I Accidentally Killed the Tooth Fairy, but Maybe That's OK?

Entrepreneur Office Hours - Issue #280

Photo by Anthony Tran on Unsplash

My 6-year-old daughter lost a tooth this week, which, as you surely know, is a big deal when you're six. She spent the whole day proudly showing it off and excitedly chattering about the tooth fairy's imminent arrival. Of course, that meant I had one very important job to do before going to sleep.

Unfortunately, I was deep into a pile of emails, grading, and content creation until about 2 AM, and by the time I crawled into bed, I'd completely forgotten my tooth fairy duties. When I woke up the next morning and realized what I'd done (or rather, hadn't done), I panicked, and, in a desperate attempt to salvage the situation, I snuck into her room and tried to stealthily swap the tooth for a five-dollar bill.

As you can probably guess, my stealth mission failed spectacularly. She woke up mid-tooth-exchange, rubbed her eyes, and stared right at me — holding her tooth and a five-dollar bill — with a sleepy look of confusion, disappointment, and a slight smirk I'll never quite forget. It was a look that told me I'd basically killed the tooth fairy.

In other words, it was an epic parenting fail.

To her credit, she handled it incredibly well. She wasn't upset, just a bit bemused, almost as if she always had a suspicion that something about the whole tooth fairy operation seemed fishy.

Yes, I feel guilty. But I also feel like I learned a great lesson about my daughter’s ability to handle the world. After all, we grow up believing in certain stories about how the world works: Santa Claus, the tooth fairy, the Easter Bunny — stories we're told because they're comforting, convenient, or traditional. And while these stories can bring joy and excitement, being able to quickly accept that that they’re not real is a sort of superpower.

While I realize I might seem like I’m justifying my own failures as a parent — and, to some extent, I probably am — I’d also argue, as entrepreneurs, we constantly see examples of why giving up our fantasies as quickly as possible is so important.

Entrepreneurs build things based on assumptions: assumptions about markets; assumptions about customers; assumptions about competitors; etcetera. And most of those assumptions turn out not to be true. But rather than crumbling when their beliefs are challenged, successful entrepreneurs respond like my daughter did. They greet the unexpected with curiosity, openness, and even a little excitement. Instead of feeling betrayed when the world doesn't match their expectations, they lean into the opportunity to understand reality a bit better and adapt their plans accordingly.

So, yes, I messed up. I killed the tooth fairy. But maybe my daughter learned something valuable in the process… something I hope every entrepreneur learns sooner rather than later: Not every story you're told is true, and discovering the truth, even when it's uncomfortable, is the first step toward building something meaningful.

-Aaron

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This week’s new articles…

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Office Hours Q&A

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QUESTION:

Hi Aaron,

I enjoyed your Medium article from the other day "The Tricky Thing Venture Capitalists Understand About Startups That Most Entrepreneurs Don’t"

I agree with the message of what you wrote but I'm curious to hear how you've seen hardware startups achieve this approach. In developing our products, we ended up talking to a couple product development firms. It seems their approach, which involves working on one product for months, forces a lot of this "perfect bet" risk into the equation.

We decided to keep the whole process in-house so we can bring users a new iteration on almost a weekly basis. In your experience, are there any common practices that you've seen work really well in letting consumer hardware businesses balance quickly getting user feedback with the costs/delays of hardware iteration?

-Sam

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First of all, I love that you’re thinking this way. It’s somewhat rare to see a hardware founder so focused on iteration and user feedback this early in the process, so major kudos for keeping development in-house and prioritizing learning velocity. That’s not just admirable. It’s strategic.

You’re right: hardware has unique constraints that make “place lots of bets” thinking more complicated than in software. Physical stuff is expensive. Tooling takes time. You can’t ship three different versions of a product in a weekend. And as you’ve experienced, when you hand over the work to external product development firms, they tend to operate with a waterfall mindset — scope it all upfront, build it once, and hope it works. That model is optimized for predictability, not discovery.

Which is exactly the problem.

So the question becomes: how do hardware companies embrace uncertainty the way VCs do, when every bet costs more and takes longer?

Here’s what I’ve seen work well:

1. Break your “product” into smaller bets.
You can’t redesign and manufacture a whole new physical product every week, but you can isolate specific assumptions and test them independently. For example: Will users prefer this button layout? How do they respond to this onboarding flow? What value props resonate most? Not every test needs a new PCB. Some tests don’t even need a working prototype. Just because you’re building hardware doesn’t mean every experiment needs to be hardware.

2. Treat non-product experiences as part of the product.
This is a huge blind spot in hardware. People obsess over the device and ignore everything surrounding it — the messaging, packaging, onboarding materials, support process, etc. All of those are cheaper to iterate on and can deliver massive learning. You might not be able to change the circuit board this week, but you can A/B test how you talk about the product, or how you teach people to use it, or what feature you highlight first.

3. Prototype more scrappily than feels comfortable.
The hardware world tends to over-index on polish because everyone’s afraid of burning credibility. But early users don’t need perfection… they need progress! Paper prototypes, 3D prints, Frankenstein models built from off-the-shelf parts, etc. Simply put, if it gets feedback, it’s useful. Some of the best hardware founders I know constantly remind themselves that they’re not building a product, they’re building a learning system. And sometimes duct tape teaches you more than CNC aluminum.

4. Know when to switch from “maximizing learning” to “maximizing efficiency.”
You’re still early, and it sounds like you’re in full learning mode. That’s the right place to be. But at some point, assuming you get strong signals, you will want to shift into a more traditional, structured development process. The trick is knowing when to make that turn — when the biggest risk is no longer “will anyone want this?” and starts becoming “can we deliver this reliably, affordably, and at scale?” Until then, stay scrappy. Make bets. Learn fast.

Bottom line: yes, hardware is messier. But the mindset still applies. You don’t have to place lots of bets; you just need to place enough to learn quickly and adjust confidently. And from the sound of things, you’re already doing that better than most.

Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer.