The Bird-in-Hand Principle: Your Secret Weapon for Starting a Business

Entrepreneurship has become a component of the new American dream. In 2022, 43% of Americans planned to start a business. However, only 1.5% of Americans did the same year... Most people stay a wantrapreneur, spending their time and money on everything else except creating a real business.

"When I was a kid I really looked up to entrepreneurs... But I always thought I didn't share anything in common with these people... I kind of looked up to them the same way I looked up to Michael Jordan", Ben Silbermann said, "I thought that what I should do is I should do business, but I didn't have any idea what doing business was."

Ben Silbermann is now one of those people that people aspire to be after he helped to create Pinterest. What lead to this change? How did he build Pinterest into a success with no business or product experience?

Ben used the Bird-in-Hand Principle when starting Pinterest.

Certainty over potential: The Bird-in-Hand principle

The Bird-in-Hand Principle is a common strategy for many investors. Instead of investing in companies with potential gains, some prefer to invest in companies that pay them a dividend each month. The dividend is their "bird in hand", meaning it's something they have and don't risk losing trying to gain something else.

When it comes to starting a business, Saras D. Sarasvathy adapted this concept in her work on effectuation used to create opportunities and perform actions based on what's available now.

From consultant to startup founder

Failing to become a doctor, Ben started out as a consultant staffed in the IT department. It was the only place they had openings at the time. Sitting in his cubical, he stumbled upon TechCrunch one of the early tech blogs gaining traction on the internet.

Reading about Yelp and many others getting their start he said, "I remember having this feeling that this was the story of my time and I was totally in the wrong place doing the wrong thing."

He was talking to his girlfriend about tech all the time. While beginning to immersing himself around people building products and selling them. Being in an environment where people were so passionate about what they were building was different. Up until this point Ben never thought about starting his own company, surrounded by so many people that thought it was a big deal changed that. He became one the people that planned to start a business each year.

"Even if you don't have a really specific plan of exactly what you're going to do, being close to people that inspire you is a really good first step"

- Ben Silbermann

Ben landed at Google doing customer support because he lacked a computer science background where he was taking data and turning it into product design recommendations.

This experience became very frustrating. He always wanted to build products, but wasn't on the engineering team. He would continue to complain to his girlfriend about his desire to build a product. One night she said he either needed to put up or shut up.

This struck a cord and he quit the job at Google to try to build Tote, connecting consumers with retailers through an app.

A week after this, the economy collapsed...

He couldn't raise any funding, was struggling to get customers, and burning his savings.

Tote wasn't working.

Start with what you have

Understanding your Bird-in-Hand when starting a business. The Bird-in-Hand principle focuses on the resources you have available. It focuses you to stop the infinite search for the right business to launch. It's important that you start by answering three questions:

1. Who are you?

2. What do you know?

3. Who do you know?

The answers will provide you with enough awareness to start building something. It shows you where that ideas connects to your own studies, background, and interest.

At first, you may not have a lot of resources available to you. There may be a handful of people you know or only a few things you know well enough.

You'll never know everything when your starting out, but a good rule of thumb is to have 70% of the information. There's two options to get you there:

1. Acquire the specific knowledge on your own — expand what you know.

2. Find the people that complement your weaknesses — expand who you know.

Starting a business doesn't have be to done by you. It's a collaborative process (in fact most successful businesses always start this way).

Leverage your unique starting point

Tote pivots to catch their Bird-in-Hand. They were failing to gain traction and destine to fail as a business if something didn't change. Ben knew that the iPhone and shopping were going to be big. If he was going to struggle to make it work he wanted it to be on something he loved.

As a kid, he was always a big collector and this was a big part of who he was. His collections were a part of his identity and he knew you could quickly learn something about another person by looking at the things they collect (books, movies, clothing, etc.).

In 2009, with the help of Evan Sharp, they launched the early version of Pinterest.

It was a combination all the resources and knowledge the had available to them at that time. All the sites that existed provided fragmented collections. Pinterest goal was to unified the collection of items all onto a single platform.

The Bird-in-Hand Principle is what means entrepreneurs have in starting a business. It's taking everything that you've previous built up without intention, and allowing you to start in a place that give you an advantages. Your "bird" removes the guesswork of where you should start a business. This type of self-awareness is critical for any entrepreneur.