Step 1. Steal Underpants
Step 2. ?????
Step 3. PROFIT

Know this meme? It’s from a South Park episode in 1998, fifteen years ago!! It is hilariously ridiculous and unfortunately the strategy many startups operate under today. Let me explain.

You’re a first time entreprenuer on Step 1. Your company is in the early stages, readying for a product launch, working with initial customers, making moves. In fact, it’s been that way for a while. You’ve had some small wins, and some setbacks, but you persist; you continue to steal underpants, for success is just around the corner, right?

Now take a moment to think about your goals. Where do you want your company to end up? I’m sure you could paint me a vivid picture of your Google-acquired startup, and your traveling lifestyle, filled with fame and fortune. Your Step 3 is as clear as day.

But what is your plan for Step 2? For this we need to take a closer look at the entrepreneurial landscape and the limited paths to success. Then we can better understand the game we’re playing and the strategies needed to succeed.

Success is rare

At any given point there are an infinite number of tasks your company can be working on: promoting, building, hiring, networking, etc. Lets assume that every set of decisions represents a path to either success or failure. Unfortunately, most of these paths lead to failure (see the power law). The CS degree that I’m still paying for says I should visualize this as a search tree.

If the problem is presented this way, there are a few conclusions we can make. First, succeeding on intuition alone is nearly impossible. You are inexperienced and there are just too many paths to consider. (In fact, this model doesn’t even take into account that luck is a very real factor and most of the paths are unknown i.e. you can’t see the paths you don’t think of).

Second, before you succeed you must fail many times. Learning what doesn’t work and backtracking is a necessary step. In fact, it’s the most common event you’ll face. Yet most founders will avoid it like the plague. They keep doing what they’re doing, hoping for change (instead of measuring it), and rationalizing their decisions along the way.

“We’ll be successful as soon as we launch.”
“Our sales will blow up after we finish that feature.”
“If we get just a little more funding, it’ll work.”

We lose sight of our progress, or lack thereof, and get stuck in the proverbial weeds. The reality is that most startups rarely question the path they’re on. They will…

• build for years without ever speaking to potential customers
• spend months making an unwanted product scalable
• hold off product launches (read potential failure) until they’re really ready
• plan inventory management systems for a product nobody wants
• spam the internet with their new service and wonder why no one will buy it
• blindly, prematurely push sales because the investors expect growth
• waste time coming up with solutions to questions no one has asked

This happens because we’re not using a systematic approach to solving our entrepreneurial problems. We let our intuition (read irrational emotions) guide our choices and rarely take the time to evaluate our decisions.

We need a strategy.

There is the Lean Startup method, customer-driven development, the scientific method and many more. We’ve heard their principles, although we don’t really follow them. For most of us they’ve been reduced to networking buzz words.

Although you may not use any of these methods, you must have some sort of method. The particular steps are not what’s important here. What’s important is the common thread these methods share: systematic feedback and reevaluation. That is, regularly stepping back and reevaluating your progress, hypotheses, and decisions (your path) based on new information you’ve learned.

Always be able to answer the following:

• What questions are you trying to answer?
• When will you get that answer?
• What metrics do you use to measure progress?
• How often do you reevaluate?
• What have you learned from past failures?
• Why are you doing what you’re doing?
• What are you trying to learn?
• Is there a faster cheaper way to get the information you need?

This is the only way to systematically remove “failure paths” without wasting valuable time and energy.

Startups deal with so much uncertainty that you can’t just work harder or longer hours. It doesn’t matter if you launch your product in six weeks instead of seven. Because without a method, six weeks can quickly become six months in the wrong direction.

Instead, you must work smarter. You must run your company like a laboratory. Ask the right questions. Create hypotheses. Create experiments to test your assumptions. Measure, measure, measure. Accept that most of your experiments will fail. Keep track of everything you learn. And repeat.

Success awaits at the top of a mountain built of failures and lessons learned.