Noam Wasserman is a professor at the University of Southern California, a former professor at Harvard Business School, and the author of The Founder's Dilemmas. Over the past two decades, he has become "the founder guy" in academia and beyond for his work on building successful startups and founding teams.
In his new book, Life is a Startup: What Founders Can Teach Us about Making Choices and Managing Change, Wasserman discusses many key moments in a founder's life, including the challenges (or "handcuffs") that prevent people from launching their own businesses. This "handcuffs" theory is one of the biggest takeaways I gleaned from Life Is a Startup; the approach taken by successful founders applies well to all decision-making around change, and change is one of life's few constants.
The "Handcuffs" on Your Business
Wasserman talks about metaphorical handcuffs, or factors that prevent entrepreneurs from making change. He describes them as "inducements or penalties that increase the cost of change and thus dissuade us from shifting gears in ways we would otherwise find attractive."
Wasserman discusses a variety of handcuffs in his first chapter and illustrates them by focusing on a key founder's dilemma: "When is the best time to quit my job to launch a startup?" Here are some of the handcuffs he says keep aspiring entrepreneurs from making that leap:
Financial Handcuffs: Quitting a high-paying job to start a startup isn't as easy it sounds. You might have a mortgage to pay and kids' tuition to fund; these responsibilities become handcuffs that undermine your agility. This is the reason behind a common myth: that the best founders are just past undergrad but not yet married with kids and a house.
Psychic Handcuffs: People fear failure more than they crave success. That is just a biological fact of nature. Taking a risk to start a company is made even more difficult by the uncertainty of change. Psychic handcuffs like "better the devil you know" and "the grass is always greener" cause many would-be founders to stay at well-paying jobs that they hate.
Handcuffs of Perfection: These handcuffs include parables like "waiting for the right opportunity" and "if only it had x, then I would be in." Successful entrepreneurs, however, know that "done today trumps perfect tomorrow."
Analysis Handcuffs: The need to know more or do more research before making a decision is a pair of handcuffs. You will never have perfect information with which to make a decision, and when that decision deals with change, it can be paralyzing.
How to Remove the Shackles
To loosen these handcuffs, Wasserman recommends that you think through how your constraints affect your decisions, and outline things you can do now to make your preferred choice more viable in the future. Here's how:
To loosen the financial handcuffs: Entrepreneurs who are just starting out have a massive cash deficiency (a lot is going out and none is coming in yet). Many successful entrepreneurs address that reality by reducing their personal burn rate in advance so as to ensure the largest possible cash cushion after the leap.
To mitigate psychic handcuffs: First, recognize what's holding you back (some factors are easier to spot than others). Then, address it. Assess the potential gains of taking a big risk, and the possible losses (and the probability they will occur). Often, when you confront your psychic handcuffs, they dissipate, since they may be more perceptual than real.
To break the handcuffs of perfection: "Our natural aversion to change can lead us to defer any change that isn't perfect," Wasserman says. "We let the enemy of the perfect solution be to do nothing. We are handcuffed by hope that we will indeed encounter the perfect situation."
However, perfection is a myth and thus unobtainable. Change is always hard because it deals with the unknown. To break the handcuffs of perfection, Wasserman suggests the "staging approach": breaking down a big decision into smaller ordered sub-decisions, and treating each smaller item as an experiment. Successful experiments receive further resources and attention; unsuccessful experiments are abandoned, and the resources and attention are redeployed to other efforts.
To unshackle the analysis handcuffs: According to Wasserman, the ultimate entrepreneur is one who "combines the passion of the evangelist with the clear thinking of the analyst." To be successful, you must remember that not making a decision may be worse than making a decision with less-than-perfect information.
In The Founder's Dilemmas, Wasserman walked us through some of approaches successful entrepreneurs use to make the toughest startup decisions. In Life is a Startup, he widens the scope to show us all how to apply these approaches to everyday life.