Startups and the Stockdale Paradox

Why on earth can I only seem to post about once every two months? Note to self: startup, new family and blog posts don’t mix well.  Sheesh.

It is possible that I'm the last person to read Good To Great. But, if you haven’t read it, you’ve got to. The central question the book addresses is: how is it that some companies putter along for years and years and then suddenly transform themselves into great companies which deliver tremendous returns for shareholders?

As is usually the case for business books, it’s more descriptive than predictive (it accurately describes what happened at these companies but it doesn’t necessarily mean that emulating those steps predicts your own success) and it profiles companies that have been in business 25 years or longer (not exactly startups).

But, the book is worth $27.50 for page 85 alone. Tape it to your wall.

Page 85 has what I believe to be the ultimate summarization of the required mindset for a startup. And, it doesn’t come from an entrepreneur. It comes from a sailor. Author Jim Collins calls it the “Stockdale Paradox”.   

The Stockdale Paradox is named after Admiral Jim Stockdale who was the highest ranking US military officer imprisoned in Vietnam. He was held in the “Hanoi Hilton” and repeatedly tortured over 8 years.

8 years.

Collins describes going to lunch with Stockdale (can you imagine?) and trying to understand how he survived 8 years as a POW while so many died after just months in captivity.

Here’s how Stockdale put it.

“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.”

Wow. 8 years of torture, all the while never losing faith in the end of the story?

“Who didn’t make it out”?

“The optimists. 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. Then they died of a broken heart.”

So, on the one hand it was about unswerving faith that one will ultimately prevail while on the other hand it’s about banishing all false hopes? As usual, the guy who lived it says it best.

“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.”

Holding those two seemingly contradictory notions in his head simultaneously was the key to Stockdale surviving, even thriving, in his experience. And, I believe, it is a perfect summary of the mindset you’ve got to have in starting a company.

You have to believe that your vision will come to pass. You’ve got to do everything you can to make it happen. But, you can never let your belief and faith cloud your confrontation with reality.

In the front of each notebook I write in, the first thing I put on the inside cover is “face reality”. I write it to remind myself that many startups fail because they don’t take a true accounting of the facts of the market (usually because they’re never as good as you want them to be and it sucks to look them in the face). Most startups are long on faith and short on reality.

Entrepreneurs are wired for optimism. But, in Stockdale’s story, it was the optimists who died. Don’t forget to balance optimism with fact and belief with reality. If that can get someone through 8 years of being a prisoner of war, it certainly can get anyone through a (trivially compared) startup.