Willful Delusion – Startups and the Stockdale Paradox

tl;dr Willful delusion – rational optimism is necessary for startups.

Early when I was starting PrimaTable, a friend and mentor told me about the Stockdale Paradox. Described in Jim Collin’s Good to Great, the paradox is named after Vice Admiral Jim Stockdale, an American naval officer held captive for eight years in the Vietnam War.

Stockdale’s Paradox

When asked about about how he coped with captivity and regular torture, Admiral Stockdale responded:

“I never lost faith in the end of the story, I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”

When asked who didn’t make it home from Vietnam, Stockdale replied:

“Oh, that’s easy, the optimists. Oh, they were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go. Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart.”

Collin’s coined the Stockdale paradox as Stockdale’s summary:

“You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

Startups

Creating a new product is hard, creating a new company is even harder. There are countless reasons why any given company doesn’t exist. Startup growth is a process of managing and mitigating risk.

In order to make the leap from Peter Thiel’s Zero to One, a founder must believe the technology is different, the market is different, her team is different, the business model is different and so on. This belief has been called a Reality Distortion Field but without balancing the ability to confront the brutal facts a startup often faces can lead a founder astray. Weathering the difficult challenges of a startup, requires the ability to see and navigate issues or Tom Tunguz’s Ruthlessness and Grit.

Like Stockdale’s paradox, starting a company and surviving requires a willful delusion. Delusion supporting optimism in face of that risk. Willfulness allows the management of risk through rational assessment. While a founder needs to be a rational, convincing and brilliant operator, at the same time, she must ignore the mountain of evidence that this company shouldn’t exist.