More-Experienced Entrepreneurs Have Bigger Deadline Problems

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Professor Andy Wu and doctoral candidate Aticus Peterson of Harvard Business School tracked 314 entrepreneurs who launched multiple technology hardware products on the crowdfunding platform Kickstarter from September 2010 to June 2019. The more projects the founders completed, the wider the margins by which they overshot their go-to-market dates. The conclusion: More-experienced entrepreneurs have bigger deadline problems.

Professor Wu, defend your research.

Wu: Entrepreneurs are notorious for failing to hit their own delivery dates, and those in our sample were no exception. Fewer than one-quarter of their projects were completed on time. Although experience should in theory help people anticipate how long it will take to bring something to fruition, set more-realistic deadlines, and execute more quickly, in practice just the opposite happened. And we’re not talking about minor setbacks. We saw average delays of an additional six weeks for each subsequent project undertaken by these entrepreneurs.

HBR: That’s so strange! Why weren’t they learning from experience?

To make accurate forecasts, you have to correctly anticipate the complexity of a project: the number of interdependent tasks or components. As entrepreneurs execute more projects, they do get better at that. But they also discover how to improve their products, adding complexity that they didn’t expect—and that’s the effect that tends to dominate. Both types of learning are important. But they intersect in a way that causes increasingly experienced founders to make increasingly unrealistic predictions and blow through their deadlines.

Why don’t they build in a buffer?

They do. All the entrepreneurs we interviewed tried to give themselves more time than they thought they’d need. And we found that they gave themselves about eight additional days, on average, for every successive project. But that’s not enough. One new feature can generate a cascade of changes in components, requiring much more work—and time. At the extreme, complexity increases geometrically. When setting their deadlines, our study subjects seemed to extrapolate linearly. They failed to see how many more things could go wrong from just one small change.

Here’s an example. One entrepreneur built a computerized brick that lets customers control motors and lights in their Lego creations. After launching his initial product, he learned it would be useful to add sensors so that, say, a remote-controlled car could detect darkness and turn on its lights. That’s an incremental change—otherwise, it’s the same product—and he gave himself more time to deliver it than he’d needed for the original version. Still, he underestimated how much work that one new feature would cause. He needed more-sophisticated tooling, and the original manufacturer wasn’t up to the task. He went through seven others before finding a company that could do it, and of course he missed his delivery date.

Why focus on technology hardware projects?

Those products—things like wearable devices, 3D printers, educational gadgets, and robots—are among the most complicated offerings an entrepreneur can bring to market. And we looked only at people completing multiple products of the same type so that past experience would be relevant.

We collected data from the comments and updates on the entrepreneurs’ Kickstarter pages, where they discuss problems that arise. We found that with each successive project, unexpected issues increased by an average of 21%.

Entrepreneurs are famously overconfident, and maybe initial success heightens that feeling. Could your findings simply reflect that?

Overconfidence is definitely part of it, but complexity is a difficult concept for anyone to fully grasp and account for. Yes, these entrepreneurs might be more confident than most about their ability to execute in the future. But it’s more about their inability to comprehend how hard the future will be. That’s a challenge we all face.

If they’ve missed deadlines in the past and nothing terrible happened, maybe they just don’t sweat it as much going forward?

That’s not likely. Research has demonstrated that a past delay can hurt your ability to raise funds in the future. And our interviews showed that founders get pretty upset with themselves when they miss their deadlines. Even worse, angry customers go after them on social media; they hate that.

These entrepreneurs turned to crowdfunding to finance their work. Do you think you’d see the same tendencies in founders who get their money from traditional investors? Maybe you studied a subset that’s a little less savvy or skilled?

Those who rely on Kickstarter are almost certainly early-stage entrepreneurs, although some of them raise venture capital as well. Indeed, other sources of financing was one of the factors we controlled for. So the effects we found are probably strongest for founders who are relatively early in their careers. There’s reason to believe that when you’re extremely experienced, you can overcome some of the forecasting challenges.

That said, we’re currently studying whether this is a problem for VC-backed entrepreneurs too and how investors might solve it. When those projects fall behind, the VCs often have to bail them out with bridge financing. We’re trying to figure out how VCs can avoid that outcome by making better timeline predictions themselves.

Did the amount of money raised have any bearing on the timeliness of product releases?

It did. We actually found that when the entrepreneurs exceeded their target amount the delays got worse, because it meant that more people than expected had ordered the product. When that happens, it often requires a switch in manufacturing and distribution. If you plan for 100 customers, you need a certain kind of supply chain. If suddenly 1,000 people want your product, that adds a lot of shock to the system. But in calculating our findings, we did control for the total amount of money raised.

We also controlled for fixed entrepreneurial traits—such as natural talent, intelligence, and work ethic—and for whether someone had previously embarked on an unsuccessful fundraising campaign. If you were traumatized by a past failure and worried you might not be able to raise enough money to complete your next project, you might set a highly aggressive timeline to make it seem more attractive to potential customers. We didn’t find any evidence of that, though.

Do you think you’d find the same pattern of increasingly wide deadline misses if you looked at more-experienced innovators working within big companies?

We’d expect the same effect in a large company that was launching a series of innovations in a new product category. In fact, we’d expect the delays to be worse because there’s more organizational complexity, so more issues and outcomes could be incorrectly forecast. It would be different for a well-established company innovating with a product it has already launched many versions of, however.

Do you have any advice for founders hoping to steer clear of this pitfall?

The first thing I’d advise is to build awareness of the nature of complexity. Many unknown unknowns will arise. You need to recognize that any small tweak to your product could increase complexity dramatically and rapidly. Think geometrically, not linearly.

The second thing is to try to better anticipate the specific problems you might face. You can do this by experimenting with new components in low-stakes settings—using incremental stress testing, small-batch production, and iterative processes like agile—to identify potential issues early on, before you establish your timeline.

Remember, time is money, and these delays are not trivial. They can cause companies to go under. So try to plan for them as best you can.

A version of this article appeared in the March–April 2022 issue of Harvard Business Review.

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