Startup Brainframe

Startup Brainframe Episode 14 - Why Startups Are A Real Life Lab Experiment

Neoteq Season 1 Episode 14

Today's episode covers:

- why neurofounders are simultaneously the "scientist" and the "subject"

- how the human brain is wired to predict scenarios and how it adapts when the predictions are wrong

- 4 examples of successful entrepreneurs who have applied this approach in their companies

- 4 actionable steps for neurofounders + 1 CTA

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Welcome to Startup Brainframe, where we translate brain science for startups who want to build the future. Today's deep dive is called Why Startups Are a Real Life Lab Experiment. Yeah, it's an interesting frame. Most people, you know, they just see startups as businesses, money growth, exit strategy

but if you're actually in it building one, it feels well, it feels a lot more like an experiment. You're testing human behavior, how people make choices when things are uncertain, how systems actually work. Or don't. So suggesting it's like a lab experiment. . That gives us a different way to look at the whole messy process.

Maybe. Exactly. A more insightful way, I think. Okay. Let's unpack that a bit. When we say lab, what are we really talking about here? Not necessarily white coats and test tubes, I assume. No, not literally. But think about the core idea of a lab. It's basically a place, maybe even just a conceptual space where you test hypotheses, you try something out, watch closely what happens, observe the results.

Yeah. And then you refine your understanding based on what you saw, . Okay. I can see the startup parallel starting to form. Mm-hmm. You definitely have an idea, a hypothesis about what the market wants. Totally. That's your business model, your product concept. That's the core hypothesis and the environment.

It's inherently uncertain. You don't know if it will work. Definitely uncertain. Often chaotic uhhuh. So you take action, you launch a feature, you run an ad campaign, you talk to customers, and then you get feedback. Real time data. And crucially underlying all of this are. Human brains reacting your customer's brains, your team's brains, and importantly, your brain reacting to risk, to novelty, to failure, to learning. So it's not just a business experiment, it's a behavioral one too. That's the key point.

It's a real life behavioral lab. Hmm. So you mentioned the founder's brain being involved. How does that, uh. Neural entrepreneurial angle change things. It's not just about testing the product anymore. Right. This is where it gets really interesting. You're not just running experiments on the external world, the market, the users.

Mm-hmm. You're simultaneously running a massive experiment on yourself. On yourself. How so? Well, think about it. How do you perceive reality when everything's on the line? How do you handle that intense pressure, that stress? What are your hidden biases that pop up when you have to make a quick decision?

Okay. Can you regulate your own emotions when things go sideways? Can you maintain clear thinking? Every single high stakes decision is, in a way, a test of your own internal wiring. So the variables aren't just customer clicks and conversion rates. No. The key variables in this lab absolutely include customer behavior and team dynamic.

Sure. But maybe the most critical variable is the founder's own ability to function effectively under extreme pressure. Wow. So the state of the startup, mm-hmm. It kind of mirrors the state of the, the founder's mind in a very real, tangible way. Yes. You can almost say your startup is your brain turned outward, .

That's quite a thought. So what does neuroscience tell us about this? This constant cycle of. Trying things, seeing what happens, adjusting.  A really relevant concept here is the predictive brain theory. Basically, our brains aren't passive receivers of information. They're constantly, actively predicting what's gonna happen next based on past experiences and current data.

Like little forecasting machines. Exactly. So every time a startup does something, launches a feature, changes pricing, even pivots the whole model. It triggers this predictive process. In your brain, your team's brains, your customer's brains, everyone's predicting the outcome. Okay? But predictions are often wrong, especially in startups.

Yeah. What happens then in the brain, that's where something called prediction, error correction, kicks in. When reality doesn't match the prediction, , the brain doesn't just ignore it. It flags it as an error, and that error signal is incredibly important. Because it forces learning precisely.

It drives adaptation. The brain updates its internal model of how the world works based on that error. That's like the fundamental mechanism of learning in neuroplasticity and dopamine fits in here somewhere, right? You hear about the startup high. Absolutely. Dopamine, the motivation molecule. What's fascinating is that dopamine release isn't highest when a reward is certain.

It peaks when the outcome is uncertain, but there's a clear vision or possibility of reward. Ah, that sounds exactly like the early stages of a startup. Huge uncertainty, but a compelling vision. I. Bingo. That constant tension between uncertainty and vision fuels that dopamine system. It drives persistence, that willingness to keep going despite setbacks, it can feel almost addictive.

That process of striving and building under uncertainty. So our brains are kind of. Naturally wired for this experimental loop seeking novelty testing, maybe failing learning. Yeah, you could say that we're inherently curious, exploratory creatures. The brain thrives on figuring things out. Uhhuh, but, and this is a big, but there's a potential downside.

If you just ride that dopamine wave without any structure, without a discipline process around your experimentation, it can easily lead to chaos. Chasing every shiny object. Burning out. Right. You need some method to the map. Exactly, and that's where neuro entrepreneurship comes in. Again, it's about consciously channeling that.

Powerful innate neurobiological drive to explore and learn through intentional design and disciplined experimentation, not just letting it run wild so the founder isn't just the scientist designing the experiment. They're also the subject in the experiment simultaneously. Yes. That's a crucial point.

Yeah. You are both the observer and the observed. Every decision you make under pressure, every reaction to bad news, every interaction with your team, it's all part of the experiment. It becomes a test of your own, like your internal operating system. Absolutely. Can you act despite fear? Can you put your ego aside?

When presented with contradictory data? Can you spot your own biases and blind spots before they derail things? It's testing your habits, your core beliefs, your mindset, even your nervous system's, response to stress. That sounds intense, like a real crucible. It is. And honestly, this is often the point where founders either experience profound personal growth.

Or they break. So it's not just about finding product market fit out there. It's also about developing what you might call brain founder fit , cultivating an anti-fragile mind, staying focused, adapting that internal work is just as critical as building the external product that really reframes the challenge.

Can we look at some real world examples, founders who maybe embodied this startup as lab idea. Consciously or not? Definitely. Let's take Sarah Blakely, the founder of Spanx. Her origin story is classic experimentation, using herself, her own body as the initial prototype and test subject, right. Testing the product on herself.

Yeah, but it goes deeper into the mindset. She talks about how her father used to ask her and her brother at dinner, what did you fail at this week? And they'd actually celebrate the attempts. Wow. Celebrating failure. That's counterintuitive, but incredibly powerful from a neuroscience perspective. It trained, her brain literally rewired it to see failure, not as something to fear, but as necessary data collection.

She practiced cognitive reframing, redefining rejection as just learning. So her experiment was as much on her own mindset as on the undergarments. Exactly. Her key insight, maybe implicitly, was that building the company. Required building her own resilience and founder identity alongside it. Okay. That's a great example.

Who else? How about Tony Hsieh at Zappos, he treated company culture almost explicitly as a large scale psychological experiment. In what way? He wasn't just optimizing, say, call center scripts. He was actively experimenting with how to engineer happiness. Purpose and genuine engagement within the company.

Trying different structures, different incentives, like holacracy. Wasn't that one of their experiments? Yeah. Holacracy was a huge experiment in distributed cognition and organizational neuroscience, trying to see if a non-hierarchical structure could work better. His whole book Delivering Happiness is basically a case study and behavioral design for meaning at work.

 So he saw the company itself as a kind of. Psychological playground. Pretty much he understood that the internal states of employees, their emotions, their sense of connection were critical variables affecting the overall outcome. Fascinating. Okay. One more. Maybe someone who faced a lot of initial resistance.

Melanie Perkins, the co-founder of Canva, is a great case study there. She was famously rejected by what, over a hundred VCs initially. Yeah, I've heard that story. That's brutal. It is, but instead of giving up, she seemed to treat each rejection each No. As a data point. Each pitch was an experiment testing her, framing, her storytelling, her own emotional regulation under fire.

So she was iterating on her pitch, not just the product, absolutely refining how she communicated the vision based on the objection she heard and with the actual product. Canva famously started with very simple MVPs. Testing with small user groups, gathering behavioral feedback, and then iterating relentlessly.

It sounds like she built her confidence and clarity incrementally right alongside the product through that constant testing. That's a perfect way to put it. Consistent testing under pressure built both the company and her capacity as a leader. I. These examples really drive home the point, and it seems like dealing with failure or rejection is a common thread.

It really is. Which brings us maybe to a bonus example, kind of the classic archetype, Thomas Edison. Ah, the light bulb. Thousands of attempts. Right, exactly. And his famous quote, when asked about all those failures. I have not failed. I've just found 10,000 ways that won't work. A masterclass in reframing totally from a neuro entrepreneurship view, it's pure cognitive reframing.

He detached his ego, his emotions from the outcome of any single experiment. Failure wasn't defeat, it was just information. Neutral data. He normalized it as part of the process. Yes, he conditioned his brain demonstrating neuroplasticity in action to treat setbacks as essential feedback, allowing him to maintain that incredible persistence.

The key insight was making failure feel neutral, not negative. Okay. These stories are inspiring, but also practical. How can listeners translate this into action in their own startups? Let's pull out some concrete tips. First, drawing from Sarah Blakely actively train your brain to redefine failure like her dad's dinner question.

Exactly. So try this. End of each week, jot down maybe three failures or things that didn't pan out as expected, but don't just list them. Reflect, what did I learn? What insight did I gain? Frame them as learning moments you're actually proud of. Okay? Make failure reflection a weekly habit. Got it. What's next?

Inspired by Tony Shea. Design your culture like a behavioral scientist. Don't just let it happen. Be intentional. Think about the building blocks. Neuroscience shows are important, psychological safety, autonomy meaning, and then run small experiments. Try this. Run a quick monthly culture pulse check.

Ask your team simple questions. Where did you feel most energized this month? Where drained your energy? Use that feedback to tweak things. So actively iterate on the culture based on team feedback. Nice. What about handling rejection like Melanie Perkins? The actionable lesson there is turn every no into a refinement loop.

Don't internalize it as just rejection. Okay. But how practically keep a refinement journal when you get a no from a vc. A customer, whoever log it, write down why you think you got the no, if you know. And then crucially, what specific change or refinement you'll make next time based on that signal that turns rejection into productive analysis.

Yeah, I like that. And finally, from Edison, detach emotion from experimentation fall in love with the process of learning, not just the idea of immediate perfection or success. Easier said than done sometimes, for sure. So try this. For your next big product decision or feature launch, don't just go all in on one big bet, design and run, say three smaller, faster experiments.

First, focus on documenting the learnings from each, not just whether they succeeded or failed in the traditional sense. Build that muscle of process driven learning, right? Value the data from the process itself. These are really concrete, actionable tips. So yeah, the call to action for everyone listening is basically put on your lab coat, metaphorically speaking.

Look hard at your startups data, the wins, the losses, the customer feedback. What conclusions can you draw? Where are the strengths, the weaknesses, and most importantly, what new hypotheses can you form and test next in your own real life lab experiment? A fantastic way to wrap it up. Treat your startup as the ongoing experiment it truly is.

Thanks for taking the time to tune in on today's episode. See you the next one.