Definition of Entrepreneurial Judgment

Marc Andreesen’s post about the psychology of entrepreneurial mis-judgment made the rounds awhile ago. I re-read it recently and want to highlight the following graf because of its eminent logic:

In my view, entrepreneurial judgment is the ability to tell the difference between a situation that’s not working but persistence and iteration will ultimately prove it out, versus a situation that’s not working and additional effort is a destructive waste of time and radical change is necessary.

I don’t believe there are any good rules for being able to tell the difference between the two. Which is one of the main reasons starting a company is so hard.

Well put.

(And yes, I know Seth Godin wrote a whole book on this topic.)

One Response to Definition of Entrepreneurial Judgment

  1. Charlie Munger’s original speech at Harvard Law School in 1995 on the psychology of human misjudgment needed a commentary like Andreessen’s to make it intelligible.

    His magnum opus has some sparkling aphoristic gems of insight, but they’re buried in a stream-of-consciousness delivery so non-linear that I found it near impenetrable.

    Reading it was like navigating in unfamiliar waters without compass or charts, and making sense of what I’d read was like decoding the Rosetta Stone with no context.

    Munger’s relentless shilling for Cialdini’s book, Influence, did whet my appetite, paradoxically, for more behavioral boosterism, so I suppose he practices what he preaches when he speaks.

    Yet I was left at the end with the feeling that the whole speech could have been reduced to two points– that we all are victims of marketers practicing the diabolical science of Pavlovian association and Skinnerian operant conditioning– and that human misjudgment is a foible to be exploited by advertisers.

    This was confirmed, at least for me, by his last sentence:

    “…I don’t think it’s good teaching psychology to the masses. In fact, I think it’s terrible.”

    Thanks, Charlie. I love you too.

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