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Why Reasoning by Startup First Principles is Important For Your Sanity

The hardest part about running a startup is knowing whether or not your decisions will have guaranteed outcomes. One thing that most people don't know is that great decisions can have bad outcomes, and bad decisions can have great outcomes, but over time consistently making great decisions is the difference between resilience and gambling on your startup. The downside of relying on bad decisions that create great outcomes is that you'll be at risk of losing trust in yourself. Most of the world reasons by analogy, and that causes a lot of faulty decisions and mistakes that you just can't afford that when you're running a startup and functioning at high speeds and under high stress. You have to reason by truth. All leverage, all massive output, all force multipliers come from tiny kernels of truth and it's your job as a startup founder is to stack those kernels of truth to increase output.

The most common reasons behind failures for Startup founders are: misreading market demand, having an inexperienced team, and getting beat by the competition. Failure ultimately stems from reasoning by analogy or by logic - neither of which leads to truth. The good news is you can prevent all these scenarios by observing startup first principles. These are the five startup first principles that you should apply to your startup to sift through the BS and arrive at the truth:

1. Set Goals

No matter how you word your goal, the customer should be at the heart of it. The number one reason startups fail is that the market does not need their product. As a business, you should help the market address pain points to keep them happy.

Here are some pain points you can address:

  • Financial

  • Convenience

  • Research

  • Tracking

  • Delivery

Before you invest everything you have in a startup, make sure you have products that solve a painful problem - that will make life easier for your target market. If your product doesn’t pass this first criterion, it’s time to think of something else. Learn what your potential clients need and find out how to address those requirements.

2. Apply the Scientific Method

Sometimes, experienced entrepreneurs feel like they have enough knowledge to forego this step. If you’ve run a business before, you can probably relate to this. Some business owners think that emulating a past successful venture will lead to another hit, but that’s not always the case.

Many factors might make past truths not applicable anymore. For example, market needs change, and industries evolve. The success elements you used in the past might not work today.

Use the scientific method in all your projects, regardless of what you think you know. Create theories, hypotheses, observations, and conclusions based on current data. This process should validate your knowledge.

3. Use Rewards for Motivation

When looking for results, you should optimize for truth and not rewards. If you start a rewards-based culture, you should recognize what matters most. For example, gaining leads, meeting prospects, and signing contracts do not merit celebration—closed sales and additional revenue does.

The brain is a powerful learning algorithm machine that naturally goes after advantageous offers. Unnecessarily rewarding your team will keep them hyper and excited, creating a system of never-ending compensation.

4. Implementing Systems

Creative processes typically fall into two categories: event-oriented thinking and systems thinking.

  • Event-oriented thinking: Using this concept, a causal chain of events can explain any system component. Companies that practice this way of thinking play the blame game and pinpoint individuals responsible for a failed activity.

  • Systems thinking: This concept sees processes in a loop structure, where root causes are not individual parts. Teams that adopt this way of thinking work together toward a common goal.

You can’t develop systems thinking overnight, but it’s an ideal thought process for startup growth and predictable revenue.

5. Have Focus

In business, having focus means having a crystal-clear vision and sticking to it. Even with obstacles and changes along the way, you can still find a way to succeed.

Check out this 2014 video where Apple’s Jonathan Ive describes how he witnessed the kind of focus Steve Jobs had daily. It’s one of the three most crucial life lessons he learned from the celebrated visionary.

Reshape Your Startup

If you don’t have a startup growth plan for predictable revenue, you’re setting yourself up to be like the 90% of startups that fail. The key to success takes more than hard work, logic, and experience—you need a solid foundation based on truth.

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