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In Startups And Life, You Need Plan A, B, And Z

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Editor’s note: Reid Hoffman is the founder of LinkedIn and a prolific investor. His new book co-authored with Ben Casnocha is The Start-Up Of You, from which this guest post is adapted.

An entrepreneur receives lots of contradictory advice from really smart, experienced people. For example, you’ve probably been told to be both persistent and flexible; to have a clear vision you pursue relentlessly, and yet also to change your vision as the market changes. Simple, right?

This same tension pervades career advice. Some will tell you to think about where you want to be in ten years, work backwards, and construct a long-term career plan for realizing your ambitions. Others tell you that firm plans are like a straitjacket; they will blind you to unexpected breakout opportunities. It’s better, they say, to stay nimble and opportunistic.

Who’s right? Both are not only right, but critical. Entrepreneurs are flexibly persistent. The best entrepreneurs I’ve worked with engage in serious planning and strategy, but they do not set fixed plans. In my new book with Ben Casnocha, The Start-Up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career, we show how any professional can apply entrepreneurial techniques to their career, even if you never plan to found a company.

I was involved in a number of companies that you wouldn’t have recognized at their inception.  Two in particular serve as great examples since they both have had massive impact: Flickr and PayPal.  Flickr started as a multi-player online game, before morphing into one of the most widely used photo hosting and sharing websites. PayPal started as an encryption platform for mobile phones, then became a service to transit money between Palm Pilots, then finally became the leading online payments company. Both persisted at their initial visions in order to learn and grow: Flickr by being a social experience and PayPal being secure with cash.  Nevertheless, despite being hugely resilient and perseverant, both companies radically changed the type of product and how they engaged with the customer.

How can you be flexibly persistent in your startup or in your career? Here’s a framework I use: ABZ Planning. In business and in life, you should have three plans: Plan A, Plan B, and Plan Z.

Plan A is your current plan, your current thesis about how you can win in the marketplace. For Flickr co-founders Caterina Fake and Stewart Butterfield, the original Plan A was Game Neverending, a multi-player online game.  Unlike most games of the time that only enabled play between a few opponents and through a fixed experience, they wanted theirs to have hundreds of users playing concurrently and creating new things in the game forever. To engage users, they built social features like groups, Instant Messaging, and – crucially – a feature that allowed players to share photographs with one another.

My original career Plan A was to pursue academia because I thought it would be the best way to have impact on the world by spreading ideas about what made a good society. As I studied at Oxford, I learned much about how people come together, interact in groups and relate to society. But I also learned that career success in academia too often meant producing specialized writings that only 50 or so people ever read.

Plan B is what you pivot to when you recognize that a new opportunity has more potential than the one you are working on. Sometimes you change to Plan B because A is not working, which is what most think when they hear “Plan B.” But sometimes A is working, yet Plan B appears to have more potential. Regardless of the reason for shifting, the best Plan B’s are different but related to what you are doing now; this way you can apply the lessons you’ve learned to date to the new plan.

At Flickr, unexpectedly, the photo-sharing feature eclipsed the game itself in popularity.  Caterina and Stewart were faced with a choice: Should they stick with their Plan A or put the game (and its twenty thousand avid users) on hold to focus exclusively on the photo-sharing feature? They shifted to Plan B. To be sure, Caterina and Stewart were still following their original idea to build an online social space—they just saw greater potential in photo sharing than gaming.

In my career, my realizations about academia led me to shift to a Plan B and find a career path that had broader impact. My Plan B was to build new software. Success in the software industry also meant “impact”—but on a much broader scale than academia. In some cases, it meant building a product that improved the lives of millions of people every day. To pursue this alternative route, I first focused on building relevant skills and connections by working in the online divisions of Apple and Fujitsu. Second, I connected with people who could cofound a company of my own. Then, when I started my first company, I recruited as many smart advisors and participants as I could in order to learn and adjust quickly. And, in terms of company formulation, since my first company (SocialNet) was unsuccessful, both PayPal and LinkedIn were my own shifts to new Plan Bs.

Keep in mind that you should rarely write down a specific Plan B, but you should always be aware of your parameters of motion as you are executing your Plan A. You should be thinking about the “adjacent possible.” Your transferable skills. Other opportunities on the horizon.

Plan Z has two critical parts. First, identify how to measure when you’re tracking towards a worst-case scenario. Second, it’s the plan that tells you what to do should that happen. Maybe when your credit card debt bloats to a certain amount you cash out your 401k or get a job at Starbucks. The certainty of a Plan Z backstop is what allows you to take on uncertainty and risk in your career. When I started my first company, Socialnet, my parents offered me a room in their house in the event things didn’t work out. Living there and finding another job was my Plan Z. It gave me the confidence to throw myself into the business knowing that if it all went to hell, I wouldn’t end up on the street. You want to be able to survive failure in order to play again.

TechCrunch readers see, on a daily basis, the adaptable paths of a number of successful companies. Yet few apply this adaptive playbook to their own lives. Frameworks like ABZ planning can help you take control of your career. It’s something we should all remember, whether we’re starting startups, working at a startup, or working at larger companies: the ultimate start-up is you.