Pattern Breakers: How to find a breakthrough startup idea | Mike Maples, Jr. (Founding Partner at Floodgate, ex-Product at Silicon Graphics)

0:00 You found that there's basically three elements of most breakthrough startup ideas. The three are inflections, insights, and then the founder future fit. Business is never a fair fight. What inflections let the founder do is wage asymmetric warfare on the president. You reference this term that you use occasionally, this earned 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 gonna get to play an unfair game by unfair rules that favor us. Today my guest is Mike Maples Jr. Mike is a legendary early stage startup investor.

1:06 And with his firm Floodgate, which was founded over twenty 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. Lift, twitch, octa, rapi, and applied intuition. and has been on the Forbes Midas list eight times.

1:23 More recently, he's been spending a lot of his time researching where great startup ideas come from. And what separates the startups 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.

1:56 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 patternbreakers.com slash Lenny, you will receive a second signed copy of the book for free. There are a limited number of copies available of the software, so if you're interested, I'd encourage you to place your order ASAP. The book is coming out July 9th.

2:31 To take advantage of this offer, go to patternbreakers.com slash Lenny. With that, I bring you Mike Maples Junior. Mike, thank you so much for being here and welcome to the podcast. Lenny, thanks for having me. It is absolutely an honor.

2:50 It's my honor. What we're gonna be talking about in our conversation today is How to come up with a startup idea. And how to Take the first few steps.

2:59 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

3:12 Kind of a broad question. You're very busy, very successful investor. Why did you decide to write a book. Yeah, and it 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 ten years ago

3:30 Twitch was acquired by Amazon for nine hundred and seventy million. And we made something like eighty five 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'em? And they they were all like, Nope, we're good. Just send us the money.

3:56 And some of them even sent me like bottles of champagne and stuff, but and and the good kind. Then I started to kind of Feel a little bit unsettled. Wha how was I a shareholder in Twitch I invested in a company called Justin T V. that it morphed into two companies, Social Cam and Twitch, and then

4:13 social cam got bought. And so I just thought that was the company. So then I looked at at I've been investing for about ten years. And I noticed that like eighty percent of my exit profits had gone for pivot. And and I also noticed that like

4:28 All the ones that had seemed to do well. Didn't necessarily follow the best practices that everybody talked about. I didn't I didn't see the Twitter guys doing the business model canvas, for example. And I didn't see the Justin T V team, even as they morphed into Twitch, being

4:45 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 of at the same time I was helping founders shut down their companies. And they had seemed to do all the right things. They'd done the business small canvas. They'd done customer development. They'd done All the things you're supposed to do hired well.

5:08 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.

5:27 I started to talk to people about it and 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

5:46 to Zendesk 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 DScript. to accurately integrate the voice of the customer into your product development process, helping you build best in class products. What makes Interpret 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 competently prioritize things.

6:20 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 roadmap with confidence, get in touch with the team. at interpret.com slash Lenny. It's E N T E R P-R-E-T. dot com slash Lenny.

6:40 This episode is brought to you by Anvil. Their document SDK helps product teams build And launch software for documents fast. Companies like Carta and Vouch Insurance use Anvil to accelerate the development of their document workflows. Getting to market fast is a top priority for product teams.

6:59 And the last thing that you or your developers want is to build document workflows from scratch. It's time 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.

7:19 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.

7:41 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 useanvil.com/slash Lenny to learn more or start a free trial. That's use A N V I L dot com slash Lenny.

8:10 Amazing. I'm even more excited to get into the meat of this. I was already excited. Before we get into that, just can 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 uh dorky old British guys in Anorak coats. Mm.

8:34 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 start up. So I have a database of Any startup where you would have made more than a hundred acts. On your first check.

8:49 And what I wanna do is I wanna 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.

9:05 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 in joining. But yeah. And 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.

9:26 And the 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 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

9:45 Exactly what it was like. What were the w what was the origin story of this idea? How do they come up with it? If they pivoted, what caused him to pivot. You know, when did they first start to encounter success? What was the reason for that? All those things. And and I

10:01 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 y what what you wanna do is you wanna say okay I notice here's the seed pitch deck. And you called the product X. But now the product's called Why.

10:20 When did you make that change? Why did that happen? And so you're trying to do the very best you can Uh asking a very nonjudgmental set of questions that are gonna give you a nonjudgmental set of answers. that you can kind of be like a detective and get kinda get to the root cause of why these things.

10:36 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. I think the other thing is I just have a pretty sympathico relationship with founders usually. And so

10:52 I can kinda push for the real. And they're not, you know, I'm like, look, I'm not gonna I'm I won't s share anything you don't want me to share. I'm just trying to understand. And so so you know, you when you have the 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

11:13 You try to glean these facts over time with informal discussions and you know in the 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.

11:32 Amazing. Okay. So let's get into it. Your book's basically broken up into kind of two parts. How to come up with an idea and then the actions you need to get right. to move forward on the idea. And you have a really cool way of framing

11:45 How to do this and then we'll guide 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.

11:58 So the incumbents 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

12:21 Better doesn't matter when you're a startup. Because better is an extension of the present. Better is when you think the future will resemble the present. But only be slightly different. The way startups win is by being radically different.

12:36 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 Uber X. 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.

12:56 And and so like th 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 moat.

13:15 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.

13:32 And propose something completely different. And that was the The original uh 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

13:50 Coming up with the idea and the actions that you gotta 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. Okay. Everything starts with the idea.

14:01 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

14:09 Elements. Uh across successful companies, pattern breaking companies. So within the idea. Bucket.

14:17 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 w what I call founder future fit, or another way I phrase it is is this from the future. But those are the those are the main three things that I've observed.

14:38 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.

14:58 But if your insight 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.

15:20 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 infections. What is an inflection? Why does it matter? What does inflection look like? An inflection is an an external event.

15:36 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 You we brought up uh So maybe we'll use them as an example. So

15:51 The inflection that enabled lift was the iPhone. shipped with a GPS locator chip. And One of the things that that illustrates is, for example, Moore's Law is not an inflection. You know, an improvement curve is not an inflection.

16:07 An inflection I'm a little persnickety 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.

16:22 that creates new empowerment for the first time possible. And so, you know, people talk about timing 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 four s, 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 four S, it would have been obvious.

16:46 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 we're in a position to offer that kind of empowerment. in the form of a radical product that changed the future.

17:04 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 camera's getting better on the smartphones. Which enabled Instagram. So Instagram

17:18 uh was at the convergence of a few inflections. Uh first of all, there were smartphone adoptions, so there were just more of'em. And so they crossed like ten million But then. You had the the cameras getting a lot better. You had more of'em connected on Wi Fi.

17:33 You had the networks having better upload speed. uh for smartphones. 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.

17:47 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, two thousand eight, it probably wouldn't have worked. It probably or it wouldn't have worked to the extent that it did. You know, it's I its window of timing was just right.

18:07 W what are some other examples? You know, the the locator chips in the smartphones powered other companies as well. Power DoorDash, 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.

18:23 One thing I love about inflections, uh, 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.

18:38 For like five hundred 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.

18:58 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 unleashed could change the future. And it and it's

19:11 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'd be similar to yesterday. But sometimes the founder will notice

19:28 uh an inflection. And I 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

19:39 so busy going about our day to day 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 Chat GPT when it came out. It was

19:52 Sitting on top of an existing model. And it just gave people a new interface to use it and all of a sudden everyone went crazy. They're like, Oh my god, that's the future. But it was already there. It's just you couldn't chat with it the way that People wanted to check. Yeah, you know that like um uh Michael Saylor once I was talking to him and

20:09 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 and the ability to have movable type and letter press.

20:23 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.

20:40 that most of us would just walk right by and never see. Yeah. 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 your stickler for what is an inflection, what is not. Do you consider AI an inflection?

20:55 Uh I would say that I I would probably be a little more specific about it. So I'm I might say that certain uh large language models are an inflection. Because like what the 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 their weeks off if they had to do that. Right. So

21:18 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 me 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 can say

21:37 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?'Cause like

21:53 Nuclear power has existed for a long, long time, but we haven't built any nuclear power plant plants in fifty years. And so just because you have a power doesn't mean it's gonna get used. It could get regulated out of existence. Customers could decide they don't want it. And so w we want to answer all three things. What's the specific new thing?

22:13 What is the specific form of empowerment it offers and to who? And under what are the empowerment conditions. So like with the collection for lift. the infl the inflection was the new thing was the iPhone four us with a GPS chip. The empowerment was you can locate anyone within one meter accuracy with an algorithm.

22:32 And that's gonna be pretty much anybody with a smartphone, and that's a lot of people. And you know, in order for this to be Matt. People are gonna have to wanna share their location information with applications. the government's gonna have to not outlaw GPS chips and phone. Apple's gonna have to keep wanting to ships chips and phones.

22:51 And we felt like those were pretty reasonable bets, right? We felt like um It's pretty likely those empowerment conditions. Amazing. I was just gonna 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 uh

23:06 The first was the um the shift towards user generated content and sort of internet celebrities. Justin Conn wanted to be an influencer before he there was a term to describe influence. Right. He was really building the product that he wanted for himself. But you know, right before

23:23 Twitch or right before Justin TV, which was the original company. Time's 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.

23:37 But simultaneously, broadband penetration had reached critical mass. You had the C D Ns were getting really good and and and and we thought that they would get better. And so, you know, you you you were in the 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 couldn't have done that even two years before. In fact

24:00 Kyle Vote had to invent some pretty miraculo 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.

24:12 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 infliction. You know, um Airbnb. It could be close to both of our hearts for different reasons. They benefited, I think, from a couple of things. One was the p proliferation of customer reviews online.

24:29 in 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

24:42 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 f 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 air Air B.

25:00 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

25:17 because of shelter in place for telemedicine visits, you know It it used to be illegal to do a telemedicine visit across state lines. But now all of a sudden with covet and shelter at place not only was it made legal, but it could even be reimbursed by the healthcare system. And so that's an inflection because it empowers patients.

25:39 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 that meets that condition.

25:59 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 gonna

26:10 You know, once Covet shelter place goes away, are they gonna revert back to the old laws. And if they did, that would have been a problem. And so that would be the empowerment issue. 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.

26:27 So there's regulatory inflections, big changes in regulation, there's technological There's also I think you s implied like an attitude, like w the way people see it. Yeah, there can be a belief inflection, uh so for example uh during Covid, the amount of telemedicine visits Exploded. And so as a result, there was a permanent change in people's belief about whether they would want to do a telemedicine visit. Before that

26:50 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 r much rather do it this way than go visit the doctor and wait in line and all that stuff. And the doctor was like I'd much rather do this than than you know.

27:08 b 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 uh 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

27:29 inflection that happened with COVID. And sir, are those the three regulatory, technological, and belief? Those are the main ones, you know, and and I would say that in in in in many ways it's um you could say that it from a macro point of view, it's two things. It's technology changing Enablement.

27:47 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 changes can represent a turning point in one's capacity to change the future. Amazing. Okay.

28:04 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 uh unlike an inflection, an insight does come from the founders. Uh an insight.

28:18 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 it in the example that we gave earlier with Lyft, the inflection was the iPhone four S. 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

28:43 What was uh you know what was non obvious about it or non consensus about it. Who's gonna wanna get in a stranger's car? That's crazy, right? And uh um Thank God I mean, if there's one piece of goodness about us passing on airbed and breakfast Zime Ann and I were like, Man, you know, nobody's gonna wanna stay in a stranger's house. That's crazy.

29:05 And at the time, Airbnb Breakfast, the host of the guests stayed in the house at the same time and the You know, the the host would be Pop Tarts or something like that to the guests the next Morning. We're like You know, this is right around the time of the like the Craigslist killings and stuff were like this is just scary, you know, kinda crazy. Uh, you know, couch surfing is a service, you know.

29:24 But By the time uh we we saw what was Zim Ride at the time what became Lift. Anne 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

29:38 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

29:53 If you're Right and consensus. You still don't do that well. And A a an idea that is right but consensus.

30:02 has a couple of 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

30:17 It means it's too similar to what they already know. 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 this trait where Most people don't like it. Or or even hostile to it or just kind of meh about it.

30:35 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

30:51 That a great startup Unlike uh unlike a conventional company that proposes the future as an extension of the present. So that normal companies forecast. They say, I'm gonna look forward from the present and forward project what the future will be.

31:07 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 gonna look for radically different futures. And work backwards from those radically different futures. And so the radically different future comes from that thinking different.

31:27 Thinking non consensus. And then it's ac 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

31:49 I can't waste my time with people who won't move. I can't waste Any orgs of energy on anybody other than those ready to move or about to m And then I need to co create the future with those early believers. And so Great startups happen.

32:04 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. There's so many threads I want to follow here.

32:21 One is the Airbnb 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 Airbnb. idea. They are all like this is a terrible idea. This we we're just we're gonna assume they will change the idea. But we love the founders, we're gonna take a bet on. So I was introduced to the guys by uh Michael Sibel. From who was one of the co founders of Justin TV Twitch.

32:42 And Michael introduced me to Brian Chesky before they applied to Y Combinator. So like m like Michael's like they're not even close to rate of applied to Y C. But like w you know, he thought that I was maybe would think that it was the right kind of crazy I I get pitched by a lot of like uh

32:59 I'm uh you know, I'm not very off put by crazy ideas. I can see why. Yeah. Uh so it was uh and it and the meeting was totally discombobulated, right? It's a room full of cereal boxes, I'm like What's up with this? Why is there cereal here? And then and then he can't get the product to work. So we're like twenty eighty and I'm like okay, that's okay. Let's just look at the slides. And he goes, Well, Michael Seibel told me that

33:20 You don't like slides, you like demos. And I was like, That's true, but Not working. So we're like twenty minutes into this meeting in a room full of serial boxes just looking at each other. And and uh you know you keep You can't win'em all, right? Uh you you win some, you lose some.

33:34 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 start up ideas. So they wanted to do a start up together.

33:53 But but like never occurred to them at first that air airbed and breakfast was like the start up 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 it that that you know You look back on it and almost smile at the fact that they didn't They didn't know what they even had at first.

34:11 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 it the other thing, the other great lesson is

34:26 You don't want your initial 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

34:44 New insight is gonna reveal itself. Uh and so y you know, there is a little bit of play to this. Uh that I think is pretty important. Do you remember wh what some of the ideas they were brainstorming, by the way? I I don't. I I wonder if even they do, right? Uh probably not probably not the Airbnb story, right? Their book.

35:04 I feel like them uh failing in your demo helped prepare them for Y C and that's uh what helped them get in. So I think that you're a big part of their story. And to make it m even more painful, like I'm in the book, right? Somebody Somebody Is that your husband in the Airbnb story?

35:20 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 V C. They were like You know Look how bad we were at presenting this at first, right? It was just a complete Catastrophe presentation.

35:36 Uh but That's another good lesson for me too. I learned a A very permanent lesson from that, which is Just because the presentation's good or bad, it 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 gonna be.

35:52 regardless of how messed up the presentation is. What was their evaluation at that point? Oh God. Um This hurts to I th I think he offered me a chance to invest at a one point five million dollar valuation.

36:06 But another a hundred billion dollar business. Oh yeah, I would have made like six thousand times more money or something like that. Thank God I said yes to Twitter and Just T V and Uh you know, we said yes to lift, uh an Octa'cause if it If we'd seen all of those and passed on all of'em, I'd you know, I've done I'd be apoplectic.

36:28 That's I think that's what's interesting about your uh stage of investing is you You just need a coup to work out for You to wait. Yeah. That's right. It's it 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 and the power of surprises. Can you talk a bit about that?

36:54 Yeah, so so there's a couple of 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.

37:18 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 sharing companies or Airbnb by Chesky and Nate, those guys.

37:37 And so What you want to adopt is the right mindset. And how do you adopt the m right mindset? You You interact with new technologies at the cutting edge. But you actively savor surprises.

37:52 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.

38:13 You didn't really learn anything when you think about it. You know, you just double down on your existing understanding or opinion. I learned this lesson from Scott Cook, who was the founder of Intuit. Whenever he would be presented a new product People would present.

38:28 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 brainlocked on what they want. They have they have the agenda they have and they they want validation.

38:48 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 as a gift. Because you think, Wow, maybe I encounter that surprise before anybody ever has. And so uh so that's kinda what we mean. And you wanna

39:06 Construct your experiments. So that you're in a position to be surprised. So uh a good example Would have been what the guys at Cheg did. So Cheg was Wanting to see if people would t do textbook rounds. So they created a fake site called Textbook Flicks.

39:22 But here's where Osman and Ayush were were very savvy. Rather than just test whether people would rent a hundred dollar textbook for thirty five dollars. They Tested an arbitrary set of prices. All the way up to seventy five dollars. So they had

39:38 the demand preference curve at different prices and Textbook Flix wasn't a real site, so you'd get to the shopping cart and it would give you a four oh four error. But we could tell the people wanted to rent textbooks and the surprise was that they would rent'em for more than we thought. We thought We need to get at least thirty five, but some students were well to pay seventy five.

39:56 And so That understanding was huge. If we'd only Done an experiment to validate the hypothesis of Yes, well they ran it for thirty five. our pricing model would have been totally different from oh wow.

40:08 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 gonna give it back anyway. So seventy five bucks is l less than a hundred. 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

40:27 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

40:46 tinkering with the future and noticing surprises. And having their noticing filter tuned to like volume eleven. Where most b most of us wouldn't notice it. Most of us would just pass the secret w right by because we're looking To validate what we think is already true.

41:02 You referenced this term that is also some 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 uh 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

41:35 People are 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.

41:49 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 trained spotter for startups. They become a trained spotter for this new thing that they're excited about.

42:04 And you know, they frustrate the people around'em. 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. It's the last thing they think about when they go to bed. First thing they think about when they wake up.

42:24 And so that's where I find most of the really great earned 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 or that just most people are This connects with that stat that you shared that eighty percent of your biggest returning investments came from a pivot. It all connects where

42:46 You're just trying stuff, you're learning, seeing things people haven't tried and 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

43:06 Your Idea. A couple of things could be true. One is your insight could be wrong. Your insight's wrong, you don't have a start up, right? You should just stop. The other thing though that could be true is your implementation is wrong.

43:20 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. And they said, What is your top priority? And they said, Identity management. So they had the right insight, which was

43:42 customers would struggle to manage cloud services. But they had the wrong implementation of the insight. So then they came back with identity management and it worked. So You know If if somebody doesn't like your idea. If they're not desperate for it.

43:56 Either the insight's wrong, the implementation's wrong, or you could be talking to the wrong customer, right? Like some some people that often talk to wanted to integrate it with on prem software. And in that case, their opinion's irrelevant because They're not an innovative customer. They're not living in future

44:14 They're not gonna give you product requirement ideas that or additive to your strategy. And so, you know, you wanna be Right insight, right inflections. Right implementation, right early believers that you're talking to.

44:27 as you iterate towards prior 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.

44:45 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.

45:05 And so what you're trying to do though is pursue opportunities where the odds are massively in your favor. It's so like I kinda 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

45:23 And it's very understandable. They say, I want to go after big market opportunities. So they analyze big markets. They find unserved customers. With unmet needs. in underaddressed 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.

45:44 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.

45:59 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 gonna be in the future. I know that this is where things are gonna be radically different some day. I would rather have those things present. And be willing to pivot the product.

46:17 than not have those things and have a much clearer idea of what the product should be. Funny enough, one of my biggest investment successes that exactly which you're saying you shouldn't do, which is they looked at a huge market with a bad incumbent and built something better and it's working. But I think Again, it's not that you can't win that way.

46:36 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 w it wouldn't surprise me if they found a way to use inflections to fight an unfair bite.

46:57 What I try to do with the insights is I realize 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 the president. And the insight is like the vessel. that they use, right? It's it's kinda like the the rock is the inflection, the slingshot is the insight.

47:19 That they shoot it. at David, or or David shoots at Goliath, right? And so So that's what we're looking for. We're looking to create the conditions where we're gonna get to play an unfair game by unfair rule pay for us. Great segue to the third bucket, the third element of

47:35 Breakthrough companies, 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.

47:51 You know, all the all these things, right, that people talk about. Passion for the user. But what what I find is that there's no canonical best founder, right? So Mark Andreessen started Netscape as a programmer making minimum wage at the University of Illinois. And everybody thought the digital highway at the time was gonna come from Time Warner or from Microsoft Network or from the US government. Nobody thought that some kid was gonna do it from the bottoms up.

48:20 But it turns out that Mark was tinkering with a set of inflections around the world wide web And you know, right around that time. Microsoft uh introduced uh a better version of Windows and right around that time that Pentium Processor came out.

48:34 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.

48:48 If if you're gonna 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, cast or and Um Peter had been They they'd grown up in Detroit and Michigan.

49:05 They had worked at car companies in the past, it in the big three. And then they worked in inside of Google at Waymo and Google Maps. And so and they and they'd had a successful startup before it. So if you looked What what is a team from central casting to do this? It would be them.

49:22 And so what I what I mean by found or 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 first time founders. Mark Zuckerberg Bill Gates, Paul Allen, um, you know, we just gave the example of of Mark Andreessen. In that case, usually they're at the cutting edge of a new technology.

49:45 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 Cartesian coordinates and they discover pol polar coordinates. And they don't even have to translate between the two because they never understood Cartesian coordinates. And so in that case

50:03 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 can do the job. If you're Octa and you're doing identity management, for cloomers.

50:22 They're gonna t trust Todd McKinnon from Salesforce. way before they're gonna trust a college drop down. To do that job. And so I like to say uh founder future fit is You know

50:34 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.

50:50 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 the some vision of the future that is more

51:09 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, Louis 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.

51:36 Right. Chance favors the prepared mind because a prepared mind attracts luck. A prepared mind is better positioned to notice a breakthrough. Than other minds.

51:50 And a prepared mind sees the breakthrough, sees around the corner. Because they're thinking about the subject all the time. And so like Most people think that the way you come up with good start up ideas is try to think of startup. And I like to say, No, that's exactly wrong.

52:06 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, it you'd be living in the present.

52:23 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 Andreessen didn't do the mosaic browser because he thought there was a market for browsers or the d he didn't even know about a digital highway.

52:41 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.

52:56 But the but the principle still applies, right? Those customers weren't equal. Yeah, they were Lighthouse because kinda like when I was at Silicon Graphics. I didn't spend time with normal movie studios I spent time with industrial light magic because I thought

53:11 If we solve their problem, they're gonna 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 wanna find customers that live in the future. I love this point. Uh, Justin T V is this another great example of this where

53:27 He'll just assume the future, everyone's gonna be watching each other's real reality shows. So he built his own backpack with a camera and a site just to stream himself. Yeah, and and and the Justin TV example's 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 and embody these inflections and these insights. that led them ultimately to Twitch.

53:51 Ironically, the Justin's second company, Atrium Most people thought that that made sense. Well automating legal tasks and You know, uh Justin's a great founder.

54:02 But Justin just didn't like the legal field. He had no passion for it. When he started Atrium, his passion was to be a higher status founder. And I've got a podcast with him recently where he talks about this, where he's like

54:14 I wanted to be as big as Patrick Collison and Brian Chesky and Drew Houston. 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.

54:32 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 first wins. This episode is brought to you by Webflow. We're all friends here, so let's be real for a second.

54:49 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 one oh one. But here's a number for you. 54% of leaders say web updates take too long.

55:03 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.

55:18 Learn how teams like Dropbox Ideo and orange theory. Trust Webflow to achieve their most ambitious goals today at Webflow. Come. Okay, so

55:29 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 wanna start a startup.

55:39 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.

56:02 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.

56:18 that exists right now today. And so what when I like to say to people it 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

56:33 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

56:46 It gives you the right to have an opinion about the future. So right I I like to say if you're not living in the future, you don't your opinion about it isn't valid. Kinda like saying I think a customer will do X and you've never talked to a customer.

57:01 I'm like, okay, your opinion's interesting but irrelevant. And so the The only relevant future the the only relevant opinions about The future. come from people who are living in it.

57:12 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 Matty Hall. Who started Living Car, but she was working at Xenophit. 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.

57:32 But then she decided to go follow Sam Altman for a year and be his chief of staff. And Sam Altman 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 Genet.

57:51 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

58:09 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

58:22 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 work with a silicon graphics. Yeah, magic does it.

58:34 Yeah. Yeah, so McCracken had a term for it uh that I've always liked, uh lighthouse customers. And so like a lighthouse has this light that shines out and and unobscures the fog. And not all customers are equal. And some customers are living in the future.

58:51 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

59:02 You can build what's missing for yourself, like Andreessen did or Zuckerberg or Steve Wozniak 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

59:18 Hey, that's great if you live in a supercomputer lab, or if you You know, uh we're selling to Industrial Light or Magic or like all the sales force. I'm not one of those. I'm a second year student.

59:29 at Stanford Business School. I'm a product manager or company X. I'm You know, whatever the case may be. That's where the Maddie Hall example's really powerful because Maddie proactively got out of the present. In a very intentional way.

59:43 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. U usually it has to do with how tech forward they are. You know, there was a there was a time when a lot of people didn't think the cloud was gonna be a thing because it was insecure and I'm not gonna host my important data and let somebody else have it.

1:00:09 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

1:00:28 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

1:00:50 the 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

1:01:07 If We want to solve problems for desperate people. And and it's like If we have powerful inflections that really empower And we have something unique.

1:01:18 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

1:01:34 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 gotta have it.

1:01:47 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 ten times better apple. I want to be the world's first banana. And I I wanna say to people You may not want bananas. You may not like'em. You not may not value the advantage of bananas.

1:02:04 But if you value bananas. I'm the only person that's got. And it's like, you know Come to Papa. Right. And so that's like an insight feels like that.

1:02:14 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 gonna convince them. And they're gonna waste your time. What you wanna do is find Everybody in the world evalues the advantages of bananas. As soon as possible, not wasting any time on the people who don't.

1:02:32 And so that I'd I'd say that that kinda rap uh 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 Cybertru and says Oh yeah, well how does that compare to Ford F one fifty?

1:02:46 And you may hate the cyber truck, you may think it's stupid. But nobody is neutral about the cyber truck. Right. That's That's you wanna have a product that people can't be neutral about. But that the people who magnetized positively to it.

1:03:00 Just can't imagine a world without. Mm-hmm. I love that. Going back to your banana example. You won. Just a few people to be

1:03:07 Just like I need that banana no matter how much your 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.

1:03:25 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 Gotta have that thing. I'll take any version of it you give me.

1:03:40 Because I am desperate for it. Speaking of execution. Good 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

1:03:55 Do, and many of them do. Uh movements. Storytelling. Disagreeableness. Let's talk about each one.

1:04:02 Pick whichever one you want to start with. Yeah, so so you know We've talked about thinking different. But it's like the the the problem though is that uh You know, asking people to abandon the familiar for an uncertain tomorrow.

1:04:16 Is a provocative act. Uh all startups are fundamentally disagreeable. There are disagreement with how things are done, there are disagreement with the pattern of what is. And so uh We need as founders to persuade others to change their habits.

1:04:32 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.

1:04:50 And so, you know, I like to say there are three aspects to 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, Martin Luther King, or they think of You know, there's artistic movements like Cubism and Picasso.

1:05:15 But like fundamentally A movement is a different way of developing a market. than how most marketing people think about developing markets. 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

1:05:36 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 movie.

1:05:50 So like um Early customers are not animated by pragmatism. They're animated by belief. Uh early Early customers, early employees. early investors.

1:06:03 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.

1:06:20 to a different future. And when you think about it, it's the s 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

1:06:34 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.

1:06:46 And you know, the people who who followed Martin Luther King bought in to the aesthetically better future that is movement Promised. And it turns out, and I don't mean to equate uh

1:06:58 that was a pretty important movement, right? Like some movements are more frivolous, we know I'd 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.

1:07:13 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.

1:07:32 And now the company's no longer a startup, it's a company. And now all of a sudden it is a valid market and all of a sudden they're the status quo and they gotta watch out for the next set of disruptor. So the movement is the first Key thing, I think, in all of this. Is there an example? Uh lift obviously comes to mind with this the big mustaches just this is the future. Yeah, ride sharing ride sharing was a movement.

1:07:53 You know, in in my early days starting Floodgate uh with Anne We thought that seed investing was a movement. And so we thought that there was gonna be a day where seed funds would be a permanent feature of the venture landscape. But people didn't believe that in the late two thousands. And so we're like Not enough that we just

1:08:12 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 Horsley at Horsley Bridge and Dave Swenson at Yale and people who

1:08:24 you know, are respected 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 Weathergate who had just started A d a new firm. Uh one one of my favorite examples actually an old one, uh Clarence Birdseye.

1:08:43 So you know, you go into the supermarket and there's frozen food aisle. Well Clarence Birds Eye discovered how to flash freeze food when he was up in the Arctic looking at Eskimos. And they were flash freezing their fish and he wondered, could you do it for other things? And he found out you could, fruits and vegetables. But like

1:09:00 It wasn't enough to just flash freeze the fish. Or the fruits or the vegetables. You had to convince the trains to have a uh refrigerated car. You had to convince the supermarket to have a refrigerated aisle. And so he had to start a movement.

1:09:14 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 you were. And so all movements have that characteristic where you're You know, you kinda start with a higher purpose.

1:09:32 And then you move people to that different future. I'm trying to think about what are current movements that are happening when That might Yeah, movement is the With L O M's just this bet that transformers are the

1:09:44 future of how this is gonna work. Just more compute is the answer versus trying to find something else. Yeah, 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 copy.

1:10:01 Right. So like Tesla doesn't say, Here's why we're better than Ford and Toyota. The and 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 X. You know, I'm Avis, I try harder than her.

1:10:18 They appeal to a more aesthetically Higher purpose future. And then they show that this startup 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

1:10:34 is kind of pushing this movement of craft and design and experience matters in B to B software. And you shouldn't settle for something that you don't love. Ver very much so. And you know what? Chesky, this was it 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 a movement around living like a local.

1:10:54 And so the the other thing that a movement does is it turns the greatest strength of the status quo into its biggest weakness. And so like J Brian never said hotels suck. You know, death to the four season. He just said, Hey, look, you know, when you go to Paris

1:11:09 You have a choice. You can you can hang out the four seasons, and it's gonna 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 kinda hotel everywhere you go, I'm not for you.

1:11:31 But so like Now let's say your four seasons. Your whole business is predicated on doing the good job of having a common experience that people can accept and that they're used to, and that they Expect. And so now you've t you've taken all of the stuff that you invested decades in

1:11:47 And turned it into something you have to apologize for all of a sudden. And so so like the gr the great startups they create movements not so much by criticizing the incumbent But by um showing the weakness in the strength of the income. And then just saying to the customer, Hey, look, you decide. It's not up to me to decide.

1:12:06 What's bad about four Cs is up to you to decide whether You value my difference or not. That reminds me of counter positioning from Hamilton Hamilton Helmer's Seven Powers book. Hundred percent. So to make it even

1:12:19 More practical for people that are like, Oh, I need to come up with a movement for my startup. That's why things aren't working. It sounds a Here's How we want the view. future to look and why we're doing this.

1:12:29 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 I but I would also say that uh It's about storytelling. And so like storytelling, uh

1:12:43 There is a science to storytelling. And so like for example Yeah, the hero's journey. You have somebody in the world that is The hero.

1:12:53 Uh let's say Luke Skywalker on Tatui. 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.

1:13:04 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 Brew 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.

1:13:23 The mentor has uh a tool and a magic. In this case it was the lightsaber was the tool or the uh 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

1:13:40 Then what happens is you you You Fine co conspirators along the way, Han Solo, Chewy. You know, ultimately the princess You you rescue her

1:13:51 You blow up the Death Star, you beat the Empire. And then emerge, transformed. 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.

1:14:07 In the past, the world that is, taxi suck in San Francisco. I can't even get one and when I get one it's gross and it smells bad and it's Wait. They won't take my credit cards, I have to have cash. Can't rely on him to get me there.

1:14:21 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.

1:14:37 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.

1:14:51 So the pink mustache made it seem a little bit less scary. When you see these cars drive around in San Francisco. You're like what's up with that pink mustache and you're talking to your friend and they say, Oh, it's this new thing called Lift it's pretty cool. You know, it's an app, if you've seen it. And so Logan and John.

1:15:06 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 microblogs inc. Right. They they created a metaphor around Tweeting birds, you know.

1:15:22 the the the Tesla was this way, right? It wouldn't have survived a comparison with a Porsche of nine eleven. It just seats weren't as good, the radio wasn't as good. But but Elon was telling a 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.

1:15:45 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 different future. We need to understand, and this is important, right? That Your job as the founder is to be OB One, not Luke.

1:16:04 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.

1:16:16 early believers to wanna 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 you tell A customer. because all of them have a different idea of what their hero's journey 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.

1:16:36 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 wanna work on something you're excited about with really awesome people. that don't waste your time with politics and bureaucracy, right?

1:16:56 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 to be. I had Nancy Duarte on the podcast. She's one of the most famous presentation designers and she

1:17:15 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 kinda keep going back and forth. Hundred percent. In fact, um Nancy is the person who helped me r understand this better than any single person. Uh so

1:17:33 So Nancy would show me how Steve Jobs' iPhone watch speech She'd be like, Okay, well n 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 a an iPod.

1:17:53 And he 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.

1:18:03 How bad it was, how awesome it's gonna be. How awesome it is. Like when you look at his speech. He's masterful at toggling. And by the way, the same is true of Abe Lincoln with the Gettysburg Address.

1:18:15 Or 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 but he kinda goes back and forth.

1:18:27 drawing attention between what has happened and 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.

1:18:41 And they have this really cool blog post and Big idea, but Nobody really cares about their product yet. Give me advice of just like Just make sure you're building something people want above all above all else and the story is

1:18:54 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.

1:19:05 VCs That's not storytelling. 'Cause you're talking about yourself. Right. Like And

1:19:13 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 gonna make them a hero. And so like when you when you kinda say, Okay If I'm pitching VCs, what I really need to do is help them understand why they'll be a hero.

1:19:30 If they invest in my company according to what makes them feel heroic. What you present is different. 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.

1:19:48 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.

1:20:01 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 it could be. And also show your amazing stats and backgrounds and market size and All that stuff.

1:20:19 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 the poor founder will get advice from twenty different people about their pitch deck.

1:20:35 And a lot of the people giving him advice d 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 gonna believe anyway.

1:20:53 And then they try to have a slide to meet that objection and before you know it You have what I call a Franken Deck. And so you have this huge, gigantic Presentation. Trying to anticipate every objection.

1:21:06 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 wanna find is the ones who are prepared to move with you. And make sure they absolutely know why they should. Uh that's that to me that's the ideal pitch deck.

1:21:28 I love this advice. And just to be clear, this is like pre seed and pre seed before there's a lot of traction, a lot of data. 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 it stick to your guns? Okay, here'd be my succinct advice. Uh And other than that, there's about a million details. Um slide one.

1:21:49 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 B Cs think marketplaces are hot. Residential real estate's big.

1:22:08 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 V C I'm like oh I know what you do. And and there are a lot of pitches I'm ten, fifteen minutes in, and I'm trying to understand what they do, but I don't know.

1:22:24 So if like you just say, here's what we do. And then the second thing that I uh 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 an L P and say We believe that there's a gap between angels and VCs.

1:22:44 And V Cs are writing five million dollar checks, Angels two hundred fifty thousand dollar checks. We believe that five hundred thousand is the new five million because of lean startups. We believe that there will be A new type of category of funds called Z funds. Now if you don't believe that Nothing else I'm about to say is gonna make any sense to you.

1:23:02 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.

1:23:16 He's not gonna compete with me because why would Peter Fenton leave benchmark to start a seed fund? Doesn't make sense. The only people who are gonna try to compete with me from the big funds are the people who aren't performing. But if you if you set the context to 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

1:23:39 You we need to agree on this insight for this to have a chance. of being right some. So What do we do? What's our insight? And then slide three is

1:23:49 What if any proof points do we have? Do we 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.

1:24:04 When we 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 Here you talk about it, which is disagreeableness.

1:24:18 What is that about? Earlier I mentioned that you wanna escape the comparison trap when you have your insight and when you 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.

1:24:36 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 Living's the Seagull. Where there's a seagull that wants to fly

1:24:52 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. So to me the great founders are kinda like Jonathan Livingston Siegel. They're willing to pursue something that they're obsessed with that they think has to happen in this world.

1:25:15 And they're willing to sacrifice Yeah. status you know in the socio Economic sometimes. Dominance hierarchy.

1:25:25 Because Fulfilling the mission is ultimately more important to them than fitting it. And you know, you can't stand out if you always fit in, right? The only people who are different can really make a different. And so that's kinda the the mindset. So I like to say a start up is a fundamentally disagreeable act.

1:25:42 In first place. And there's gonna 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 wanna work with a founder who's coachable. I'm like uh you know, I'm not really sure, you know, like it

1:25:58 I 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 yeah, I I don't think you should raise that much money because I think you'll spend whatever you raise in eighteen months, no matter how much you raise. He said, Man, that's So you mean that startups almost always spend their money in eighteen months, regardless of the amount?

1:26:19 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

1:26:30 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.

1:26:41 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.

1:26:52 You know, he didn't say parum sand, I'd 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 that uh

1:27:08 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 right. They're the founder. They're the genius. And so

1:27:20 I I find that and you know, all of them Not all of'em, but a whole lot of'em. Or more disagreeable than History lets on. You know, like my dad worked for Bill Gates when he was at Microsoft.

1:27:32 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.

1:27:42 As long as the hard ass Like Makes the s you know. You you meld the steel in the heat of the flame. Of high standards.

1:27:52 And you know, people Sometimes people can't work for Elon Musk for very long, but almost everybody I know who's worked for him really respects it. Because he has high standards. And you know. He's not trying to win friends and influence people. He's trying to

1:28:06 Land on Mars. And if you're gonna land on Mars you've gotta be disagreeable some of the time. So um you know, I just find that that is a trait that is under underappreciated these great founders quite often. What you just shared reminds me of a a recent podcast episode of Jeffrey Pfeffer, which I know you listen to.

1:28:24 Where he talks about the rules of power. 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

1:28:40 As you said, he was not so nice. Here's the other thing and by the way, I listened to that episode from beginning to the end, right? And and I I thought it was fantastic because I was like the The next thing I wanna do is go to uh Professor Pfeffer and say Can we cast these seven principles through a pattern breaking lens? Like Let's assume you're a start up capitalist. You're not at a company Because you know.

1:29:03 Changing the future. requires you to acquire a different Form of power. than you know, you would say in an organization But

1:29:12 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 gonna like you.

1:29:26 You know, if you if you want to be alive, get a dog. But if you want a ch if you want power there's certain things you're gonna 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 gotta wield the carrot and the stick.

1:29:44 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 gonna use your desire to fit in against you. They're gonna say, Oh, you can't do that, that's illegal, or you can't do that, that's unethical, or you

1:30:03 You can't do that. You're being some tech pro 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

1:30:14 they they have to have the courage to be disliked'cause 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 at what the future should be?

1:30:31 And so they just they get criticized unfairly in the other direction. After they succeed. But in the end that's w it comes with the territory, right? It's kind of you know, part of the job description, unfortunately. Yeah, Elon goes through a lot of that.

1:30:45 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 at these companies like this is a place is a mess. How is this even working? But you're You're finding is that that's very common and normal.

1:31:00 Yeah. Especially in startups. So Th 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.

1:31:20 Like Corporations in theory should always win. They have big management team. They have more experienced people. They have customer suppliers, partners, brand. So a startup never beats a big company by executing better than the big company.

1:31:35 Startup wins over the big company because it proposes a radically different future. disorients the incumbent. It sort of chaotically moves people. But but like every startup I've ever seen on the inside

1:31:49 Was white. You know, it was like a capitalist mutation. It was like It was like trying to find a a beaked finch in the Galapagos 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

1:32:08 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 kinda what we Comes with the territory.

1:32:17 Like Friend friend of mine, Robin Roberts, once said, You know, make your mess your message. It's so true. Oh man, that's so funny. I love it.

1:32:27 I have a couple more questions before we wrap up. Before we leave the actions category, is there anything else you think is important to share, any other lessons that we haven't touched on? 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 N 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.

1:32:53 Right for product manager, but I'm I'm like what And you know I imagine the early posts that you wrote, it probably felt kinda 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

1:33:08 Tell their friends about it. And now all of a sudden it kinda becomes a thing, right? And so Uh you know, in many ways Lenny's podcast, Lenny's Blog and Lenny's newsletter are all

1:33:20 You know Kind of. Examples of facets of this movement that you're creating. But you're

1:33:27 Your movement is not just about the stories you tell or the guests you have or the podcast or the Right up you have. You have a point of view. Right, you have a point of view about The centrality of a product manager

1:33:41 In companies and in businesses and in the future And it's like honoring that j 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.

1:33:55 When it's a startup. Uh this 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. I'm flattered. I I have no intention of starting a movement.

1:34:09 Uh, I could see what you're saying. That sounds like a lot of stress. I think you already have, whether whether you meant to or not, I think you have. All right. Well I do have swag and if you're on YouTube. This is our best selling item. A hat that just says product manager. People love it. I have it in the background. Do I give a fit. Can I wear one if I'm still not one? Actually, you've you've been one and so forever product manager. I'll send you a hat. Get grandfathered in for my past.

1:34:35 Forever. Forever PM Mike. Okay, I just have one more question. And this is around your last chapter. Which I think is gonna 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.

1:34:48 What are these Principle still play. What advice can you share for people say a PM inside a large company? to help them find pattern breaking ideas, big ideas within the company. Yeah, so the first the first thing I think

1:35:00 it is important to understand is that Everything about a value deliver. 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 twenty four months or three years or whatever.

1:35:21 Bad strategy. Right. So like Yeah. Let's take a company like say Apple where they did the iPhone. The iPhone was a whole new thing.

1:35:30 It w it was driven by, in this case, Steve Jobs, the founder. You couldn't reconcile it with the original business of the map. And not really even the iPod. So you had to you had to treat it is a totally different thing.

1:35:45 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

1:35:59 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

1:36:13 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 you know radically

1:36:32 New direction. Or am I buying a company that's an extension of my current business? Neither is 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

1:36:47 The iPhone, Steve Jobs, uh A W S But some people objected. They said, Okay, that's easy for the founders to do because they're founders of the company and that's Steve Jobs at Chezos. The other example I like is Skunk Worms with Lockheed. And so when they when they created a uh

1:37:05 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 try to make it not visible, try to make it be Separate.

1:37:20 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 Estridge at IBM when they did the IBM B. C. But it's almost always an autonomous business.

1:37:36 Headed by a 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 have two recent podcast episodes. Talking to PMs at companies that are doing zero to one stuff. Mejica and Tongi.

1:37:54 And Tongi had a really interesting tidbit along the lines you just talked 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

1:38:13 That totally uh That totally jibes with what I've seen. Uh the you know, the other person Has an interesting take on this is uh Vinode Coke book. And so Vinode basically thinks that what companies should do is take some portion of their profits.

1:38:28 And uh l let's say ten percent 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 mothership. in the early in eight.

1:38:41 It's so You know, you wanna you wanna it's it's your willingness to fail That lets you have breakthrough success. And it you know. A any coin that says can't lose bad

1:38:52 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.

1:39:06 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 the coin that says can't lose says can't win on the other side and

1:39:22 Lose big says win 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

1:39:35 A 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? Are 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 don't like your idea.

1:39:55 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.

1:40:10 And so just for what it's worth it 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

1:40:22 Tempting to not believe. You know It comes with a territory. Every great founder has faced And uh, you know.

1:40:31 It doesn't make you wrong. Amazing. What a empowering, inspiring Where to end it? Mike.

1:40:38 With that we've reached our very exciting lightning round. Are you ready? 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 regrets of the dying by Bronny Ware.

1:40:56 She was a hospice nurse and she would talk to people uh in their the last ninety 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.

1:41:08 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 gonna last forever. Some day'll be the last day. There's another book that that I really like called uh Chase, Chance and Creativity.

1:41:25 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.

1:41:39 You do make luck. And so like I I I l 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

1:41:51 There there's a whole bunch of'em. Uh you know, I've always liked all of uh Clay Christensen's Books. Th the the other one that I kinda liked is uh that I read recently is by Robert Green, The Laws of Human Nature. So I like that one a lot.

1:42:05 As well. And then Nancy Guarte's book resonate, which 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 were talking and buying it. Good good pick there.

1:42:21 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 it and it I just um I have this huge uh Uh. affinity for nineteen sixties cars.

1:42:39 And the way that they replicated these nineteen sixties 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, uh, your book was recommended on Amazon for me. Oh good. Here we go.

1:42:57 Get job, Amazon. I will point people to where to find it at the end of this s 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 w uh my before I got into computers, I had a

1:43:12 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

1:43:22 discovered the world it it had been a long time since I'd reconnected with that hobby. I discovered the world of vintage fountain pen. So my favorite product of recent times is a this will go that everybody will be like that sounds pretty esoteric, but it's a Mont Blanc one hundred forty nine first generation celluloid pen. So it was like right after World War Two.

1:43:44 And it was the Germans kinda 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. Th they used to make flexible nibs so that you could write the way

1:44:01 Scribes wrote like in the eighteen hundreds and stuff. But then people in the modern world break those nibs and they use ballpoint pads anyway. But like when I use these old flexible Nineteen.

1:44:15 Pins from nineteen hundred to the nineteen forties. They're just magical. I mean they're just nothing like there's Nobody's ever been e able to equal that experience in modern times. Well.

1:44:26 I gotta give me I gotta try one of these pens. Yeah, I'll I'll 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.

1:44:39 Two more questions. Do you have a favorite life motto that you often repeat to yourself, share with folks they find useful to come back to? I learned it from my dad. Um It sounds simple, but it's kinda profound. Do your best. And what he what he meant by that is he didn't mean be the best. He meant that

1:44:58 Life is a gift. You don't know how much time you're gonna 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 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

1:45:18 It I've already gotten into Stanford. I'm totally psyched. I'm gonna go last week of the semester. of senior year. And um Have a test the next day in English.

1:45:28 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 gonna get an A in the class'cause 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.

1:45:45 It doesn't sound like you're doing your best. And what he was kinda getting at was that, you know The people who achieve greatness They think everything counts. So I I always uh

1:46:00 Got a lot from that with him. And there there'd 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 the idea of doing your best

1:46:17 I find to be very profound and it causes you to realize that the best way to show up in the 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 the view the

1:46:35 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.

1:46:46 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.

1:46:56 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 Anne Marycoe'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're doing a world class job. Yep.

1:47:19 Amazing. Okay. I'm gonna skip the last question just to end on that because I was Way too beautiful to sull with another question. So

1:47:27 Just uh 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 uh well, we've got a sub stack of Not everybody's gotta buy books, right? So there's uh

1:47:42 Pattern breakers dot substack dot com. And then I you know, I have a site patternbreakers dot com, but you can also get the book on Amazon or you know, anywhere. I it's already available for pre order. 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 will have achieved that goal. Uh

1:48:08 But just any anything that people can do to help spread the ideas and I'm looking f look co conspirators wanted. I love these episodes where somebody like you spends hundreds of thousands of hours analyzing data. and history and startups and talking to founders and just synthesizing all the things you've learned in 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. It was honor to be on your show and you know

1:48:35 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.

1:48:46 See you Lenny. Panes. Hi everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, 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.

1:49:07 at Lenny's podcast dot com. See you in the next episode.

What you see above is a preview of the first minutes. One unlock costs 10 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.