September 21, 2023

Ambiguity Aversion

Gregg Scoresby

I think most of us have ambiguity aversion. Uncertainty is uncomfortable so we try hard to avoid it. At least most of us do. But when ambitious entrepreneurs decide to turn their ideas into real startups, they almost always have some understanding that they are signing up for a decade of ambiguity. And they do it anyway.

That's one of the things I love about the most ambitious company builders, they lack ambiguity aversion. In company building, there are just so many inputs and variables that can't be controlled. And that creates ambiguity. Even with great execution, early-stage founders face an insane amount of uncertainty including:

- Income uncertainty. When will I be able to pay myself?

- Product uncertainty. Can I quickly build and ship a viable product?

- Customer uncertainty. Will people pay for my product?

- Technology uncertainty. Will some new tech make my product obsolete?

- Economic uncertainty. Will the economic tides turn against me?

- Regulatory uncertainty. Will some government action negatively affect me?

- Competitive uncertainty. Will competitive headwinds increase?

- Distribution uncertainty. How will people discover my product?

- Capital uncertainty. How will I fund this business?

- Exit uncertainty. How will I get investors their money back?

- Co-founder uncertainty. Will this founding team stay together?

- Talent uncertainty. Will I be able to attract the talent I need to succeed?

- Social uncertainty. Will I look stupid if this company fails?

To be clear, I am not suggesting that there are no controllables. There are. Founders make choices that have real positive or negative consequences including:

- Level of effort they exert

- Problem they choose to solve

- Depth of customer research they do

- Products they choose to build- people they choose to hire

- Culture they choose to create

- Growth strategies they choose to pursue

- Daily activities they choose to prioritize

Decisions matter. But even if a founder makes almost all the right entrepreneurial choices - and nobody does - the probability of failure is still astronomical. Perhaps as high as a 90% failure rate. Founders know that, but they launch their startups anyway. The very best founders I have met have a truly unique ability to embrace uncertainty. They are comfortable making critical decisions with imperfect information. The most ambitious and resilient founders remain obsessively focused in the face of so many unknowns. And when one of those unknowns moves against them and knocks them down, they get up and ask for more ambiguity. Those special founders are not paralyzed or impeded by ambiguity. In fact, some even seem to love it. I believe that a lack of ambiguity aversion is a founder superpower.