Thread by @girdley

I started 9 companies that employ >1,000 people.

But… I don’t build startups like everyone else.

I use a system called “Effectuation”.

It will change how you build innovative businesses…

First, some history...

I’ve used the standard startup techniques:

· Lean (“Ask customers their problems”). It produces “small” ideas. Yuck!

· Waterfall (“Build a big vision & customers will come”). Common to VC. It's too risky.

There is a better way...

It's called Effectuation.

Effectuation is playing Jazz in the world of business – all improvisation!

You use available means to take action and let the big vision emerge over time.

Here’s how it works…

Effectuation normally has 5 principles:

1. Bird in Hand
2. Affordable Loss
3. Lemonade
4. Crazy Quilt
5. Pilot in the Plane

I add a 6th, which I think is equally important:
6. The Backwards Cycle

Let’s go through each…

1. Bird-in-Hand Principle

First, list your resources.

a. Who you are- your personality and abilities
b. What you know- education and skills
c. Who you know- your network

Explore viable ideas using those strengths.

Then, get started building something ASAP!

2. Lemonade Principle

You WANT mistakes as quickly as possible.

What?!

Mistakes are a GIFT!

They make you learn quickly.

Each piece of bad news or failure gives a clue...

... you use to create new markets!

When a business gives you lemons, make lemonade.

3. Affordable Loss Principle

Each step in startup building has bigger “bets” as conviction grows.

Unlike all-or-nothing bets like VC, you’re running many small experiments.

If they work? Great!

Or you learn how to do better.

And live to fight another day!

4. Crazy Quilt Principle:

Only choose partners willing to put skin in the game.

These people become part of your “crazy quilt” of unique resources that win.

The people and organizations unwilling to be all-in?

You have no room for them!

5. Pilot in the Plane Principle:

You focus on activities you can control.

Don’t worry about things out of your control.

You believe that the future is unknowable.

You create tomorrow solely through your entrepreneurial work!

6. The Backwards Cycle

These principles tie together in a cycle BACKWARDS from what others do.

Capabilities -> initial actions and experiments.

Your experiments maximize learning -> conviction.

And goals (especially audacious ones) emerge!

All done in a low-risk way.

I first learned these principles by watching baller entrepreneurs.

Once I’d found it the hard way, I learned Professor Saras D. Sarasvathy had already defined Effectuation!

I've built:

@joinscalepath
@HireWithNear
@gocodeup
@dura_software

..and more.

All with Effectuation!

Tl;dr:

Effectuation is a lower-risk but high-upside way to do startups.

Use these 6 principles:

-Start with what you can do
-Make small bets
-Rapid mistakes maximize your learning
-Find skin in the game partners
-You build the future
-Go against the grain

And win!

I’m on a mission to make X be:

- Positive
- Useful

I need your help if you do too:

Bookmark/Like/Retweet this now so it won’t get buried.

Also: What questions do you have? Reply below.