Hey Reader,
Last weeks game theory was very simple. Trust is the only currency that compounds in an infinite game. The founders who win know when to switch from finite-game (aka survival) to infinite-game (aka trust). Simple. (Not easy to execute, but simple to understand)
What I failed to define (thx Coen) is what trust actually is... Trust is explicitly a bet where you can get hurt. And if you can't get hurt, it's not trust, it's just a transaction.
If you know what you're going to get like sitting down in a chair you don't need trust as you have near-certainty. Trust only exists when there is a real possibility of damage, where you are choosing to be exposed.
Which should sound familiar because almost every single meaningful moment in your startup is exactly that bet, repeating over, and over, and over again!
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Offering your cofo 50% before you know if they’ll quit when it gets hard or giving an employee equity before they’ve shipped code - sure vested - but still invested. Every investor you are transparent with or VP of Sales who “has a network” and you don’t know how it will play out. Building a feature on a customer’s verbal commit. Everything. Literally.
Every one of those bets can destroy you and that’s not a flaw in how startups work. That’s what makes it trust. If the outcome was guaranteed, it would be transactional, just a contract.
I would be remiss not to mention that trust isn’t just about whether the other person is trustworthy. It’s about whether you’re reading them correctly.
From my own poor read many years ago in Asia, “yes” can simply mean “I hear the words coming out of your mouth.” It does not mean “yes, we will buy your thing.” And anywhere in the world, “interesting, keep me updated” can mean “hard no” said politely enough to not hurt your feelings... Founders consistently mistake politeness for alignment.
Trust requires context and accurate reading otherwise it is just optimism, and optimism is not cute, optimism kills more startups than competition does. And there lies the next layer of mayhem. Your ability to trust your own read!
One of my fave lines… Optimists build planes, pessimists build parachutes, if you want accuracy go to a pessimist if you want it done go to an optimist.
Trusting your cofounder because of vibe without having the hard conversation about what happens when things go wrong isn’t trusting. The founder who trusts an investor because they said the right things without talking to other founders in their portfolio isn’t trusting. It’s some version of performative optimism aka prayer?
To recap. Real trust has to have hurt and is informed. It’s a conscious decision to be exposed after you’ve done the work to understand what you’re exposed to including having no idea the consequences.
THE SPECTRUM
Two directional views of how this really shows up for founders:
Too little trust: the founder who won’t give anyone real equity, won’t delegate real decisions, won’t let anyone see the real numbers. Run everything through themselves because they’ve been burned or are afraid of being burned. They think they’re being smart and this is the only way, but in reality, they’re being a bottleneck, velocity dies and they end up alone which, as I screamed last week, is the only guaranteed losing strategy.
Too much trust: the founder who gives the keys to everyone because they want to be liked, because they think trust means openness, because some podcast told them to be “radically transparent.” They hire without references. They partner without contracts. They share strategy with people who haven’t earned it. Thats not being trusting, that’s being reckless and calling it “part of the culture we are building”.
... and the middler who is trying to go from too little so over indexes on too much...
The skill - and to be so f’n clear this is a skill, not a personality trait is calibrating how much can this person hurt me? What’s the evidence that they won’t? What’s the cost if I’m wrong? And is that cost survivable?
As a founder….
Trust in a startup tends to feel early days like trust in a friendship, it is, but, the stakes are different, this is more than feelings, the net cost of being wrong is the company.
Which means you have to be better at reading people than almost anyone else, because don’t have a choice, the margin for error is smaller. You don’t have anyone that will catch or save your error, it's all on your shoulders. Which means your ability to read who’s real and who’s performing is a survival trait.
It is so related to why great founders pick up the faintest signals, or have visceral reactions to the smallest errors, it’s not because they are pedantic (they are, you should be) it’s because reading people is just signal hunting.
To recap the recap. Real trust requires the possibility of hurt, the work to be informed, and the awareness that context changes everything. It’s not about trusting good people vs bad people. It’s about trusting good people in the wrong context.
THE RULE
Trust early. But trust with eyes open.
The romantic version where you just believe and it works out rarely does, so just maybe the founder version is: I’m choosing to be exposed, I know what it costs if I’m wrong, and I’ve done the work to make this a good bet.
More simple it is not about asking you to be less trusting. It's asking how you might trust better.
The chair doesn’t require trust because it can’t betray you. Your cofounder can. Your investor can. Your team can. Your customer can. So if you choose to sit down anyway, try and make good bets.
If I can be of service, feel free to grab time.
LFG.
— James
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