The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What are some common mistakes young entrepreneurs make?” is written by Karl Martin, founder and CTO of Nymi.
When founding a new business, you have to accept that you might drop the ball sometimes. It’s not about perfection, but rather about setting priorities and disciplining yourself to keep them. Do well at the things that will move the business forward, and for everything else, just don’t make any fatal mistakes.
However, this leads to a more macro-level challenge. As an entrepreneur, you’re defining your business from the ground up. What business paths should you explore, and which are not worth your time? This has been a core challenge for me from the beginning. While my team and I have broadly applicable technology, we have to accept that we can’t do everything. Having limited resources is the common variable that binds all startups.
The biggest mistake that I see many young entrepreneurs make is not clearly defining which opportunities they will target. This can be framed as a sort of Schrödinger’s cat experiment for startups. In the classic thought experiment, physicist Erwin Schrödinger supposed that a cat could be simultaneously alive and dead if its fate was dependent on the unobserved state of a quantum system. As entrepreneurs, our number one driver is always achieving success for our ventures and keeping them alive. But a company’s fate is dependent on an unknown: Which of the multitude of opportunities is the winning path? The decision is usually made with very limited information, leading to a highly uncertain outcome.
The natural psychological response to this dilemma that many inexperienced entrepreneurs have is to simply not make a definitive choice — to run multiple options at the same time. But believing the cat is still alive somewhere in the flurry of activities is a fallacy. With limited resources, you risk running out of capital before achieving important proof points to keep the business alive.
The answer to this conundrum feels unnatural, but it involves making decisions quickly and resolutely with limited information. What’s often not obvious is that if you move fast, you have greater opportunity to recover from mistakes and try another option should the first choice not pan out (also known as the classic startup “pivot”).
In the case of Nymi, we had originally positioned our wearable authentication product, the Nymi Band, as a consumer device. We pushed early with a pre-order campaign and got lots of invaluable market feedback. Before we even fully launched the product, the data showed us that the interest in our product was too broad across consumer applications and would be very hard to execute effectively. We decided to pivot and focus on enterprise use cases that allowed us to create a user experience centered around truly burning problems in the market.
Many aspects of being an entrepreneur feel psychologically unnatural. Going fast and hard down a path with high uncertainty goes against our natural tendencies to mitigate risk. But avoiding failure simply leads to a slow death as your resources dry up. By making fast decisions and failing early, you realize that your cat may actually have a few lives to give.
Read all responses to the Entrepreneur Insider question: What are some common mistakes young entrepreneurs make?
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