Transcript for:
Breakthrough Startup Ideas: Inflections, Insights, and Founder Future Fit

you found that there's basically three elements of most breakthrough startup ideas the three are inflections insights and then founder future fit business is never a fair fight what inflections let the founder do is wage asymmetric Warfare on the present you reference this term that you use occasionally the earn secret the way inventions happen is people get their hands dirty being awake to the possibility that secrets are there if you're living in the future and you notice what's missing your intuition about what to build is far more likely to be right this connects with that stat that you shared that 80% of your biggest returning Investments came from a pivot so startup never beats a big company by executing better the way startups win is because it proposes a radically different future disorients the incumbent and chaotically moves people to that different future the rock is the inflection the slingshot is the Insight that David shoots at Goliath we're looking to create the conditions where we're going to get to play an unfair game by unfair rules that favor us [Music] today my guest is Mike Maples Jr Mike is a legendary early stage startup investor and with his firm Floodgate which was found out over 20 years ago was one of the earliest pioneers of seed stage investing as a category he's made early bets on transformative companies like Twitter Lyft twitch OCTA rappy and applied intuition and has been on the Forbes Midas list eight times more recently he's been spending a lot of his time researching where great startup ideas come from and what separates the startup and Founders that break through and change the world from those that don't go anywhere after spending years reviewing his notes and decks from the thousands of startups that he's met with over the past two decades he's uncovered three ways that breakthrough Founders think differently and act differently in our conversation Mike shares what he's uncovered along with the pitfalls that he's seen many Founders and startups fall into how to apply these pattern breaking principles to large companies and so much more I've never seen anything like this sort of research done before on early stage investing and startups and if you're a Founder a product Builder or an investor this will change the way that you think about building successful products also as an added bonus Mike has offered listeners of this podcast a very cool offer if you pre-order the book at pattern breakers.com Lenny you will receive a second signed copy of the book for free there are a limited number of copies available of this offer so if you're interested I'd encourage you to place your order ASAP the book is coming out July 9th to take advantage of this offer go to pattern breakers.com Lenny with that I bring you Mike Maples Jr Mike thank you so much for being here and welcome to the podcast Lenny thanks for having me is absolutely an honor it's my honor what we're going to be talking about in our conversation today is how to come up with a startup idea and how to take the first few steps to make that idea real you have a book coming out that is exactly this helping people understand how to do this it's called pattern Breakers why so why some startups change the future let me just ask kind of a broad question you're very busy very successful investor why did you decide to write a book yeah and like a lot of things in life it it was kind of an outgrowth of an accident and uh outgrowth of being down a certain Rabbit Hole so you know about about 10 years ago twitch was acquired by Amazon for 970 million and we made something like 85 times our money and normally you'd think that's a really good thing it was a good thing but I had forgotten that I was even a shareholder and so uh so I had to go to my LPS and I had to explain to them hey I'm sorry I don't have this in my financial statements uh you know but do you want me to restate them and they they were all like nope we're good just send us the money and some of them even sent me like bottles of champagne and stuff and the good kind then I started to kind of feel a little bit unsettled because so how was I share Aller on Twitch I invested in a company called Justin TV that had morphed into two companies social Cam and twitch and then social cam got bought and so I just thought that was the company so then I looked at at I'd been investing for about 10 years and I noticed that like 80% of my exit profits had come from pivots and and I also noticed that like all the ones that had seen seemed to do well didn't necessarily follow the best practices that everybody talked about I did I didn't see the Twitter guys doing the business model canvas for example and I didn't see the Justin TV team even as they morphed into a twitch being who I would hold up as like the most functioning management team I ever saw right A lot of it was pretty crazy and wild and random and and a lot at the same time I was helping Founders shut down their companies and they seemed to do all the right things they done the business mod canvas they' done customer development they'd done all the things you're supposed to do hired well they would have been a Harvard Business School case study except for the fact that they failed and so the Genesis of this project was really like okay should I just retire before I get exposed is this just all random am I just lucky or is there something else worth understanding and as a as I started to develop conviction about what those things were I started to talk to people about it a lot of people said oh you should write a book Founders ought to see this it'd be really valuable for for their thought process and coming up with their startup ideas this episode is brought to you by interpret interpret unifies all of your customer interactions from gong calls to zenes tickets to Twitter threads to App Store reviews and makes it available for your product team it's used by Leading product orgs like canva notion Loom linear and descript to accurately integrate the voice of the customer into your product development process helping you build best-in-class products what makes interprets special is its ability to build customer specific adaptive AI models that provide the most granular and accurate categorization of all your customer feedback and also Connect customer feedback to revenue impact to help product leaders confidently prioritize things that will actually move the needle for your business if you want a custom model built for your organization so that you can automate your feedback loops and prioritize your road map with confidence get in touch with the team at interpret. Lenny that's n t r p t.com Lenny this episode is brought to you by Anvil their document SDK helps product teams build and launch software for documents fast companies like ca and vouch Insurance use Anvil to accelerate the development of their document workflows getting to Market fast is a top priority for product teams and the last thing that you or your developers want is to build document workflows from scratch it's timec consuming expensive and distracts from core work you could stitch together multiple tools and manage those Integrations or you can use an all-in-one document SDK most product managers will tell you paperwork sucks Anvil's document SDK helps teams get to Market fast incorporate your brand style and give you back time to focus on your company's core differentiated features for your users paperwork often starts with an AI powered web form styled and embedded in your application from there you can route data to your backend systems and to the correct fields in your PDFs via API complete the process with a white labeled e signature the best part about Anvil is the level of customization their SDK provides non-technical folks love Anvil's drag and drop Builder and developers love their flexible apis and easy to understand documentation build document software fast with Anvil that's use Anvil docomo that's use nv.com Lenny amazing I'm even more excited to get into the mut of this I was already excited before we get into that just could you share a bit about the work that you did to uncover these insights I know you have hundreds of decks of all these early stage companies you've looked at what is the work that went into this yeah so there's um there's a movie that came out a few years ago called train spotting right and there's these guys these dorky old British guys in anct coats who chart the comings and goings of trains like it's the most interesting thing in the world they put it in their journals and everything I'm that way when it comes to startups so I have a database of any startup where you would have made more than a 100 act on your first check and what I want to do is I want to get a time capsule for those startups I want to understand what did it look like not after it succeeded but what did it look like at precisely the time you would have needed to decide whether it was an interesting opportunity so I have the original pitch deck for what was at the time called airbed and breakfast which I foolishly passed on and um you seem to have made a good career decision en joining a little later but yeah you know I have the I have the pitch deck for Pinterest I have the pitch deck for uh all all of these that we either either passed on or said yes to and the the reason I want to do that is it's easy to misremember how things really happened uh and what I find is even the founders themselves we we have a tendency to remember knowing more than we really did at the time and so you know I really wanted to do the best job I could of understanding exactly what it was like what were the what was the origin story of this idea how did they come up with it if they pivoted what caused them to Pivot you know when did they first start to encounter success what was the reason for that all those things and and I had to be really careful in the questions that I asked because you like for example you don't ask why were you successful because then they'll they'll offer their reasons they thought they were successful what what what you want to do is you want to say okay I notice here's the seed pitch deck and you called the product X but now the product's called y when did you make that change why did that happen and so you're trying to do the very best you can of asking a very non-judgmental set of questions that are going to give you a non-judgmental set of answers so that you can kind of be like a detective and get kind of get to the root cause of why these things took off incredible and I think what's also important is you have access to more data and more unique data than most other people because you invest so early stage yeah yeah I think the other thing is I just have a pretty sympatico relationship with Founders usually and so I can kind of push for the real and they're not you know I'm like look I'm not going to I'm I won't share anything you don't want me to I'm just trying to understand and so so you know you when you have kind of these informal relationships that's the other thing I learned is you try not to show up in a conference room interviewing them like a normal interview you try to you try to glean these facts over time with informal discussions and you know in in the midst of talking about other things as well and so so I think that that that was part of what was really valuable about the exercise was the the sort of the opportunity to get the unvarnished wild story uh of what really happened amazing okay so let's get into it your book's basically broken up in kind of two parts how to come up with an idea and then the actions you need to get right to move forward an idea and you have a really cool way of framing how to do this and then we'll get get into it but maybe frame the these two parts real quick yeah so I'll give it my best shot I mean the the main thing is that business is never a fair fight so the incumbent start out with an advantage and the default is they will maintain their advantage and so the startup has to decide that it wants to fight unfair and so how does a startup fight unfair it has to harness a different set of powers than are obvious to most people right so so for example better doesn't matter when you're a startup because better is an extension of the present better is when you think the future future will resemble the present but only be slightly different the way startups win is by being radically different a startup wins by Avo avoiding the comparison trap entirely so like when when Lyft launched ride sharing and then Uber closely followed right with uberX nobody after re riding a ride share said oh how's that different from taxis right it was just self-evident how different it was and and so like that's what what we mean by forcing a choice and not a comparison so the the startup capitalist it turns out is a different type of capitalist right a corporate capitalist makes money by persistently compounding makes money by extending their advantage makes money by having a moe makes money by um you know doing things well over and over again in a compounding way startup has none of those things there's nothing to compound and so the way a startup wins is they just change the subject they they deny the premise of the rules and propose something completely different and that was the the original notion behind pattern breaking was you want to have an idea that just radically breaks the pattern that can't be compared to anything that's come before and that's when the startup has a chance to play offense so coming back to the two parts are coming up with the idea and the actions you got to take so let's dive into coming up with an idea and this is where I want to spend most of the time because I think this is where most people get it wrong or everything starts with the idea so I think there's a lot of meat here and what I love about your book is you have a very succinct limited number of things you've uncovered that are elements uh across successful companies pattern breaking companies So within the idea bucket you found that there's basically three elements of most breakthrough startup ideas can you share the three and then let's talk about each one yeah the three are inflections insights and then uh what I call founder future fit or another way I phrase it is is this from the future but those are those are the main three things that I've observed uh tend to suggest breakthrough potential and here's an important thing you'll notice I didn't say the implementation right so one of the things that I learned is that if you have the right insight and we'll get to some of this you have a first mover Advantage into the future and so a lot of times your first implementation won't be right but if your inside is is correct you can navigate the implementation to the right implementation to get product Market fit and so but what what we need to understand is there need to be these underlying forces underneath the idea to give it the power to escape the gravitational pull of the present right that's what we want we want a set of powers that we could observe that make it worth pursuing and make it worth navigating the product to the ultimate place so let's talk about the first Power you call it inflections what an inflection why does it matter what does an inflection look like an inflection is an external event that creates the potential for radical change in how people think feel and act inflections happen external to any startup or any company for that matter so we brought up uh lift a little bit ago so maybe we'll use them as an example so the inflection that enabled lift was the iPhone 4S shipped with a GPS locator chip and one of the things that that illustrates is for example Mo's law is not an inflection you know an improvement curve is not an inflection an inflection I'm a little pnic about it's a turning point and so you know in math it's a turning point on a curve where the slope changes but in in in Tech startups it's a point in time where something new gets introduced that creates new empowerment for the first time possible and so you know people talk about timing and and why now inflections for me were the unlock you know you could have you could have had the idea for ride sharing before the iPhone 4S but it wouldn't have mattered because the Riders and the drivers wouldn't have been able to locate each other well enough if you'd waited too long after the iPhone 4S it would have been obvious and so there was this window of time this magical moment when uh a new type of empowerment was possible for the first time ever and the companies that the founders who understood that were in a position to offer that kind of empowerment in the form of a radical product that changed the future to make it even more real for people what are some other examples of inflections either in the past in the present another example would be the cameras getting better on the smartphones which enabled Instagram so Instagram uh was at the convergence of a few inflections uh first of all there were smartphone adoptions so there were just more of them and so they crossed like 10 million smartphones but then you had the the cameras getting a lot better you had more of them connected on Wi-Fi you had the networks having better upload speed uh for smartphone so all those factors converged and made it possible for Instagram to offer a product that was good enough to take most of your photos with you know you didn't start to think oh I need a digital camera separate from my smartphone now I can just use my smartphone everywhere I go uh but you know Instagram could have come out in uh 20 08 it probably wouldn't have worked it probably or it wouldn't have worked to the extent that it did you know it's its window of timing was just right what are some other examples you know the the locator chips and the smartphones powered other companies as well powered door Dash instacart they they had different insights which we'll get to right but they there were there were lots of different ways to harness that power one thing I love about inflections um and this this kind of goes really old school is just because you have a power doesn't mean you know how to use it right so like um the wheel was mounted horizontally for like 500 years before somebody mounted it vertically so originally people used the wheel to make pots and that was a good Innovation because it accelerated making pots but then somebody decides to mount it vertically and now they're now you're propelling wagons and you know it just changed Transportation entirely and so most people don't realize that the thing that's underneath us or the thing that's in our hands or the thing that's in our pocket might have a power that when unleash could change the future and and it's one of the very special things about Founders that are great is they recognize they notice things that we don't know all of us tend to just follow the patterns we've always followed most of us tend to assume that tomorrow be similar to yesterday but sometimes the founder will notice uh an in inflection and and I find that kind of inspiring because inflections are all around us all the time but most of us don't just don't bother to look you know most of us are so busy going about our daytoday that we don't notice the emergence of a new empowering thing right under our nose or right in our pockets uh but some Founders do it makes me think about chaty BT when it came out it was sitting on top of an existing model and it just gave people a new interface to use it and all send everyone crazy oh my God that's the future but it was already there it just you couldn't chat with it the way that people wanted to chat yeah you know that like um uh Michael sailor once I was talking to him and he said you know the the Romans could have invented the printing press a lot earlier they had sandals that would make marks in the mud you could have in theory drawn the connection between those marks in the mud the ability to have movable type and letter press but nobody did right and so quite often these inflections will go they'll just go unrecognized for a while but they're always there like they're always there they're they're there right now uh you know in the ambient atmosphere there's somebody about to harness an inflection that most of us would just walk right by and never see wow my mind is racing what's out there right now uh obviously AI is top of mind for a lot of people I know you're stickler for what is an inflection what is not do you consider AI an inflection uh I would say that I would probably be a little more specific about it so I I might say that certain uh large language models are an inflection because like what when I when I think about an inflection and one of the one of the things I emphasize in the book is uh stress tests so like it's funny Founders never really come to me and say hey can you help me come up with a good idea right they would think they're weak sauce if they had to do that right so usually what's the more common occurrence is they'll say I've got this idea what do you think about it and so what I can say to them is it's not my place to have an opinion but like let just ask you does it embody one or more inflections and if it does there's a few there we could stress test that we could say what is the specific new thing that was just introduced how does it Empower people how does it specifically Empower specific people in specific ways and under what conditions might that empowerment be realized and under what conditions might it not be because like nuclear power has existed for a long long time but we haven't built any nuclear power plants in 50 years and so just because you have a power doesn't mean it's going to get used it could get regulated out of existence customers could decide they don't want it and so we want to answer all three things what's the specific new thing what is the specific form of empowerment it offers into who and under what are the empowerment conditions so like with the inflection for lift the in the inflection was the new thing was the iPhone 4S with a GPS chip the empowerment was you can locate any one within one meter accuracy with an algorithm and that's going to be pretty much anybody with a smartphone and that's a lot of people and you know in order for this to be met people are going to have to want to share their location information with applications the government's going to have to not Outlaw GPS chips and phones Apple's going to have to keep wanting to ship GPS chips and phones and we felt like those were pretty reasonable bets right we felt like um it's pretty likely those empowerment condition amazing I was just going to ask for an example you already provided one uh what about in terms of twitch was there what was the inflection there I I think there were a couple at the first was the um the shift towards user generated content and sort of internet celebrities Justin KH wanted to be an influencer before he there was a term to describe influen right he was really building the product that he wanted for himself but you know right before twitch or right before Justin TV which was the original company times person of the year had been you and they had YouTube on the cover of the magazine and so you had that was a major turning point in how entertainment was happening but simultaneously Broadband penetration had reached critical mass you had the cdns were getting really good and and and and we thought that they would get better and so you know you you you were in a situation where the conditions to live stream video for the first time broadly over the Internet were being met whereas you know you could you could could have done that even two years before in fact Kyle vote had to invent some pretty miraculous stuff to even make it work when they did but you could you could see how Okay once once video start streaming on the internet in real time that could be a thing right you could just see how that would be a thing if it if it worked and so I'd say those are the inflection you know um um Airbnb company close to both of our hearts for different reasons they benefited I think from a couple things one was the proliferation of customer reviews online and people's trust of reviews as a substitute for trusting the brand of a hotel but then also Facebook connect made it possible to pass people's profile information and so the guest and the host didn't quite seem like as much of a stranger as they might have and so there were a few things that that happened at the same time and then the great financial crisis and so you had people upside down on their houses needing to find some way to generate income so all of those things came together at the same time to help their air beb the examples you shared are a good reminder that the inflection doesn't have to be technological you shared a few of the categories of types of inflections can you just do that again I love that question and I'm glad you reminded me right because like like here's here's a really recent example when the the laws were changed because of shelter in place for tele medicine visits you know it used to be illegal to do a tele medicine visit across state lines but now all of a sudden with Co and shelter Place Not only was it made legal but it could even be reimbursed by the Health Care system and so that's an inflection because it empowers patients to access more doctors and it empowers doctors to access more patients and it also changes the delivery mechanism in an empowering way in no event was that a technology change right that was a regulatory change that allowed technology to be empowering in new ways but you know it was a specific new thing it beats that condition it empowered specific people in specific ways and there was a new set of empowerment conditions that ended up being made and one of the one of the things that we would ask at the time was are they going to you know once Co shelter Place goes away are they going to revert back to the old laws and if they did that would have been a problem and so that would be the empowerment add um but but you know it's a it's a fairly robust way of stress testing any inflection right is to ask those three or four questions so there's regulatory in big changes in regulation there's technological there's also I think you implied like an attitude like the way people see there could be a belief inflection uh you know so for example uh during covid the amount of tele medicine visits exploded and so as a result there was a permanent change in people's belief about whether they would want to do a tele medicine visit before that the technology was there but a lot of people just didn't do it the doctors didn't want to or decide to the patients didn't want to decide to but now all of a sudden people were doing it they're like this is much better I'd much rather do it this way than go visit the doctor and wait in line and all that stuff and the doctor's like I'd much rather do this than than you know have these people backed up in my my office you know I I would argue that uh you know here we are doing a podcast on a video uh platform right even though it's not zoom I I would say that Zoom was another example you know the the idea of um people working from home a reasonable number of days a week as a permanent condition I think is another inflection that happened with Co and so are those the three regulatory technological and belief those are the main ones you know and and I would say that in in in many ways it's um you could say that from a macro point of view it's two things it's technology changing enablement and it's people socially changing their beliefs and their patterns of Behavior Uh and and either one of those changes can be an inflection because either one of those Chang can represent a turning point in one's capacity to change the future amazing Okay so we've talked about inflection the next bucket is and the next element of breakthrough companies that you found is an Insight talk about that yeah so an Insight unlike an inflection an Insight does come from the founders uh an Insight I like to say is a is a non-obvious Truth uh about how one or more inflections can be harnessed to change people's behavior so if in the example that we gave earlier with Lyft the inflection was the iPhone 4S Insight was oh that means you could do Airbnb for cars and so you had to you had to have some type of a creative insight to see that now what was uh you know what was non-obvious about it or non-consensus about it who's going to want to get in a stranger's car that's crazy right and um thank God I mean if there's one piece of goodness about us passing on a bed and breakfast I'm an and I were like man you know nobody's going to want to stay in a stranger's house that's crazy and at the time air bed and breakfast the host of the guest stayed in the house at the same time and the you know the the host would feed poptarts or something like that to the guest the next morning we're like you know this is right around the time like the Craigslist killings and stuff were like this is just scary you know kind of crazy uh you know couch surfing is a service you know but by the time uh we we saw what was Zim ride at the time what became lift an and I were much more prepared to believe that Insight than we would have been right because we'd foolishly passed on Airbnb so that's a really important aspect of insights right so the the Insight needs to leverage inflections but this is the subtle part it needs to be non-consensus and right not just right so in the world of opportunities if you're right and consensus you still don't do that well and an idea that is right but consensus has a couple problems to it one is if it's consensus it's probably not radical enough because you know when you think about it human beings are conditioned to like things and so if everybody likes your startup idea it means it's too similar to what they already know and what they're familiar with which means it's probably too similar to the consensus it's too similar to the incumbents and so the best startup ideas have the trait where most people don't like it or are even hostile to it or just kind of meth about it but some subset of people are just like oh my God where have you been all my life this is amazing I love this that you know they fall irrationally in love with the idea and so most of the great startups that I've seen have that attribute to them and and the reason is that a great startup unlike unlike a conventional company that proposes the future as an extension to the present so the normal companies forecast they say I'm going to look forward from the present and forward project what the future will be great Founders pattern Breakers backcast they say it's it's it's a it's a given that the future has to be radically different for me to be a big winner and so I'm going to look for radically different Futures and work backwards from those radically different Futures and so the radically different future comes from that thinking different thinking non-consent census and then it's a it's the different actions that get you to say okay now I'm out in this different future but right now I'm all alone in this different future I have to get people to come join me in that different future and I have to find people who are ready to move with me to that different future and that's where the pattern breaking actions come in and like not everybody's going to move at first and so I can't waste my time with people who won't move I can't waste any URS of energy on anybody other than those ready to move or about to move and and I need to co-create the future with those early Believers and so great startups happen when a subset of people in this world buy into the founders insight and then move with them to co-create that future and then eventually what was a heresy becomes the conventional wisdom as more and more people start to realize the advantage of there's so many threads I want to follow here one is they arbb story interestingly enough I had Jessica Livingston on the podcast recently and you probably know this but Paul Graham and her did not like the airb be idea they all like this is a terrible idea this we we're just we going to assume they will change the idea but we love the founders we're going to take a bet on so I was introduced to the guys by uh Michael cyel from who was one of the co-founders of Justin TV twitch and Michael introduced me to Brian chesy before they applied to YC combinator so like like Michael's like they're not even close to ready to apply to YC but like you know he thought that I was maybe would think that it was the right kind of crazy I get pitched by a lot of like a I'm you know I'm not very off-put by crazy ideas I could see why yeah uh so it was uh and the meeting was totally discombobulated right so a room full of cereal boxes I'm like what's up with this why is there cereal here and and then he can't get the product to work so we're like 20 and I'm like okay that's okay let's just look at the slides and he goes well Michael cyel told me that you don't like slides you like demos I was like that's true but not working so we're like 20 minutes into this meeting in a room full of cereal boxes just looking at each other and and uh you know you you can't win them all right uh you win some you lose some I wouldn't blame myself if I were you here here's the other thing that's hilarious about Airbnb so like they they do this thing because they can't pay their rent they put up this WordPress site to pay for their rent because there's a design conference in San Francisco in the meantime they're brainstorming startup ideas so they wanted to do a startup together but but like never occurred to them at first that air airbed and breakfast was like the startup idea they're like we just need to use that to make money so we can go do a real startup and so that's the irony too right is that that that you know you look back on it and almost smile at the fact that they didn't they didn't know if they even had at first you know it was almost an accident there's a lesson there of like you find something that works and even if you don't think it's a big idea don't take that for granted oh I very agree and and the other thing the other great lesson is you don't want your initial start startup bets to be too big to fail right you want you want ideas that are small enough to fail a lot because you know you don't want to be attached to success you want to be able to just try things and play with stuff and Tinker with things because you don't really know where the fractal of new insight is going to reveal itself uh and so you you know there is a little bit of play to this uh that I think is pretty important do you remember with some of the ideas that were brainstorming by the way I I don't right and I wonder if even they do right probably the Airbnb story right their book I feel like them uh failing in your demo helped prepare them for YC and that's what helped them get in so I think that you're a big part of their story and to make it even more painful like I'm in the book right somebody somebody called my wife Julie the other day and said is that your husband in the Airbnb story and we we get the we get the book and there's a chapter and it talks about how hard it was to raise money and they weren't dissing on me as a dumb be see they were like you know look how bad we were at presenting this at first right it was just a complete catastrophe presentation uh but that's another good lesson for me too I learned a very permanent lesson from that which is just because the presentation is good or bad it has nothing to do with whether you should necessarily invest or not sometimes you have to be awake to the possibility of what it's going to be regardless of how messed up the presentation is what was their evaluation at that point oh god um this hurts to I I think he offered me a chance to invest in a $1.5 million valuation but another a hundred billion dollar business I believe oh oh yeah I would have made like 6,000 times my money or something like that just great thank God you know thank God I said yes to Twitter and Justin TV and uh you know we said yes to Lyft uh and Offa because if it if we'd seen all of those and passed on all of them i' you know i' I'd be apoplectic that's I think that's what's interesting about your uh stage of investing is you you just need a couple to work out for you to win yeah that's right it's and by the way it's true when you're a Founder too you if if you do this right you only have to be right once right and so that's that's really important coming back to uh the insights lesson one thing that you brought up when we were chatting about this is the importance of being surprised in the power of surprises can you talk a bit about that yeah so so there's a couple things about insights that I think are really important and this is one of them I believe that there can't be a recipe for breakthrough so uh you know and and why is that well recipes exist for things that have already been discovered so if if I give you a recipe for making a cake somebody has probably made that cake right before the exact way they're defining it and so breakthroughs though by definition haven't happened yet they haven't been discovered right the general theory of relativity had to be discovered by Einstein right and and the you know the idea for ride sharing had to be discovered by the the ride Shar companies or Airbnb by by by chesy and Nate those guys and so what you want to adopt is the right mindset and how do you adopt the right mindset you you interact with new technologies at The Cutting Edge but you actively Savor surprises and when you think about it when you think about it through the lens of a breakthrough and what we just said it makes sense because if you want to find a breakthrough you want to be surprised you want to discover the Undiscovered you want to know something you didn't know before because if all you do is an experiment that proves that validates what you think you didn't really learn anything when you think about it you know you just doubled down on your existing understanding or opinion I learned this lesson from Scott Cook who was the founder of Inuit whenever he would be presented a new product people would present the the idea to him and he would say what were your three biggest surprises as you were coming up with this plan and what he would find is quite often they couldn't name any and he felt like when people can't name the surprises they came up with they're too brain locked on what they want they have they have the agenda they have and they they want validation rather than truth seeking and so like if you're if you're an authentic truth Seeker you're always hoping to be surprised and you think of surprise is a gift because you think wow maybe I encounter that surprise before anybody ever has and so uh so that's kind of what we mean and you want to construct your experiments so that you're in a position to be surprised so a good example would have been what the guys at CH did so CH was wanting to see if people would te do Textbook Rentals so they created a fake site called textbook flick but here's where asman and iush were were very Savvy rather than just test whe people would rent a $100 textbook for $35 they tested an arbitrary set of prices all the way up to $75 and so they had the demand preference curve at different prices and textbook flick wasn't a real site so you'd get to the shopping cart it would give you a 404 error but we could tell that people wanted to rent textbooks and the surprise was that they would rent them for more than we thought we thought we need to get at least 35 but some students were willing to pay 75 and so that understanding was huge if we'd only done an experiment to validate the hypothesis of yes will they rent it for 35 our pricing model would have been totally different from oh wow and when you think about it it makes sense like the student didn't want to keep the textbook you know econ 101 I'm going to give it back anyway so 75 bucks is less than 100 I can buy beer with the extra money so that would be an example of the surprise but um most of the startups that have had great outcomes I find there was a kind of a surprise like that right you know being non-consensus is not the same as being contrarian you know being contrarian is another form of Conformity because it's still relative to somebody else most of the great Founders I see they almost feel guilty that they found this secret but they earn the secret by tinkering with the future and noticing surprises and having their noticing filter tuned to like Volume 11 where most most of us wouldn't notice it most of us would just pass the secret what right by because we're looking to validate what we think is already true you referenced this term that is also one I love that you use occasionally this earned secret can you talk a bit about that it's basically the same idea that you uncovered something by trying things that no one else has seen yet is that the general idea so to me secrets are earned like a lot of people I think have the wrong idea of what vision is like a lot of people tend to think Visionaries it's like they have a special pair of binocular and they can look out farther than the rest of us can but but in my experience that's not how inventions really happen the way the way inventions happen is people get their hands dirty and they they they learn about what's missing in the future because they they're they're they're getting their hands dirty with what's new about it and so they earn the secret by going down this Rabbit Hole of exploring something at The Cutting Edge for its own sake and they become like just like I'm a train spotter for startups they become a train spotter for this new thing that they're excited about and you know they frustrate the people around them they'll be at a party and everybody's talking about the basketball game and the Celtics against the Mavs and and somehow that reminds them of the fact that they want to test prices for textbook rounds and it's like they're but they're that interested the last thing they think about when they go to bed first thing they think about when they wake up and so that's where I find most of the really great earn Secrets come from they're earned in the sense that you earn them by getting your hands dirty and you earn them by being awake to the possibility that secrets are there that just most people aren't look this connects with that stat that you shared that 80% of your biggest returning Investments came from a pivot it all connects where you're just trying stuff you're learning seeing things people haven't tried and that that's right you know and in the early days of product Market fit I like to say we want to answer a very simple but profound question what can we uniquely offer that people are desperate for and if if we have an Insight that makes us unique now if a customer doesn't like your your idea a couple things could be true one is your Insight could be wrong if your insight's wrong you don't have a startup right you should just stop the other thing though that could be true is your implementation is wrong so like you had the right Insight so like OCTA at first they wanted to do Cloud systems management they thought that they needed to do problem resolution but when they showed it to customers they were kind of meh about it and they said well what you know why are you meh about this and they said well it's not a top priority they said what is your top priority they said identity management so they had the right Insight which was customers would struggle to manage cloud services but they had the wrong implementation of the Insight so then they came back with identity management it worked so you know if if somebody doesn't like your idea if they're not desperate for it either the insight's wrong the implementation's wrong or you could be talking to the wrong customer right like some some people that op to talk to wanted to integrate it with on Prim software and in that case their opinion is irrelevant because they're not an Innovative customer they're not living in future they're not going to give you product requirement ideas that are additive to your strategy and so you know you want to be right Insight right inflections right implementation right early Believers that you're talking to as you iterate towards product market and if you're not succeeding at product Market fit then it's one of those one or more of those variables isn't working yet I think this might be a good time to remind people that you don't need to have every one of these for your business to potentially be a huge success it's more that the more you have the more likely it is that you'll find something massive is that right that's right and and it's like what this is the hard part about being non-consensus and right is you don't know for sure that you're right at first you only know that you're non-consensus and so you have to be willing to risk being wrong to be spectacularly right and so what you're trying to do though is pursue opportunities where the odds are massively in your favor and so like I kind of return back to business is never a fair fight and so if I'm a Founder there's a set there's a universe of ideas I can pursue the mistake that a lot of Founders make and it's very understandable they say I want to go after big Market opportunities they analyze big markets they find unserved customers with unmet needs in underdressed markets and then they go build a product to go solve that problem and and that's very appealing because it seems obvious and the dots connect forward in an obvious way but unwittingly it buys into a context it buys into the current definition of the market which was already set by the incumbents and so what you instead want to do is pursue a slightly more ambiguous opportunity but one that harnesses these Powers ones where you look at the inflection you say wow that's really powerful you look at the Insight you say yeah I know that this is going to be in the future I know that this is where things are going to be radically different someday I would rather have those things present and be willing to Pivot the product than not have those things and have a much clearer idea of what the product should funny enough one of my biggest investment successes that exactly what you're you're saying you shouldn't do which is they looked at a huge Market with a bad income and built something better and it's working but I think again it's not that you can't win that way your point and your research shows that your chances are a lot higher doing something totally different that's right and I would bet that this company I don't I don't know enough about it I don't know what it is right but like it wouldn't surprise me if they harnessed inflections in some way that was disorienting to the incumbent it wouldn't surprise me if they found a way to use inflections to fight an ver bite what I try to do with the insights is I realized there was a theory behind it like a a theory is not a recipe it's an explanation and what inflections let the founder do is wage asymmetric Warfare on pres and the Insight is like the vessel that they use right it's it's kind of like the the rock is the inflection the slingshot is the Insight that they shoot at at David or or David shoots Goliath right and so so that's what we're looking for we're looking to create the conditions where we're going to get to play an unfair game by unfair rules favor us great segue to the third bucket the third element of breakthrough company's future founder fit what is that yeah so this is one of my favorites so a lot of times people will say what makes a great founder and uh there are some common traits right passion for the idea persistence resilience you know all all these things right that people talk about passion for the users but what I find is that there's no canonical best founder right so Mark andreson started Netscape as a programmer making minimum wage at the University of Illinois and everybody thought the digital Highway at the time was going to come from Time Warner or from Microsoft network or from the US government nobody thought that some kid was going to do it from the bottoms up but it turns out that Mark was tinkering with a set of inflections around the worldwide web and you know right around that time Microsoft uh introduced a better version of Windows and right around that time the Pentium processor came out so there you know more and more people had graphical user interface computers at the very time that browsing started to happen but let's take another company more recent applied intuition makes uh simulation software for autonomous vehicles if if you're going to sell a giant contract to the CEO of a car company he needs to look at you across the table and think these guys can do the job right so you know casser and um Peter had been they they'd grown up in Detroit in Michigan they had worked at car companies in the past in the big three and then they worked in inside of Google at weo and Google Maps and so and and they've had a successful startup before and so if you looked what what is a team from Central Casting to do this it would be them and so what what I mean by founder future fit is there's a set of traits that a Founder can have that make them ideally suited to a certain type of future sometimes they're really young firsttime Founders Mark Zuckerberg Bill Gates Paul Allen um you know we just gave the example of of Mark andreon in that case usually they're at The Cutting Edge of a new technology and they have a beginner's mind and they aren't even encumbered by the old way of looking things it's like the entire world lives in cartisian coordinates and they discover po polar coordinates and they don't even have to translate between the two because they never understood caresan coordinates and so in that case their knowledge about the future is more valuable to success than their knowledge as business people but in the case of like applied intuition if you're selling very large contracts Enterprise customers they need to believe that you could do the job if you're OCTA and you're doing identity management for cloud customers they're going to trust Todd McKinnon from Salesforce way before they're going to trust College drop down to do that job and so I like to say founder future fit is you know who knows the most about this future who has the most intrinsic motivation to pursue it who um has the best network and keep the best company in in that ecosystem of the future you know those are the types of things that you know Founders that that show up differently on those Dimensions usually do better because they're more likely to understand what to build in the first place and they're more likely to convince early Believers to believe in their ideas in the first place so it's not that these people have some vision of the future that is more uh accurate or more incredible than everyone else it's that their background and even the way they look matches the problem that they're going after so in this applied intuition case you're saying like the founders look like people that a CO of GM would be like I trust these people to build this thing for me yeah I like to you know Louie Pastor once said Chance favors the prepared mind and and when I started working on this book for the first time I really understood what he meant right like Chance favors the prepared mind because a prepared mind attracts luck a prepared mind is better positioned to notice a breakthrough than other minds and a prepared mind sees the Breakthrough sees around the corner because they're thinking about the sub je all the time and so like most people think that the way you come up with good startup ideas is try to think of startup and I like to say no that's exactly wrong uh what you do to come up with great startup ideas is you live in the future and you notice what's missing in the future and it's like it's it's it's axiomatic if you're living in the future there will be unbuilt missing things because if it was all built that you'd be living in the present and so if you're if you're living in the future and you notice what's missing your intuition about what to build is far more likely to be right so like um you know andreon didn't do the Mosaic browser because he thought there was a market for browsers or the he didn't even know about a digital Highway he was trying to make the internet immediately more useful for him and his team and his intuition about what to build was very good because he was building the thing he wanted that was missing in the world you know in the case of OCTA they knew all the early Salesforce customers but the but the principle still applies right those customers weren't equal you know they were Lighthouse because it's kind of like when I was at silk and Graphics I didn't spend time with normal movie studios I spent time with industrial Light and Magic because I thought if we solve their problem they're going to take us to the promised land right all the stuff we build for industrial Light Magic will be the stuff that everybody wants someday and so like not all customers are equal you want to find customers that live in the future I love this point Justin TV is another great example this where he just assumed the future everyone's going to be watching each other's reality show so he built his own backpack with a camera in a site just to stream himself yeah and and and the Justin TV example is a great one too because right in Justin TV he built the thing that he wished he had even though it was a terrible idea but it embodied attributes it embodied these inflections of these insights that led them ultimately to Twitch ironically Justin's second company Atrium most people thought that that made sense automating legal tasks and you know uh Justin's a great founder but Justin just didn't like the legal field he had no passion for it he when he started Atrium his passion was to be a higher status founder and you know I've got a podcast with him recently where he talks about this where he's like I wanted to be as big as Patrick Collison and Brian chesy and Drew howston but it turns out that's not a very good reason to start a company right like founder future fit is ultimately about authenticity and it's about who is the most authentically matched for that different radical future and that whoever that team is has a really big head start at getting product Market fit and you know product Market fit is the game right whoever gets it verse wins this episode is brought to you by webflow we're all friends here so let's be real for a second we all know that your website shouldn't be a static asset it should be a dynamic part of your strategy that drives convergence that's business 101 but here's a number for you 54% of leaders say web updates take too long that's over half of you listening right now that's where webflow comes in their visual first platform allows you to build launch and optimize web pages fast that means you can set ambitious business goals and your site can rise to the challenge learn how teams like Dropbox Ideo and orange theory trust webflow to achieve their most ambitious goals today at webflow okay so there's inflections there's insights there's future founder fit to make this super real for say a product manager sitting at a company right now I want to start a startup or someone just starting to ideate on ideas what are some things that you recommend they start to do this week next month to start to find a big idea or to start an idea it doesn't have to be a big idea an idea that'll take him somewhere the number one thing I like to say is get out of the present and so like what what you know people talk about getting out of the building and of of course we should but getting out of the present is a little bit more subtle than that right so William Gibson was right you know when he said um the future is already here it's just not evenly distributed so most great startup ideas come from a future that exists right now today and so when when I like to say to people and this is a question that I always ask when I'm pitched is this from the future and you know and then some people will say to me like hey I have a mental health startup mental health is a huge problem it needs to be solved and I'll say why is your idea from the future well in the future I believe mental health needs to be solved I'm like that's not what I'm asking I'm asking what part of the future have you been living in that gives you the right to have an opinion about the future so right I like to say if you're not living in the future you don't your opinion about it is is it valid it's kind of like saying I think a customer will do X and you've never talked to a customer I'm like okay your opinion is interesting but irrelevant and so the the only relevant future the only relevant opinions about the Future come from people who are living in it and coming from people who understand what's new about it in a very visceral way and and you know there are people who do a good job of this right like mdy Hall who started Living carbage she was working at Zenit and at first she tried to think of a startup and she had ideas that weren't that good she had a laser tag idea and a few other things but then she decided to go follow Sam Alman for a year to be his chief of staff and Sam Alman visits the future multiple times a day with people and so that's what led her to this idea that for living carbon which does genetically modified trees but I mean couldn't be farther away from Zenit right but but like she saw Microsoft was about to spend a lot of money bunch of other companies about to spend a lot of money on carbon takeout she saw that the the the genetic engineering technology was getting good enough that you could engineer these trees she married the inflections with the need and then off she went but she was you know basically sampling a lot of different Futures uh until she found one that she liked I love that example because it makes it very real what living in the future looks like so one is spend time with people that are very far along on some edge of technology or the way people behave another you shared is a work with a company like say uh that you worked with at silicon Graphics y industrial magic magic yeah yeah so McCracken had a term for it uh that I've always liked uh Lighthouse customers and so like a lighthous has this light that shines out and and unobscured the fog and not all customers are equal and some customers are living in the future and those customers are gold and those customers will if you solve their needs take you to the promised land and so like so yeah you can you can you can build what's missing for yourself like Andre did or Zuckerberg or Steve wnc or Bill Gates or you can build something for Lighthouse customers you have a good relationship with or if you can do neither of those things the number one question I get asked is hey that's great if you live in a supercomputer lab or if you you know uh were selling to industrial Light or magic or like the Salesforce because I'm not one of those I'm a seconde student at Stanford Business School I'm a product manager of company X I'm you know whatever the case may be that's where the mdty hall example is really powerful because Maddie proactively got out of the present in a very intentional way uh so I love her example uh as a case study what signs tell you that a company is one of these Lighthouse companies living in the future or person is is just like you just feel it like they're so far ahead of everyone else you you usually it has to do with how Tech forward they are you know there was there was a time when a lot of people didn't think the cloud was going to be a thing because it was insecure and I'm not going to host my important data and let somebody else have it but there were a set of customers who were really excited about the cloud and they tended to adopt certain kinds of products when I used to work in uh client server startups you knew that the early adopters were people who were using like relational database servers and scalable front-end programming uh interfaces and things like that you know were trying to have distributed apps that they would roll out you know you could you could tell who was trying to play offense with the new trends awesome okay before we move on into actions is there anything else you think might be useful to share in terms of helping people come up with an idea find a great idea the number one thing about the ideas goes back to the not playing the comparison game so the the thing that I see people underestimate when they come up with ideas is the threshold of desperation required in the customer right so like like um if we want to solve problems for desperate people and and and it's like if we have powerful inflections that really Empower and we have something unique there should be somebody who is irresistibly drawn to that empowerment they should say oh my God this is incredible this is a game changer I can't unsee that why is that important I like to say that if a customer has the ability to do something other than what you do to solve their problem they won't be crazy enough to do business with a startup right so customer has to be so desperate that when they see what you have they're like I've got to have it and and so I like to say you want to force a choice and not a comparison if everybody's selling apples I can't be a 10 times better Apple I want to be the world's first banana and I I want to say to people you may not want bananas you may not like them you not may not value the advantage of bananas but if you value bananan I'm the only person that got and it's like you know Come to Papa right and so that's like an Insight feels like that uh and and in the early days don't spend any of your time with people who love Apples because they're not you're not going to convince them and they're going to waste your time what you want to do is find everybody in the world Val values the advantages of bananas as soon as possible not wasting any time on the people who don't and so that i' I'd say that that kind of wrap wraps up the idea of insights is it like we want to force a choice and not a comparison you know nobody looks at the Tesla cyber truck and says oh yeah well how does that compare to Ford F-150 and you may hate the Cyber truck you may think it's stupid but nobody's neutral about the cybertruck right that's that's you want to have a product that people can't be neutral about but that the people who magnetize positively to it just can't imagine a world without I love that going back to your banana example you want just a few people to be just like I need that banana no matter how much you're charging that's right and and you know even if it's halfway ripe even you know it's like you know because that's the other thing right they they need to be willing to tolerate the fact that you can't execute very well because like how could a startup execute really well they have no resources and so like the only chance for a startup to win is to win on a playing field where better doesn't matter where execution isn't as important as got to have that thing I'll take any version of it you give me because I am desperate for it speaking of execution get segue to the second part of the chat which is basically you looked into what do the most successful companies and Founders do differently and you also found three core things that they all do and many of them do uh movements storytelling disagreeableness let's talk about each one pick whichever one you want to start with yeah so so you know we've talked about thinking different but it's like the problem though is that uh you know asking people to abandon the familiar for an uncertain tomorrow is a provocative act uh all startups are fundamentally disagreeable there're a disagreement with how things are done they're a disagreement with the pattern of what is and so uh we need as Founders to persuade others to change their habits with our pattern breaking actions and so what the what the pattern breaking founder does is they create a stark dichotomy between the world that is and the world that could be and they create an irresistible desire on the part of early Believers to move to that different future with them and so you know I like to say there are three aspects two acting different right one is movements the other storytelling and the other is uh disagreeableness and so like the the movement piece is is the front and center piece because like most people when they think of movements they think of it as more like social movements like civil rights movement in Martin Luther King or they think of you know there's artistic movements like cubism and Picasso but like fundamentally a movement is a different way of developing a market than how most marketing people think about developing Market most people when they think about marketing they think okay I've got a set of targets I've got a set of programs I've got inbound and outbound I've got you know these things I need to do what a movement does is it it leverages a grievance of a minority against the tyranny of a majority and it takes that and animates it in a way that those early Believers are emotionally committed to moving so like um early customers are not animated by pragmatism they're anim animated by belief uh early early customers early employees early investors don't decide to go into business with you because of the Practical reasons that you unlock they do it for aesthetic reasons they do it because they believe what you believe and so a movement is basically a set of people with the same belief moving together to a different future and when you think about it it's the equally the same right for the civil rights movement and a movement is a way to crystallize the choice like if you're if if you believe in civil rights you can't be half in on that you either believe that that it should be about the content of people's character not their skin color you can't be sort of not racist right you either believe or you don't believe and you know the people who who followed Martin Luther King bought into the aesthetically better future that his movement promised and it turns out and I don't mean to equate like that was a pretty important movement right like some movements are more frivolous you know I say an artistic movement but the notion is similar in that there's a set of early believers who believe they've been enlightened about something that the rest of the world doesn't get yet and they think that the startup founder is is sort of like the prime mover of that movement and then what happens is that startup markets happen because the movements accumulate and accelerate and more and more people join them and what was once heresy becomes the accepted conventional wisdom and now the company's no longer a startup its company and now all of a sudden it is a valid market and all of a sudden they're the status quo and they got to watch out for the next set of disruptors so the movement is the first key thing I think in all of this is there an example uh lft obviously comes to mind with this the pink mustaches just this the future yeah ride sharing ride sharing was a movement you know in in my early days starting flood gate uh with an we thought that seed investing was a movement and so we thought that there was going to be a day where seed funds would be a permanent feature of the Venture landscape but people didn't believe that in the late 2000s and so we're like not enough that we just succeed and invest in good companies we need to get the best LPS in the world to buy into this right we need to get Phil horley at orley Bridge and Dave Swinson at Yale and people who you know are respect Ed in the ecosystem to say yeah I I buy into that and so it was really important to us to get the right early Believers uh in our movement you know Judith Elsie at weather gaug who had just started a a new firm uh one one of my favorite examples is actually an old one uh Clarence bird's eye so you know you go into the supermarket and there's frozen food aisle Well Clarence bird's eye discovered how to flash freeze food when he was up in the Arctic looking at eskimoses and they were flash freezing their fish and he want could you do it for other things and he found out you could fruits and vegetables but like it wasn't enough to just flash freeze the fish or the fruits or vegetables you had to convince the trains to have a a refrigerated car you had to convince the supermarket to have a refrigerated aisle and so he had to start a movement where a whole lot of people simultaneously believed in this idea of being able to eat food in a more convenient way not always in season not always uh grown locally from where he were and so all movements have that characteristic where you're you know you kind of start with a higher purpose and then you move people to that different future I'm trying to think about what are current movements that are happening one that might be a movement is with llms just this bet that Transformers are the future of how this is going to work that just more compute is the answer versus trying to find something else that sound right another one that I really like is Tesla so like Tesla's Mission says accelerate the world's transition to sustainable energy they don't even say they're a car company right so like Tesla doesn't say here's why we're better than Ford and Toyota and this is really important right because the great movements do appeal to a higher purpose uh they don't say I'm better I'm better than company act you know I'm Avis I try harder than her they appeal to a more aesthetically higher purpose future and then they show that this startup is is the vehicle for that movement to be actualized which is kind of a good segue to storytelling uh one other quick example I'm thinking about linear is kind of pushing this movement of craft and design and experience matters in B2B software and you shouldn't settle for something that you don't love very much so and you know what chesky this was I don't think he even knew he was fully doing this at the time but chesky did this brilliantly with Airbnb so he created a movement around living like a local and so the the thing that a movement does is it turns the greatest strength of the status quo into its biggest weakness and so like Brian never said hotels suck you know death to the Four Season he just said hey look you know when you go to Paris you have a choice you can you can hang out the Four Seasons and it's going to be just like the Four Seasons everywhere else in the world it'll be in the middle of the town or you can live in Paris like a Parisian and and he's like I don't have to say that the Four Seasons is bad for you to decide to choose me and oh by the way if you want to stay in the same kind of Hotel everywhere you go I'm not for you but so like now let's say you're for Seasons your whole business is predicated on doing a good job of having a common experience that people could accept and that they're used to and that they expect and so now you've you've taken all of the stuff that you invested decades in and turned it into something you have to apologize for all of a sudden and so so like the the great startups they create movements not So Much by criticizing the incumbent but by um showing the weakness in the strength of the incumbent and then just saying to the customer hey look you decide it's not up to me to decide what's bad about Four Seasons it's up to you to decide whether you value my difference or not that reminds me of counterposing from Hamilton Hamilton helmer's seven Powers book 100% so to make it even more practical for people that're like oh I need to come up with a movement for my startup that's why things aren't working it sounds like it's kind of a here's how we want the future to look and why we're doing this and then it's a combination of marketing positioning messaging repeating it social media I imagine is that is that roughly how to think about oh but but I but I would also say that uh it's about storytelling and so like storytelling uh there is a science to storytelling and so like for example you know the heroes Journey you have somebody in the world that is the hero uh let's say Luke Skywalker on tatto weet Dusty Planet he's bored out of his mind and then a mentor shows up and offers them a call to Adventure Obi-Wan Kenobi and at first they resist the call but then something bad happens you know in this case uh Luke's like hey I can't I can't come with you I got chores to do for Aunt Buu and Uncle Owen but then he comes back to his place and uh it's all burned down the Stormtroopers killed his aunt and uncle so then he accepts the call The MENTOR has uh a tool and a magic in this case it was the lightsaber was the tool or the magic was the Force and and they need those things because the hero has to have a reason to credibly believe that they can beat the bad guy right and so then they then what happens is you you you find co-conspirators along the way Han Solo chewy you know ultimately princess you you rescue her you blow up the Death Star you beat the Empire and then emerge transform they even get medals at the end of the movie right now it turns out that the exact same thing applies for startups so like if we take the lift example let's just say I'm a rider in the past the world that is taxi suck in San I can't even get one and when I get one it's gross and it smells bad and it's late and it it won't take my credit cards I have to have cash they can't rely on them to get me there I guess my alternative is to park you can't ever get parking people break into your car that's the world that is Logan and John would call engage in a call to adventure try this ride sharing app it's it shows cars on map you know where they are all the time they come within five minutes uh fist bump the driver now this was where the genius of the pink mustache came in so the pink mustache honored the fact that a lot of times people resist the call it's scary to get in a stranger's car so the pink mustache made it seem a little bit less scary when you see these cars driveing around in San Francisco you're like hm what's up with that pink mustache and you're talking to your friend they say oh it's this new thing called lift it's pretty cool you know it's an app if youve seen it and so Logan and John did among the best I've ever seen at honoring the fact that people might resist the call but then part of the story is languaging this was the genius of Twitter they didn't call it micro blogs Inc right they they created a metaphor around tweeting birds you know the the the Tesla was this way right it wouldn't have survived a comparison with a Porsche of 911 the seats weren't as good the radio wasn't as good but but Elon was telling the story about a different future and when you bought the Tesla Roadster you weren't buying it for practical reasons you were buying it for aesthetic reasons you were buying it because you thought that that future was something you wanted to be part of so the storytelling primitive ends up working spectacularly well for startups right we need to describe the world that is we need to describe the world that could be which is that future we need to understand and this is important right that your job as the founder is to be obi-1 not Loop so the founders sometimes make the mistake of thinking that they're the hero but they're not the early Believers are the heroes and it's the job of the founder to tell a story that emotes early Believers to want to move with them and co-create the future with them and like the story you tell an employee is different from the story you tell an investor is different from the story story you tell a customer because all of them have a different idea of what their Hero's Jour you know if you're an investor maybe your idea of being a hero is to make a hundred times your money and be on some fancy list uh and make money for your LPS if you're a early customer maybe you're a hero by solving an important business problem and getting recognized for it in your company uh if you're an early employee maybe it's you want to work on something you're excited about with really awesome people that don't waste your time with politics bureaucracy right and all of those are different Journeys all of those are different transformational ways to self-actualize and we have to we have to meet those people where they are and and give them a reason to want to come with us to the world could be I NY dwarte in the podcast she's one of the most famous presentation designers and she had exactly the same advice when you're trying to tell a story you basically bounce back between the world that is the world that could be what is what could be what is what could be and just kind of keep going back and forth 100% in fact um Nancy is the person who helped me understand this better than any single person uh so so Nancy would show me how Steve Jobs's iPhone launch speech she'd be like okay well now notice what he does he shows how bad phones suck now they have styluses they have keyboards and then he talks about what could be you could combine an internet Communicator you could combine an iPod and it goes back and forth between how bad the current stat state of things is how it should be how bad it is how it should be introducing the iPhone how bad it was how awesome it's going to be how awesome it is like when you look at his speech he's masterful at toling and by the way the same is true of Abe Lincoln with the Gettysburg Address forse forign seven years ago new nation now we're in a civil war you know we need to preserve what we stand for as a country we need to go win this war but but he kind of goes back and forth drawing attention between what has happened in the world that was and the world that could be something that I was thinking as you were talking was I've seen too many Founders spend so much time crafting this amazing story and vision of their product and they have this really cool blog post and big idea but nobody really cares about their product yet do you any advice of just like just make sure you're building something people want above above all else and the story is a layer on top of that so many startups I see the first slide is like we're Acme AI software we're located in San Francisco we're funded by X and Y VCS that's not storytelling because you're talking about yourself right like and if you're trying to make the person in the audience the hero they don't care about you yet they care about how you're going to make them a hero and so like when you when you kind of say okay if I'm pitching VCS what I really need to do is help them understand why they'll be a hero if they invest in my company according to what makes them feel heroic what you present is different but like what what a lot of startup presentations do is they take their sales pitch and they rehost it for every other audience they rehost it for the press for investors and for employees and all that and and that's wrong because what you're doing is you're talking about yourself to different people but what you want to do is describe the world that could be the stakes that are involved and then each of those individual audiences you want to meet them where they live in the world that is and show them how they can engage in a transformational journey to the world that could be and also show your amazing stats and backgrounds and Market size and all that stuff yeah although it's it's funny you know I found that investors are the same investors ultimately they believe or they don't believe you know a lot of times this is the other thing I see happen is the poor founder will get advice from 20 different people about their pitch deck and a lot of the people giving them advice are not Believers in that different future they're giving generic startup advice or they'll they'll go pitch a bunch of firms and they didn't they didn't consider who's prepared to possibly believe who isn't and so then they then they get objections to their pitch from people who aren't going to believe anyway and then they try to have a slide to meet that objection and before you know it you have what I call a Franken de and so you have this huge gigantic presentation trying to anticipate every objection and and the person who was ready to believe you in the first place doesn't know what you were trying to say because you obscured it with all this other stuff and so I find that just like with an Insight it's okay if most investors don't like your idea what you want to find is the ones who are prepared to move with you and make sure they absolutely know why they should uh that's to me that's the ideal pitch deck I love this advice and just to be clear this is like preed and preed before there's a lot of truction a lot of data exactly exactly so what's your advice to a Founder that's trying to iterate on their on their deck is it just like don't show it to too many people is that stick to your guns okay here here'd be my succinct advice uh and other than that there's about a million details um slide one slide one you say what you do as if I literally know nothing so it's not we're Airbnb we're a Marketplace for unused residential housing space bad but but you'll get advice that says to do that because VCS think marketplaces are hot residential real estate's big what you should instead say is something like um we're Airbnb we let you rent an extra room in your house because now as the VC I'm like ah I know what you do and and there are a lot of pitches I'm 10 15 minutes in and I'm trying to understand what they do but I don't know so if like you just say here's what we do and then the second thing that I say to people is I think your second slide ought to be here's the thing we know that's not obvious so like when I was Raising fund one for Floodgate I would go to LP and say we believe that there's a gap between angels and VC's and VCS are writing $5 million checks Angels $250,000 checks we believe that 500,000 is the new 5 million because of lean startups we believe that there will be a new type of category of funds called seed funds now if you don't believe that nothing else I'm about to say is going to make any sense to you you know I can just give you your time back because like it's not but then once if they did believe that or they were in a position to lean forward now when they start mentioning my competitors I say okay well recall Peter Fenton works at Benchmark he's not going to compete with me because why would Peter Fenton leave Benchmark to start a seed fund doesn't make sense the only people are going to try to compete with me from the funds or people who aren't performing but if you if you set the context of what your Insight is you can always come back to it when they bring up competitors you can always come back to it when they bring up objections and you could say hey remember like I'm just telling you you we need to agree on this insight for this to have a chance of being grome so what do we do what's our insight and then slide three is what if any proof points do we have do have any customers do we have great Founders you know is there's something happened already that should cause you to believe that my insight is valid I love this I love this tangent we went on let me come back to the actions that you found the most successful startups end up taking we've talked about movements we've talked about storytelling the third is my favorite I'm excited to hear you talk about it which is disagreeableness what is that about earlier I mentioned that you want to escape the comparison trap when you have your Insight when have your idea in in uh creating movements and telling stories you want to break free from the Conformity trap we always are under pressure to conform in this world uh and you know people use the pressure of Conformity to prevent us from exploring uh things outside of our limits you know like there's a there's a book that I love called uh Jonathan livings and seagull where there's this seagull who wants to fly at infinite speed and all the other seagulls are like look we're just destined to eat crap off the surface of the ocean that's just what we are we're seagulls and he ends up getting banished from the flock because everybody thinks he's crazy and so to me the great Founders are kind of like Jonathan Livingston Seagull they're willing to pursue something that they're obsessed with that they think has to happen in this world and they're willing to sacrifice their status you know in the socioeconomic sometimes dominance hirer because fulfilling the mission is ultimately more important to them than fitting in and you know you can't stand out if you always fit in right you only people who are different can really make a differ and so that's kind of the the mindset so I like to say a startup is a fundamentally disagreeable act in the first place and there's going to be times you need to be disagreeable and I've I've seen this time and again you know like I hear people say to me I I want to work with a Founder who's coachable I'm like ah you know I'm not really sure you know like it sometimes I used to joke that when I would meet with EV Williams my whole job was to give him advice that he ignored so I would say to him I'd say hey have I I don't think you should raise that much money because I think you'll spend whatever you raise in 18 months no matter how much you raise and he said man that's so you mean that startups almost always spend their money in 18 months regardless of the amount and I said yeah I call it Mike's law it almost always happens I said because once you have the money all the pressure is on you to spend it and so so he's like man you know that is a really good advice I'd never thought of it that way before that sounds right to me well he proceeds to go raise shitload of money but like you know he did stuff that I didn't think he should do but it worked and I liked that in him like a lot of people would say well doesn't it bother you that he didn't listen to you that much no because he was disagreeable right and he was the right kind of disagreeable you know he didn't say pound s and I you know I'm not listening to you la la la I'm covering my ears he listened and he understood what I thought the truth was he just believed a different truth than I did and you know that's fine you know uh my job as the investor is to just help them see what my perception of the truth is honestly right and if they decide to go in a different direction that's great they're the founder they're the genius and so I I find that and you know all of them not all of them but a whole lot of them are more disagreeable than history lets on you know like my dad worked for Bill Gates when he was at Microsoft Bill Gates is not a warm and fuzzy dude he was he he was tough right he was a hard ass but great people are inspired by hard asses as long as the hard ass like makes this you know you you meld the steel In the Heat of the flame of high standards and you know people sometimes people can't work for Elon Musk for very long but almost everybody I know who worked for him really respects him because he has high standards and you know he's not trying to Win Friends and Influence People he's trying to land on Mars and if you're going to land on Mars you got to be disagreeable some of the so um you know I just find that that is a trait that is under underappreciated these great Founders quite often which you just shared reminds me of a a recent podcast episode of Jeffrey feffer which I know you listen to where he talks about the rules of power how people acquire power and the last rule is understand that once you have acquired power what you did to get it will be forgiven forgotten or both and so your Bill Gates example I think is a good one where people look at him as such a nice dude when as you said he was not so nice well here's the other thing and by the way I listened to that episode from beginning to the end right and and I thought it was fantastic because I was like the the next thing I want to do is go toh professor feffer and say can we cast these seven principles through a pattern breaking lens like let's assume you're a startup capitalist you're not at a company because you know changing the future requires you to acquire a different form of power than you know you would say in an organization but as I was listening to it I was like these principles all apply to pattern Breakers and and you know like all of them every single one and and the other one right is that I think that he said you know not everybody's going to like you and you know if you you want to be like get a dog but if you want if you want Power there's certain things you're going to have to do and and reconcile yourself with and so acquisition of power you know acquisition of power has this notion of you gotta you got to wield the carrot and the stick uh if all you do is wield the carrot you won't create enough activation energy for people to move to that different future sometimes you do have to use the stick and sometimes you have to realize that people are going to use your desire to fit in against you they're going to say oh you can't do that that's illegal or you can't do that that's unethical or you can't do that you're being some tech bro bad guy who's like you know a lot of what I what I find with the founders I work with ironically before they win they they have to have the courage to be disliked because people don't like their idea they think it's stupid lonely but then after they win it's even worse because everybody says you cheated or you're a bad guy or you broke the rules or you're too powerful or who who gave you the right to decide and what the future should be and so they just they get criticized unfairly in the other direction after they succeed but in the end that's what it comes with a territory right it's kind of you know part of the job description unfortunate yeah Elon goes through a lot of that something something I saw you tweet recently along these same lines is that most successful companies there's tons of chaos internally and everyone's working comp like this is place is a mess how is this even working but you're your finding is that that's very common and normal yeah especially in startups so there have been times when I've said things like execution doesn't matter and and people can misinterpret that you know so when I mean execution doesn't matter I don't mean people shouldn't get things done or people shouldn't say what did you do this week but when I think of execution in a corporate sense like corporations in theory should always win they have big management team they have more experienced people they have customer suppliers Partners brand so startup never beats a big company by executing better than the big company startup wins over the big company because it proposes a radically different future disorients the incumbent and sort of chaotically moves people to that different future but but like every startup I've ever seen on the inside was what you know it was like a capitalist mutation it was like it it was like trying to find a a beaked finch in the galopagos islands that's never been discovered before and it's all ambiguous all the time and people are arguing about what the right direction is all the time and people are you know it's just messy but it's like you know movements are messy and and that's just kind of you know that's kind of what comes with a territory like friend friend of mine Robin Roberts once said you know make your mess your message so true oh man that's so funny I love it I have a couple more questions before we wrap up before we leave the actions categories is there anything else you think is important to share any other lessons that we hav't touched on I think Lenny you I don't know if you've consciously tried to do this or not but on some level you've created a movement right and like you have um no one has ever engaged people with product management sensibilities the way you have and you know like I I go to your site right and you even have merch right for product manager I mean I'm like and you know I imagine the early post that you wrote it probably felt kind of lonely it's probably like I wonder if anybody's even reading this stuff but it's like it starts to accumulate right more people start to read it more people start to tell their friends about it and now all of a sudden it kind of becomes a thing right and so uh you know in many ways Lenny's podcast and Lenny's blog and Lenny's newsletter are all you know kind of examples of facets of this movement that you're creating but but your your movement is not just about the stories you tell or the guests you have or the podcasts or the writeups you have you have a point of view right you have a point of view about the centrality of a product manager in companies and in businesses and in the future and it's like honoring that the way Nike honors athletes uh it and it's like that the the point of view is the movement just like the point of view is the company when it's a startup the point of view is the story it's the it's the place that people want to go that got animated by the beliefs that you shared fascinating and flattered I I have no intention of starting a movement uh I could see what you're saying that sounds like a lot of stress I you already have whether whether you met to or not I think you have all right well I do have swag and if you're on YouTube this is our bestselling item a hat that just says product manager people love it I have it in the background do I get can I wear one if I'm still not one or absolutely you've you've been one and so forever product manager hope get grandfathered in for my past forever forever PM Mike okay I just have one more question and this is around your last chapter which I think is going to be useful to a lot of people your last chapter is about how to apply a lot of these principles to working at a company say you're not a Founder a lot of these principles still apply what advice can you share for people saym inside of lar company to help them find patternn breaking ideas Big Ideas within the company yeah so the first the first thing I think is important to understand is that everything about a value delivery system when you're doing a pattern breaking idea is different from a normal idea so like the mistake that most companies make is they say I've got this new pattern breaking idea it needs to be a third of my business in 24 months or three years or whatever bad strategy right so like it let's take a company like say apple when they did the iPhone the iPhone was a whole new thing it was driven by in this case Steve Jobs the founder you couldn't reconcile it with the original business of the mat and not really even the iPod so you had to you had to treat it as a totally different thing and and that's really hard for companies like so companies make the mistake of engaging in a pattern breaking product but they make it too visible or it's a career career limiting move if it fails and you know pattern breaking products have different types of leadership different types of go to market motion as we've described different types of ideas different risk profiles you know so you're instead of saying this company or this business is too big to fail I need to make small bets that can fail a lot the same is true with mergers and Acquisitions right so if I buy a company I need to ask am I buying a pattern breaking company to break the pattern of my business and and go in radically New Direction or am I buying a company that's an extension of my current business neither was wrong per se but the the way you think about risk varies enormously and so so like some examples that I have in the book of good examples are the iPhone Steve Jobs uh AWS but some people objected they say okay that's easy for the founders to do because they're founders of the company and that's Steve Jobs at CH Bezos so the other example I like is skunk orb with Lockheed and so when they when they created a fighter plane in a very short amount of time and that's how they did it they they had an organization totally separate from the main organization somebody with absolute power and and tried to make it not visible try to make it be separate because when you make it visible you start to drift it back into the tractor beam of acting like a pattern matching Corporation you know another good example back in the day was Don estrich at IBM when they did the IBM PC but it's almost always an autonomous business headed by Maverick and you're you're trying to do something uh discreetly different rather than a better version of what you've already done this uh aligns very well with we had two recent podcast episodes talking to PMS at companies that are doing 0er to1 stuff m and tongi and tongi had a really interesting tidbit along the lines you just talking about where he set up his team in a totally different time zone so that people that wanted to bug them just were like sleeping during that time and they weren't even online so that they could just focus on the work they were doing and it worked out I'm mostly through that episode and everything that I've listened to so far I'm like okay that totally uh that totally jibes with what I've seen uh you know the other person has an interesting take on this is uh venod C and so venod basically thinks that what companies should do is take some portion of their profits and uh let's say 10% of your profits and invest it in projects likely to fail but with wildly asymmetric upside if they succeed and then make them not visible to the mother ship in the early inning and so you know you want to you want to it's it's your willingness to fail that lets you have breakthrough success and you know any coin that says can't lose bad on one side of it might as well say can't win big on the other side and so you have to you know it's it's your willingness to fail and it comes back to departing from the consensus right it's your willing it's your willingness to fail that enables success and every time you depart from the consensus there's a chance you'll wrong you'll be wrong you'll underperform the consensus but it's your willingness to do that that lets you outperform it but there's no shortcuts right the coin that says can't lose says can't win on the other side and lose big says wind big on the other Mike this episode is so full of nuggets tactical advice Amazing Stories everything I was hoping would be before we get to our very exciting lighting round is there anything else that you think might be useful to share with folks that are trying to start a company or already along with a company yeah the one thing I would say is that uh it's a lonely existence and it's okay if most people people don't like your idea and it doesn't mean you're right but sure as heck doesn't mean you're wrong either and so you know there's not enough people in this world willing to stick their neck out for things that they believe that they see before the rest of us and so just for what it's worth if anybody in your audience is one of those people you have just my utmost respect and affection and I hope that you know in those times when it's tempting to not believe you know it comes with a territory every great founder is faced and uh you know it doesn't make you wrong amazing what an empowering inspiring way to end it Mike with that we've reached our very exciting lightning round are you ready here we go here we go first question what are two or three books that you've recommended most to other people a book called The Five regrets of the dying top five regret of the Dying by bronny where she was a hospice nurse and she would talk to people uh in the the last 90 days of their lives and uh you know and she would find out the things that they'd wish that they had done in their lives that they hadn't and I always thought that that was a good that that was a good book because it it reminds you about what's important and it reminds you that it isn't going to last forever someday will'll be the last day there's another book that that I really like called uh Chase chance and creativity by a guy named James Austin and I think that it's a good book because it talks about how certain people tend to attract luck more than others and that actually that luck is created you do make luck and so like I I I I'm just fascinated by this idea of luck and how it can be how it can be harnessed so I'd say those two I mean there there's a whole bunch of them uh you know I've always liked all of Kay christensen's books the other one that I kind of liked is uh that I read recently is by Robert Green the laws of human nature so I like that one a lot as well and then Nancy gte's Book resonate would we talked about Nancy earlier I I like that book a lot I'm buying that first one immediately that sounds incredible I need that book regrets of the dying I found it on Amazon as you're talking and I'm buying it good good pick there okay next question is there a favorite recent movie or TV show that you've really enjoyed so I I really liked uh that that the movie about Enzo Ferrari uh and and I just um I have this huge uh uh affinity for 1960s cars and the way that they replicated these 1960s Ferraris I just thought was magical I I thought to the guys that did the special effects and the just the attention to detail I thought was just extraordinary have not seen it uh quick aside as I was buying this book your book was recommended on Amazon for me oh good here we go good job good job Amazon I will Point people to where to find it at the end of this series of questions but next question is there a favorite product that you have recently discovered that you really like when I was young I uh my before I got into computers I had a a job as a professional calligrapher and so I really like uh using uh uh calligraphy pens and not long ago um I sort of disc discovered the world it had been a long time since I'd reconnected with that hobby I discovered the world of vintage Fountain pin so my favorite product of recent times is a this will go everybody will be like that sounds pretty esoteric but it's a Mont Blanc 149 first generation Celluloid pen so it was like right after World War II and it was the Germans kind of coming back saying uh you know we've still got it you know it was just it was just a product for the ages you know it has a flexible nib they don't fountain pens don't work the way they used to they used to make flexible nibs so that you could write the way scribes wrote like in the 1800s and stuff but then people in the modern world break those nibs and they use Ballo penss anyway but like when I use these old flexible 19 from pens from 1900 to the 1940s they're just magical I mean they're just nothing like there's nobody's ever been able to eat that experience in modern times wow I got to give me I got to try one of these pens yeah I'll give you one of them so you can at least get a get a feel for it yeah wow I'll give you a product management hat I'll get a pen a beautiful pen I think I win in this exchange Ean two more questions do you have a favorite life motto that you often repeat to yourself share with folks that you find useful to come back to I learned it from my dad um it sounds simple but it's kind of profound do your best best and what he what he meant by that is he didn't mean be the best he meant that life is a gift you don't know how much time you're going to have every day is the gift of your time and the best way to honor the gift of your time is to do your best and there'll be times you won't be the best but if all you did was the best that's all you could do and I and I remember one time so I was a senior in high school it I've already gotten into Stanford I'm totally psyched I'm going to go last week of the semester of senior year and I'm have a test the next day in English and my dad's like hey how how are you feeling about the test I said it doesn't really matter I get to drop it and I'm going to get an A in the class because I've got you know I've got I've got the goods right I don't I don't need to do well on it and he looked so disappointed at me and and he was like you know it doesn't sound like you're doing your best and what he was kind of getting at was that you know the people who achieve greatness they think everything counts so I I always uh got a lot from that with him and there there' be other times where I wouldn't do so well on something and he would he would say well you know sometimes you make a careless mistake or you know but you did your best that's all you could have done and so like the idea of doing your best I find to be very profound and it causes you to realize that the best way to show up in the world world is to be the best your best self there's only one you in this world and the more that you can show up as your best self you'll be impossible to compete with you won't feel the need to copy other folks you won't need to the the need to compare yourself to other people you'll compare yourself instead to the idea of perfection itself and and whatever that means in terms of your own ability to do your best so I've always to me that's probably the most important life lesson I've learned wow as you said very simple but very powerful it's it's powerful when you truly internalize it right when you when you take it Beyond an aphorism it's very powerful it reminds me of uh your partner an maro's uh advice that she got from her dad which is I think maybe the opposite that she shared on Tim Ferris podcast of just always do a world class job at everything you do you doing a world class job yep y amazing okay I'm going to skip the last question just to end on that because that was way too beautiful to Sully with another question so just to give folks a chance to figure out where to buy your book when it's available how to find it what they should know do share yeah so I guess there's two main ways right there's a well we've got a substack if not not everybody's got to buy books right so there's uh patter breakers.com and then I you know I have a site patter breakers.com but you can also get the book on Amazon or you know anywhere it's already available for pre-order it amazing and I usually ask people how listeners can be useful to you I imagine it's check out the book share what you've learned my main goal is for the ideas to spread and to help people and so uh you know hopefully hopefully it we'll have achieved that goal uh but just any anything that people can do to help spread the ideas and I'm looking look co-conspirators wanted I love these episodes where somebody like you spends hundreds of thousands of hours analyzing data and history and start and talking to Founders and just synthesizing all the things you've learned into a couple hours I love this thank you Mike so much for being here and for sharing all this wisdom with us hey well thanks Lenny is honor to be on your show and you know it's been fun to see you do so well thanks Mike it's an honor to have you on the show and again the book is called pattern Breakers why some startups change the future Mike thank you so much for being here okay see you Lenny thanks bye everyone thank you so much for listening if you found this valuable you can subscribe to the show on Apple podcast Spotify or your favorite podcast app also please consider giving us a rating or leaving a review as that really helps other listeners find the podcast you can find all past episodes or learn more about the show at Lenny podcast.com see you in the next episode