Don't worry about the words. I think what these apparently conflicting quotes are about is optimism management. You want to be hopeful that you can one day produce something great, but assume what you have so far is crap. Or if you want a cheerier version, will seem like crap later compared to the marvelous stuff you'll make.
Incidentally, this applies to many types of work, not just startups.
I agree with you on this when thinking about your startup/product as a whole, however this isn't the problem I'm so interested in.
My question is more about how to identify the appropriate drivers for making specific decisions when there are too many unknown variables in play to come up with a conclusion through logical analysis.
Sorry, I don't know how to identify the appropriate drivers for making specific decisions when there are too many unknown variables in play to come up with a conclusion through logical analysis.
Intuition is one tool to use when the complexity of a situation overwhelms your logical faculties.
Intuition isn't a baseless, emotional thing. Proper intuition is your mind giving you hints based on the patterns of past experience. It's knee-jerk wisdom.
If your mind isn't giving you any hints, you probably need more experience. There are many stories of mathematicians and theoretical physicists that steep themselves in theorems and test results and then, during a break, a eureka moment happens and they cross the inductive gap. But it couldn't have happened without the massive amount of mental preparation.
Another example is what Go players do: they don't just guess at the right move, they have a feeling about the right move based on vast experience of many patterns. Then they back up their intuition with reading (for the non-Go realm, research and evidence).
I guess with startups, the thing to do is just keep at it, try to make the right decisions and reflect on their effectiveness as you go along. Eventually your intuition and judgment will start to become more reliable.
I realize you asked about instinct, not intuition, but they're related. Instinct I think is more reactive and less reflective than intuition. You're probably looking to improve the latter.
Incidentally, this applies to many types of work, not just startups.