David Heinemeier Hansson

May 11, 2022

The founder's gamble

As companies mature, grow departments, accumulate staff, and develop reliable streams of revenue, it gets structurally harder and harder to make the big decisions that might upset the applecart. This is the familiar scene of The Innovator's Dilemma.

The more of everything there is, the higher the stakes appear, and the less likely professional management at most mature companies is to risk it on a big call. But, as Clayton Christensen tells us, the biggest risk of all is thinking that what worked yesterday is going to work tomorrow too.

This is where the founder's gamble come in.

If you were there before the pillars of wealth and progress stood solid, it's easier not to fear the ruins. All are from the dust, and to dust all return. But if you entered the temple of the successful enterprise once it was all built, no wonder you'd be hesitant to take the gamble that could bring it all down.

We've been in this situation several times over the years at 37signals. On everything from product portfolio management (split it off!, expand it all out!), to pricing (many tiers!, single price!), to culture (no more politics at work!), to standing strong against monopolies (go all in on a fight with Apple!). These are the types of big calls, big gambles, that founders sit in a unique position to take. So in turn it's their obligation to do so.

That doesn't mean these types of big decisions shouldn't be broadly informed, but it's rare they can be definitively answered up front by data or argument. They're big, difficult decision because they require a leap of faith. A plunge into the unknown at a moment of peak criticality guided primarily by instinct.

This level of faith grows in a certain mold of arrogance. The kind that motivates someone to have the audacity to start a business in the first place, and to stick with it in spite of the odds, because they believe they do know something or can do something that's better than what already is.

Of course the faith may be mistaken. The gamble come up short. In fact, that's bound to happen eventually if you place enough bets. Nobody is forever the oracle and all lucky streaks end. But that's the risk with taking risks. Native to the game. Part of the deal. And not a reason not to play.

Because someone needs to be comfortable starting the fire that can clear the path, despite the danger that it might also burn down your house, lest the company is to stagnate. You have to handle it with care, but ultimately it's one of the finest duties of founders to embrace that flame.

About David Heinemeier Hansson

Made Basecamp and HEY for the underdogs as co-owner and CTO of 37signals. Created Ruby on Rails. Wrote REWORK, It Doesn't Have to Be Crazy at Work, and REMOTE. Won at Le Mans as a racing driver. Fought the big tech monopolies as an antitrust advocate. Invested in Danish startups.