Leap of Faith

It’s important that we don’t confuse risk with uncertainty


Doubt is not a pleasant position, but certainty is absurd.
— Voltaire


If we already know how to do something, but don’t know if we can or will, that’s a risk.

If we don’t yet know if that thing is even possible, that’s uncertainty.

Investors in early-stage companies often spend a huge amount of time and effort trying to understand the risk they think they are taking. This is sometimes called “due diligence”.

It’s tempting to think that if we just do enough work and ask about all of the things that could possibly go wrong, then we can eliminate all of these risks.

But that never happens. There are always questions that we’re not able to answer. There are always things that are just uncertain.

In this case I think it’s useful to be explicit about the leap of faith.

In other words, articulate exactly what we believe is possible, without evidence.


All investment is speculation.
The only difference is that some people admit it and some don’t.
— Gerald Lobe


If we can describe this uncertainty it allows us to be much more honest about what we know, what we don’t know and the specific things we need to do to close that gap as soon as possible.

Everybody involved in an early-stage venture can use this technique. If you’re a founder seeking investment, don’t wait for others to do this work. Be explicit about the leap you’re asking investors to take. Spell it out. I’ve found it’s a great way to separate those who believe that you can do it and those who are likely to waste a lot of your time while they try to prove it in advance. I suspect the reason very few founders ever do this is because they think that investors want them to pretend they are certain.

Related: How to Pitch

Even after we’ve identified the leap of faith we will sometimes still feel tentative. In that case, another question we can ask is: What are we waiting for? Or put another way: What do we need to know before we would commit (or decline)? Sometimes the answer is: “all of those things are already true”, in which case we’re just procrastinating for no good reason.

Often just framing our uncertainty that way highlights that we’re asking for something that is not going to be clear until much later. Rather than wasting energy on that we can instead think about the smaller things that we can do immediately to start to resolve that uncertainty.

Making sure that everybody understands the leap of faith in advance continues to pay dividends even after the investment is confirmed, because it gives everybody a clear thing to constantly test and track: Do we still believe?

If the answer is yes, then what’s the next thing we need to do to get closer to knowing?

If the answer is no, then it’s time to stop and make different plans!

We mitigate risks by understanding them in advance and thinking about how to avoid them.

We mitigate uncertainty by understanding what we’ll do if we’re wrong and by asking “What is Plan B”?