Listening to a startup pitch a few weeks ago I had to exercise effort not to shake my head in disbelief. The presenters were describing the products and business model of an established company I was very familiar with and doing it with what seemed to be blatant disregard of reality. They forgot to mention an entire product line that directly competed with their would-be product. They claimed the company had a different business model than the one it did. They misrepresented its scale, number of customers, etc. The obvious question was whether they were knowingly misrepresenting their competitor or whether they were confused or simply unaware. After the Q&A it became clear that they were just ignorant.
The event took place during a startup competition. What struck me was that, without exception, following any one startup’s presentation, at least one of the reviewers who was an expert in the startup’s space would point out some way in which the entrepreneur(s) had either forgotten to investigate something of critical importance to their business or deeply misunderstood it following a typically brief investigation. The startups were gearing to spend time & money based on flawed conclusions. They had all taken on significant risk because of their ignorance.
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Startup Anti-Pattern: Ignorance
What it is
Ignorance is not knowing what you don’t know. It may be the most common startup anti-pattern. It should not be confused with making an explicit, considered decision to ignore something (knowing what you don’t know).
Ignorance is often found with arrogance, escapism, not knowing your investors and unrealistic expectations. It is usually deadly when combined with a big dose of arrogance, perhaps as a result of the Dunning-Kruger effect (a cognitive bias).
Why it matters
Ignorance hurts startups in countless ways, of which the following are pretty common:
- Ignorance creates an invisible bias in decision-making, which often results in significant time and resources being wasted.
- Ignorance sends a very early negative signal that turns experienced talent away. Would be co-founders, executives, employees, investors, board members and advisors may determine it is not worth their time to engage, especially if they see ignorance co-occurring with anti-patterns such as arrogance and unrealistic expectations.
- Ignorance is self-perpetuating: it attracts equally or more ignorant talent to the company.
- When equally or more ignorant investors join an ignorant company, they can experience a very rapid & destructive “falling out of faith” when they have to come to grips with reality. I have seen several companies hit the wall at high speed because expected financings did not come together as planned for this exact reason.
Ignorance is easy to diagnose but it takes work. There are two main strategies.
The first strategy is introspective in nature. It involves comparing observed outcomes with clearly recorded expected outcomes and then analyzing the root cause of the difference. Ignorance creates an omitted variable bias (OVB) in decision making and will likely cause reality to not match expectations. If there is no obvious known root cause for the observed difference the likelihood of OVB increases and ignorance should be the suspect. The benefit of this approach is that anyone can practice it. The main problem with it is that it is a lagging indicator: it detects problems after they have already occurred, which is inefficient. The biggest reasons why this diagnostic cannot be applied are: (a) that expected outcomes are not clearly recorded or (b) that an incorrect root cause is identified (see the scapegoat anti-pattern).
The second strategy is a leading indicator. The idea is simple: seeks external feedback to diagnose and eliminate ignorance early, before it costs you. External feedback can come through materials or through people. In the latter case, the trick is to be humble and genuinely interested in people’s opinions or you may not get them or, worse, you may get an artificially positive opinion whose goal is to get you off their back. Another thing to watch out for when talking to experts is the mentor whiplash anti-pattern.
Arrogance and confirmation bias are the most common anti-patterns that make the diagnosis of ignorance difficult.
When exogenous forces such as luck and timing affect the success of a startup, ignorance is often confused with genius, vision, and perseverance. As the saying goes, sometimes people can do something just because they don’t know it couldn’t be done. Statistically-speaking, this is not a good strategy for startup success.
Once diagnosed, the refactoring of the anti-pattern very much depends on the nature of ignorance involved and its root cause.
Some methodologies can fix the symptoms by making it very difficult to remain ignorant. For example:
- Agile development methodologies make it difficult to hide issues related to engineering execution.
- Customer development makes it difficult to remain ignorant about issues related to product/market fit.
Fixing the symptoms is not the same as identifying and fixing the root cause. If the root cause is simply lack of knowledge or mis-understanding it is relatively easy to fix. If the root cause is deeply character-related, e.g., a fundamental lack of curiosity or excessive narcissism, then the fix typically has to involve finding more suitable roles for the people involved or transitioning them out of the company.
Effective startup execution requires agile handling of uncertainty. Eliminating ignorance has a cost, which needs to be considered relative to its potential benefit. A particular form of the analysis paralysis anti-pattern involves spending far more time than it is worth attempting to diagnose and eliminate ignorance.
When it could help
As with most things, ignorance happens on a scale and there are many cases in a startup’s life when measured amounts of ignorance can have positive effects, at least temporarily:
- Ignorance can facilitate focus by artificially simplifying planning & execution.
- Ignorance can be motivational by creating artificial certainty and hiding potentially bad, demotivating news.
- Ignorance can bring resources to the company, e.g., investment capital from investors who might be put off by reality.
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Simeon – I am so glad you are doing this! I see how much of this ties back to Kahneman’s work (and the Heath brothers more recently).
Ignorance really is a killer. Are you familiar with the Dunning-Kruger Effect [no, not me 🙁 ] that basically points out that novices underestimate how skilled they are, how well they perform and how much they know (relative to expert mindsets). It is very easy to believe “I know enough” if there are pressures of time/urgency, if others think you should know, or just good old motivated reasoning – you want it to be true, you need to be true, so… it is.)
I hate it when they are right, but I always try to have people around to tell me when I’m an idiot. (Besides my girlfriend, of course, LOL)
Agile development tools help, as do the counter-pressures of lean.. but nothing beats having good, smart people who well tell you that your baby is….. ugly. 🙂
Keep these coming, Simeon!
Norris, thanks for teaching me about the Dunning-Kruger effect. I will update the post with it.
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Ignorance is a treatable condition.
The first thing is to set boundaries of your current knowledge. Areas outside of your expertise and experience should be treated as such – always get a second opinion. Don’t go for face values.
The other thing is keep an open mind. This is harder than it seems because we tend to apply our view of how things work to new things, which might work very differently. I’d say 99% of common sense expressions should be reexamined. Simeon already has the “if you build it, they will come” on the list, so I’m sure he’ll do a better job of elaborating on it.
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