Today, I indulged in one of my guilty pleasures, the TV show “Gold Rush: Alaska”. Despite my aversion to the devastation to the land their mining creates, I just can’t help falling a little bit in love with these scrappy amateur miners. They signed up for insanely hard physical labor in wild, dangerous Alaskan territory to take a chance at riches. They endure setbacks, injuries, and disappointments with sheer optimism that they can “get the gold.”
This is a show about modern-day speculators, gambling their time and physical well-being to make it rich.
Startup founders are speculators too, but I don’t think we talk about it enough, early enough, or provide founders with enough tools to be great gamblers.
Think about it for a second. Once a founder is out on the road pitching their business to investors, they often face the harsh reality that the investors are “grading” them based on a set of metrics, milestones, and indicators that help the investor determine if the startup is investable.
They’re doing mental calculations to see if the business is a good bet.
Meanwhile, most founders I’ve coached have already gone all in — investing all of their time, energy, creativity, and money into their dream.
The problem is that while most people in the startup world understand that startup-building is different from business-building, we haven’t totally defined what that difference is.
My favorite definition of a startup comes from Dave McClure:
A “startup” is a company that is confused about 1) what its product is, 2) who its customers are, and 3) how to make money.
As soon as it figures out all 3 things, it ceases to be a startup and then becomes a real business.
This definition firmly reminds us that startups aren’t even actually businesses. They are just a set of unknowns!
Most activities in startup communities revolve around some form of pitching — 1 Million Cups, networking events, pitch competitions, business plan competitions. These kinds of events pre-suppose that the founder already knows the answers to these questions. What would happen if a founder presented their business at one of these events and only exposed all of the things they didn’t know?
But they don’t do that, because there is a pervasive culture of having to appear to be killing it, growing fast, gaining traction, scaling.
None of these expectations embrace the fact that founders are speculators and need to prioritize learning and de-risking their startup fast and as soon as possible. As Ash Maurya says, they don’t need to scale. They need to learn.
So why don’t founders do this naturally?
Well, it’s just not human nature to come up with a business solution that seems like it could disrupt an industry or change the world and then sit back and try to think of all of the risks and untested assumptions that could kill the business. Just like those miners on “Gold Rush”, founders are hustlers and hard workers. They want to dive in and start building.
But what if we could set up systems and structures in our startup communities to help founders prioritize de-risking their opportunity before they go all in?
I think we can.
Many of Fluent’s clients use the Fluency Score as a diagnostic tool to help their founders think through their riskiest assumptions and find focus as they test and validate these assumptions with their potential customers.
Serial entrepreneurs do this automatically, often because they got burned on their first company or two.
We can help first-time founders develop this skillset and mentality as well.
Now in Season 8 of Gold Rush: Alaska, those amateur miners have gotten a lot “smarter”. They have better equipment, invest time and money into testing the mining site before setting up camp, and don’t make as many preventable mistakes. They’re not rookies anymore.
I don’t know if they could have been coached through their first season to avoid a lot of those costly and dangerous mistakes. It certainly would have made for less entertaining television. But I do know that the founders I’ve coached feel a huge sense of relief when they access a systematic process to de-risk their startup and prioritize what they need to learn from their customers in order to build a healthy, viable, and investable business.
We’re not on TV. We don’t need high drama. We don’t need first-time founders to “learn the hard way” by going all in with their lives and their money.
We need to help them be savvy startup speculators. Let’s help give them the tools they need to do that.