A Startup is the Founders’ Thesis

Since publishing my last essay critiquing the representation of startups as an experiment, I have been racking my brain thinking of what the equivalent of startups within science might be. This representation would have to be large enough in scope and impact to represent the unique contribution that a truly successful startup makes to the lives of people and society in general. Then it suddenly struck me:

A startup is actually a lot like a PhD thesis or dissertation.

 This may not be as catchy as calling startups experiments, but the similarities are so strong that it’s strangely uncanny. It also provides a way to fully align an entrepreneurial management science with the scientific method. Below I outline four core similarities to illustrate my point:

1.  A Path for Searching

Here an interesting etymology. The term “thesis” comes from the Greek word meaning “study”, and the term “dissertation” comes from the Latin word meaning “path” (Wikipedia, 2012). The word “study” is consistent with Steve Blank’s proposition that startups should be designed to “search” for a sustainable business model through customer development and customer discovery. Steve’s proposition is simply that the job of startup teams is to “study” the market and discover two main things: 1) What customers want and; 2) A profitable business model for delivering value to customers. In science it is the same; scientific study is really just a “search” to understand how the world really works.

Within science there are clear guidelines of what constitutes a good “path” for researchers to follow when conducting their thesis (i.e. the scientific method). Within startups Eric Ries has developed a similarly powerful concept. The build-measure-learn loop provides a clear “path” for startups to take as they conduct their “search” for a sustainable business model. The power of the build-measure-learn process is that it acknowledges that you will go through various iterations of your initial ideas before you find the “truth”. In science, it is the same. There is an acknowledgement that during your dissertation, you will go through various permutations and conduct several studies until you reach your destination.

2. Research Project

The power of the thesis metaphor lies in the idea that a startup can actually be viewed as a research project. Rather than a business plan, the startup idea is a research proposal. The problem with the business plan is that it orients startups towards execution because it is, after all, a ‘plan’. And we love it when a good ‘plan’ comes together. The term ‘research proposal’ is much more tentative. It is just a proposal; meaning ‘we could be wrong’. This orients startups toward learning whether they are on the right path. This is exactly parallel to the orientation that scientists take at the beginning of any new research project.

3. Research Team

Within the thesis metaphor, startup teams can start to view themselves as research teams, rather than teams set up to deliver a product. A few months ago I had an argument with the lead engineer of a startup who viewed his role in the startup as being; “to build the best technology possible”. So he spends all his time reading software books and writing code. What he didn’t realise is that technology cannot be “the best technology possible” in a vacuum. The question for a startup to answer is; the best technology for who? The ‘who’ in this equation is defined by two factors; people who want the technology; and are willing to pay enough for the technology such that the startup can build a profitable business. So the job of the lead engineer in a startup is not to just build excellent technology. They are part of a research team, and their main job is to operationalize the hypotheses of the startup as minimum viable products designed to maximise learning.

4.  A Significant Contribution

In science, a thesis is considered successful when the researcher makes a new and significant contribution to knowledge. For startups, there are similar pressures. A startup thesis is successful when it has discovered a profitable, sustainable and scalable business model. In a PhD thesis, you have to convince may be five to ten people, who constitute the toughest audience on earth, of the value of your work, before you can graduate. But customers are equally tough as an audience. In a democracy, you can’t make customer give you their money; they have to part with it voluntarily. So unless you are creating real value in their lives and solving real problems for them, your business is doomed to fail. So upon achieving product-market fit, a startup graduates.  

Entrepreneurship as a Managerial Science

Just like calling startups experiments, the thesis metaphor emphasises learning. The difference is that an experiment sounds like a single event, whereas it’s implicit in the terms thesis and dissertation that you are involved in a process that involves several research studies and iterations.  What I also like about the thesis metaphor is that it opens up entrepreneurs to learn more about the whole tool box of scientific methods that are available to them as they develop their idea. As I noted in my earlier post, the scientific method is not just experimentation. There are several other methods including surveys, interviews, customer observations, user testing and case studies. The thesis approach fully aligns startups with the scientific method and prepares ground for the development of a managerial science that can be taught as a learnable and repeatable process to entrepreneurs; just like scientists have been doing with PhD students for centuries.