Usually when we talk about risk at a lean startup event, it goes something like this:
There are two types of risk: market risk and technological risk.
Agile methodologies are used to reduce technological risk, and lean startup (and customer development) helps reduce market risk.
The discussion continues when someone adds:
Web startups don’t really have technological risk. We know we can build it. We don’t know if anyone wants it.
Biotech companies typically have tech risk, but no market risk. Everyone wants a cure for cancer, but we don’t know how to build it (yet).
But I found myself in the middle of a very interesting conversation at last week’s DC Lean Startup Circle. We were talking about a third type of risk that is critical for startups, what Ben Willman calls “ego risk.”
From what I’ve seen, the vast majority of people working in startups have a tendency to want our work to be as good as possible before we show it to people. This instinct runs counter to the concept of a Minimum Viable Product.
We all get attached to our clever solutions, sometimes even after we’ve discovered that they solve the wrong problem (or no problem at all). Ego is why we get attached to our solutions and stop questioning, and why we want to avoid customers until it’s perfect. It’s why we conflate our sense of self-worth with the success of our product or startup.
Ben Horowitz (of Andreessen Horowitz) has written that the most difficult skill for CEOs is to manage their own psychology. He also points out that it’s almost taboo to talk about personal psychology. It’s too easy for founders or CEOs to get in their own way and prevent themselves from executing with objectivity and mindfulness.
We talk about the technical and market risks facing a startup. Why don’t we talk about this more important risk? We need to acknowledge and address ego risk.
Startups have tech risk (can we build it?), market risk (will they buy it?), and ego risk (can I get out of my own way?).
If you want to join the conversation, come check out Ben Willman’s presentation on the subject at the next DC Lean Startup Circle.