interledger Protocol (ILP) as a way to oust Visa. Intriguing.
German Challenger Bank Acquired
German challenger bank, Fidor (125,000 customers, 350,000 community members) has been acquired by French bank, BPCE (35 million customers & 8,000 branches). What does this mean for Fidor? Have they sold-out? Does this set a precedent of other challenger banks?
AI at Apple
Having had an iPhone since 2007, I switched to Android earlier this year. (A OnePlus if truth be told.) I’ve been mightily impressed by the increasing presence of machine-learning across Android apps. Meanwhile, Apple has been upping its game. Steven Levy does a fine job of walking us through their approach from the inside out.
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