Business

The Incorrect Perception of Human Effort (in Startups)

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The Science of Overestimation

Diagram by Kent Hendricks in The Availability Heuristic

The Importance of Accountability

Enter the availability heuristic. We live in a world where humans are not held accountable to every action they claim to commit to. As an example, the average person can state that they would “like to achieve xyz”, but isn’t forced to work towards that goal. This creates a disparity in human communication which must be managed by society. As an example, lawyers create contracts to ensure that a person is punished when they fail to act on their claims. In other cases, politicians are able to rally behind a cause that they themselves would not vote for. When someone claims something that is not true, it’s called a lie.

Whenever you engage in business with multiple people, there is always a verbal and physical agreement being made at any given time. Two founders may split their startup 50/50 to indicate that each person should commit an equivalent amount of resources (time, money, etc). In reality, splitting startups 50/50 isn’t recommended because this action never happens. A lawyer can create a written contract, but this does NOT guarantee that the actions within the contract occur. As a result, a written contract is equivalent to a verbal agreement with physical consequences (if the agreement is broken).

You can NOT mentally force someone to perform an action.

What is a weak founding team? A team that cannot execute. A team that cannot get along. A team that cannot resolve a conflict between themselves; let alone the problem that the business is attempting to solve. Obviously, no one creates a business with a weak founding team on purpose. However, the ability for you to create a disparity between words and actions can result in one. Such that a person may claim to commit a certain amount of time and capital to a startup, but fail to do so. That person is lying (and it might not even be on purpose).

In the context of a startup, lying goes without punishment when there is a lack of accountability: When there is no account of what is being claimed, and no account of what is being committed. Such that a strong founding team can become weak when a founder — who is not a robot — changes their level of commitment. Thus, a lack of accountability can result in a startup’s failure. As a solution to this problem, a business may implement a system that keeps people accountable. However, this system will NOT work when it’s based on a human’s perception of effort (due to the phenomena described above).

In Real Life

Pursuing Music

Pursuing Business

In Society

The Human Perception of Effort

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