Eric Ries, the author of “The Lean Startup”, defines a startup as “a human institution designed to create a new product or service under conditions of extreme uncertainty”. Implicitly, a startup entrepreneur is someone who chooses, willingly, to embrace extreme uncertainty.

Most people think uncertainty=high risk, but it doesn’t have to. Malcolm Gladwell, in his New Yorker piece “The Sure Thing“, wrote about the ability of successful entrepreneurs not to be extreme risk takers at all. Risk and uncertainty aren’t equivalent.

Entrepreneurs get up every day not knowing if they will, but believing that they can. And where this lack of certainty would paralyze most other people, entrepreneurs are instead attracted to it, energized by it.

The problem is, no one succeeds in anything worthy on their own. In business, you need to have strong support from family, friends, clients, staff, investors and more. Odds are, these folks are likely to have a much lower appetite for uncertainty than the entrepreneur. They want to know if something will work before they buy in. To build support, raise funds, win clients entrepreneurs need to make these people believe in their vision and their ability. And while they believe they can, entrepreneurs don’t know – after all, they’re operating with extreme uncertainty, remember?

This sets up the biggest moral conflict in entrepreneurship – it is all about uncertainty, and yet to succeed you need to convince key people all around you that the future is bright and successful!

How do we as entrepreneurs reconcile this? We often don’t. We are torn – and if we’re not careful, our whole lives can feel like a big charade.

To succeed, we need to exude the confidence of someone who knows they’re going to change the world. We read about & admire those who have – the Zucks, the Pages and Brins, the Jobs and the Gates and so many more. But the thing you’re not told is that they weren’t confident & always self assured.

Joe Kraus

Joe Kraus, the founder of Excite and later Jotspot, and now Google Ventures partner (and incidentally a really really nice guy with great family and a wicked collection of cool cars like this one) spoke really candidly in the book Founders at Work about how this conflict feels from the entrepreneurs perspective:

No, it was never clear we were onto something huge. You never know anything. The hardest part in a startup is that you wake up one morning, and you feel great about the day, and you think, “we’re kicking ass.” And then you wake up the next morning, and you think “We’re dead.” And literally nothing has changed… I really wanted to get to the point where I’d  say, “OK, I know we’re onto something huge.”

Remember, Joe and his 5 college buddies built one of the world’s first search engines. Two years after he experienced the feelings described above, they’d gone public. He goes onto say:

On some level it feels like you’re fooling people – like, are we really doing this? It’s the whole sausage and sausage factory problem: when you’re outside and you only see the sausage coming out you think, “That’s pretty tasty.” When you’re on the inside, and you know how its made, it’s terrifying.

This is a guy who grew his business from number 17 out of 17 to number one or two in a 1996, just one year. He’s the guy who big $3M to win the prized position in Netscape’s toolbar when they only had $1M in the bank. Clearly, there is a lot of belief here, but there’s even more uncertainty.

Mark Suster

One of my favourite bloggers and VCs and general commentators in our sector is Mark Suster. While most of the talent at TechCruch Disrupt in San Francisco this year would come and go via the VIP entrance, Mark waded out the front and mingled for at least an hour with hordes of entrepreneurs, taking questions, meeting people and being super humble. He also happens to be a cracking writer. One of Mark’s best posts was his “Start-ups are all Naked in the Mirror” article about growing his company, a B2B ecommerce play, in the tough times post the dot com crash.

These were stressful times.  My staff kept asking me about these competitor moves and I didn’t have answers.  I could tell some of my best people were losing confidence.  One of my closest friends (our CFO) left the company.

And then it dawned on him. They were seeing their competitors through the perspective of their press releases. Their confident, puffed-out-chests, spruiking everything good while hiding their flaws. And yet they saw themselves naked in the mirror, with no nice clothes and makeup to mask the blemishes.

But one comment Mark made in his blog post stood out to me more than the others. It wasn’t that it was a lie, or hypocritical, but it highlights the very real challenge that we face as entrepreneurs. His advice was stark:

Be careful about not over expressing your deepest concerns to your team.  You need to be open but not instill panic.  It’s OK to talk about fund raising challenges or customer losses.  You should.  But most people aren’t wired to deal with the nerve racking daily grind of life as a CEO.  If you shared every deep seated fear (that I know you have) and over hyped every victory (that never pays off as much as you had hoped) you’ll have people on your roller coaster ride.  Remember that most people aren’t wired this way.

I agree with Mark – and it is handling this conflict between the need to show confidence and belief when the smart, analytical, honest self is dealing with extreme uncertainty is really, really hard.

Why we should let the air out

Is the solution then to just get better at faking it? We need to convince our friends, our team, our investors that they’re on a good thing. We need to create belief. When someone asks as how we’re going, we say “great, things are awesome”. If you practice it a lot, you might even get good at it. Why should we quit puffing out our chests – perhaps we should just be better actors? What’s wrong with that?

The answer is simple really. The only way to successfully fake it in this world is to believe you’re not faking it. To drink your own Kool Aid. To get sucked into your own PR. And that is when you will fail. Because you won’t be improving, you won’t be learning, and you won’t be continually testing your beliefs, sharpening them and making them even better.

A personal perspective

At the moment we’re transitioning AffinityLive from a development focused company in beta to commercially focused company with revenue targets.

To stay sharp, I’m reading a lot, and at the moment I’m reading a book on business models, the excellent and attractive Business Model Generation.

The content is great, and it is challenging. But to make any use of it at all, I need to  admit I don’t have the answers.

To learn, we need to let the air out, be humble, and not be confident about our opinions. Our beliefs should stand up to challenge of open, rigorous intellectual challenge, and not be held with the confidence of a fundamentalist who blocks their ears lest the real world threaten the imaginary fantasy.

Learning requires humility

You can’t climb a mountain with a puffed out chest. You can’t learn and infuse new ideas if you pretend to know all the answers. And yet, the more I interact with entrepreneurs, the more I see it – they’ve become so dependent on projecting success and certainty to make sure everyone believes in what they’re doing that they’ve lost that ability to be real with themselves – and this is a real worry for them and their businesses.

Like going out on a date, you don’t show up at your worst. You put your best foot forward. So when you’re courting – investment, key hires, press – by all means puff your chest out.

But don’t fall for the trap of trying to learn, grow and sleep with your chest puffed out. Cause there’s only so long you can hold your stomach in.