I have been given the opportunity to prepare a workshop for the General Assembly team in London. General Assembly is geared towards education of entrepreneurs and aspiring entrepreneurs and have been very successful in New York, now expanding to London. The workshops are 90 minutes long, and usually gather anywhere from 15 to 35 people who have paid to attend.
While I considered doing something on concrete coding skills, I think by far the superior alternative (for myself and the audience) is to do a crash course on cognitive bias as it relates to startups, maybe throw in some other topics on rationality in a similar context. I am fairly confident that startups are an excellent testing ground for extreme rationality as they require exceptionally quick assimilation of new skills and knowledge, as well as demand rapid decisions with incomplete information.
So, as part of the brainstorming for this, here are my questions for you:
1.Do you think educating startup founders on cognitive bias/rationality will help them improve their outcomes?
2.Which biases would especially affect startups? Which of these can be mitigated (either by knowing about them or by utilising explicit strategies)?
3.What is a good way to use 90 minutes to get this information across?
4.What prior material exists to introduce rationality in a fast-paced manner? What prior material exists that relates startups to rationality?
5.Other relevant thoughts welcome
Should I go ahead with this, I will of course make the deck available for any others who may want to do similar presentations elsewhere.
Why fight what you can use?
Given that biases are an inherent part of the human nature, you might consider discussing how to use them to the startup's advantage. This does not have to be Dark Arts, though if you want to succeed in business, almost anything goes.
In fact, if entrepreneurs understood probabilities, most would never start any business, given the prevalent rate of small business failure. Furthermore, startup employees tend to be underpaid and overworked, hoping for a large payoff down the road, which almost never happens. You can get more out of people by building a sense of loyalty (a totally misplaced concept for an employee).
On the darker side, one can use anchoring to pay people as little as a frugal but eventually successful startup ("we have to be like them to succeed!"), In fact, if you go through the list of cognitive biases on wikipedia, most of them can be used to the startup's founders' advantage.
Of course, it is essential to not unwittingly succumb to the known biases, if you are running a business (sunk cost is the most pervasive one). One standard approach is to pay a knowledgeable outsider to question and critique your decisions on a regular basis. This used to be one of the function of the board of directors, but we all know how well this works out in practice (those who stir the pot do not keep this cushy job for long). The VCs are rarely up to the task, either.
Success of the startup depends a lot on the industry it is in:
http://www.amazon.com/Illusions-Entrepreneurship-Costly-Entrepreneurs-Investors/dp/0300113315
That book is actually pretty optimistic for Silicon Valley type stuff if you read it.
Startups that get venture capital tend to have high expected values:
http://80000hours.org/blog/12-salary-or-startup-how-do-gooders-can-gain-more-from-risky-careers
To be frank, I think most entrepreneurs are naïve and incompetent (this is from hanging out in online entrepreneurship communities and going to events for entr... (read more)