⭐️ Explore vs. Exploit

A soldier has absolute conviction.

“We’re going to win this war.” “We’ll win this election.” “We’re definitely going to make a billion dollars.”

Soldiers think of intellectual inquiry as a battle and deeply believe that it’s their job to support their side no matter what.

While a scout is also at war, his mindset is kind of the opposite. He believes that it’s his primary job to figure out what’s true. He analyzes the terrain, competition and any other factor that might play a role as objectively as possible.

“After studying the enemies troops, weather, and terrain, I’ve come to the conclusion that we have a 10% chance of winning the battle here.” “Taking all market factors into account, I think we have a 15% chance of succeeding.”

Common lore is that startup founders need to be soldiers. After all 90% of startups fail. Hence without absolute conviction that allows them to power through and inspire their team when things get tough, they’re doomed from the start, right?

Interestingly, it’s a well-documented fact that many of the most successful entrepreneurs are more scout than solider.

  • Jeff Bezos told his investors that “there’s a 70% chance you’re going to lose all your money.”
  • Elon Musk said that SpaceX had only a 10% chance of success.
  • Ethereum founder Vitalik Buterin emphasized that he’s “never had 100% confidence in cryptocurrency as a sector”.

Okay, let’s stop right here. I mean, who cares how we label these prominent figures? Also isn’t it equally possible to find examples of highly successful founders with a soldier mindset? Steve Jobs with his legendary “reality distortion field” certainly comes to mind.

First of all, I have of course no idea why you’re interested in the soldier-scout-distinction. I only know that there must be a reason since you clicked on the headline and are reading this sentence right now. But what I can do is tell you why I became interested in the soldier-scout-distinction.

Like most entrepreneurs at some point, I was pondering the following question on a regular basis: Should I spend more time working on my $600 MRR project even though it feels like an uphill battle or invest the time to take a step back explore new terrain?

The soldier screams “keep going”, whereas the scout leans towards the second option.

Instead of wasting time with boring caveats, let’s focus on the more interesting question: What’s the right answer in most cases? Who’s more likely to succeed in this situation, the soldier or the scout? When should you explore vs. exploit?

To use an analogy, who’s more likely to find gold: The guy who sticks to one position and keeps digging deeper or a second guy who takes up lots of soil samples?

Like most entrepreneurs I spend far too much time is reading stories about how entrepreneurs more successful than me got to where they are now. And at least when we consider the (obviously far from statistically significant sample) of founders that I studied, the answer is clear: scouts win.

It’s surprisingly difficult to find find examples of founders who stuck for a long time to a project without obvious product-market fit and succeeded nevertheless. Jon Yongfook’s journey with Bannerbear is one example that comes to mind. However, he only decided to double dow after many, many scout-type experiments.

And there are countless examples of entrepreneurs being stuck for years since they decided to keep fighting an uphill battle. I don’t want to call anyone out but you can easily find many examples by looking at Indie Hacker projects generating ~$1k revenue.

On the other hand, to give just a few examples, we have:

Having said that, note that there’s a difference between the scout mindset and shiny object syndrome. Shiny object syndrome means to jump blindly from project to project, whereas the scout mindset is all about avoiding reality distortion and seeing things as they really are.

In our context here, it’s primarily about avoiding sunk cost fallacy. Jumping from project to project is the winning strategy if you carefully evaluated all the evidence and then decided there’s a better opportunity, ignoring the time, energy, and money you invested in the previous project.

The question I’m now trying to ask myself regularly is: If I hadn’t started this project, would it do it again today?

There’s another aspect worth emphasizing. While the scout mindset is helpful when deciding what project to focus on, a soldier’s mindset seems almost mandatory when it comes to the entrepreneurial journey as a whole.

It takes most entrepreneur many years, and often more than 20 failed experiments before one of their projects starts generating enough revenue on a regular basis to pay for their living expenses.

Unless you have absolute conviction that this whole entrepreneurship thing will eventually work out for you, you’ll probably quit before you hit gold. Any objective analysis will suggest that a regular job is a smarter alternative to the year-long entrepreneurial grind with little to show for it.

So that’s my takeaway after thinking long and hard about the eternal explore vs exploit question: Be a soldier to defend your entrepreneurial journey, but adapt a scout’s mindset to decide what project to work on.

Written on March 7, 2022

PS: If you're interested in following my journey, sign up below: