How to Trust Your Gut and Make Better Business Decisions

How to Trust Your Gut and Make Better Business Decisions: A Guide for Startup Founders

Key takeaways:

    • Relying on your gut can have both positive and negative impacts on business decisions, depending on the situation and the outcome.
    • The best approach is to balance your intuition with data and seek feedback from others, so that you can make better decisions that will help you grow your startup.

As a startup founder, you have to make many decisions every day. Some are easy, while some are hard (downright scary). Some are data driven and some of them are based on your gut feelings. They question is, how do you know when to trust your intuition (gut) and when to rely on facts? And what are the consequences of choosing one over the other?

In this article, I will share some real examples of how relying on your gut can have an impact on business decisions. I will also provide some pros and cons of both approaches, and give you some tips on how to balance them.

Read: How the Butterfly Effect Can Help You Make Better Business Decisions

One of the most famous examples of a successful gut decision is the story of Airbnb. The founders of Airbnb were struggling to get traction for their idea of renting out air mattresses in people’s homes. They decided to go to the 2008 Democratic National Convention in Denver, where they knew there would be a shortage of hotel rooms. They took professional photos of their hosts’ homes and created a website called They managed to get 800 bookings and generate $30,000 in revenue. This validated their idea and gave them the confidence to pursue it further.

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Another example of a gut decision that paid off is the story of Netflix. The founder of Netflix, Reed Hastings, was inspired to create the company after he was charged a $40 late fee for returning a video rental. He thought there must be a better way to rent movies, and he came up with the idea of a subscription service that would allow customers to keep DVDs as long as they wanted without any late fees. He tested his idea by mailing himself a CD and seeing if it would arrive intact. It did, and he launched Netflix in 1997.

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However, not all gut decisions are positive. Sometimes, they can lead to costly mistakes or missed opportunities. For example, the founder of Yahoo, Jerry Yang, rejected a $44.6 billion acquisition offer from Microsoft in 2008. He believed that Yahoo was worth more than that, and he wanted to keep his independence. However, he was wrong, and Yahoo’s value declined over the years. In 2017, Yahoo was sold to Verizon for $4.48 billion, a fraction of what Microsoft had offered.

Another example of a bad gut decision is the story of Kodak. The company invented the first digital camera in 1975, but they decided not to pursue it because they feared it would cannibalize their film business. They ignored the potential of digital photography and focused on their core product. However, they failed to adapt to the changing market and consumer preferences. They lost their market share to competitors who embraced digital technology, and they filed for bankruptcy in 2012.

Read: How Occam’s Razor Can Help You Make Better Business Decisions

So, what can we learn from these examples? Here are some pros and cons of relying on your gut:


  • It can help you discover new opportunities or solutions that data may not reveal.
  • It can give you a competitive edge or a first-mover advantage in a fast-changing or uncertain environment.
  • It can motivate you and your team to pursue your vision with passion and conviction.


  • It can be influenced by biases, emotions, or assumptions that may not reflect reality.
  • It can lead you to overlook important facts or risks that may affect your outcome.
  • It can make you overconfident or stubborn and prevent you from learning from feedback or mistakes.

Therefore, the best approach is not to choose one over the other, but to balance them. Here are some tips on how to do that:

  • Use data to validate your gut. Before you make a big decision based on your intuition, test it with data. Conduct experiments, surveys, interviews, or analysis to see if your hypothesis is supported by evidence.
  • Use your gut to challenge data. Data is not always accurate or complete. Sometimes, it may be outdated, biased, or misleading. Use your intuition to question the data and look for alternative explanations or perspectives.
  • Seek diverse opinions. Don’t rely on your own gut alone. Seek input from others who have different backgrounds, experiences, or expertise. Listen to their feedback and consider their points of view.
  • Be flexible and adaptable. Don’t stick to your gut decision no matter what. Be willing to change your mind or course of action if new information or circumstances arise. Learn from your results and adjust accordingly.

In conclusion, relying on your gut can have an impact on business decisions. Sometimes, it can lead to success; sometimes, it can lead to failure. The key is to balance your intuition with data and seek feedback from others. By doing so, you can make better decisions that will help you grow your startup.

I hope you enjoyed this article and found it useful. If you did, please share it with your friends and colleagues who might benefit from it as well. Thank you for reading! 😊