In today’s world, we’re constantly being inundated with “newness”. It seems like every day, there’s a new startup or company coming up with a technology to improve how we do things. Despite how much media hype there is around these new technologies, it’s hard to know which ones have lasting power and which will fall by the wayside.
When looking at something new, a mental heuristic I find really helpful is examining it through the lens of the Lindy Effect. Those who have read Nassim Taleb’s The Black Swan and Antifragile are already familiar with the Lindy Effect. If you haven’t, here’s a brief summary (though you should still go read the books):
The Lindy Effect refers to the life expectancy of non-perishable things, like ideas or technology. Basically, the rule states that the longer something has been around, the longer it will be around.
An easy way to grasp this concept is to compare two successful books, one old – say, The Bible and one new – like Fifty Shades of Grey. The Bible has been around for about two thousand years while Fifty Shades has only been around for a handful of years. Which book is more likely to still be around in a hundred or a thousand years? Obviously The Bible. This concept applies to more than just books though – it applies to anything. Technology, media, transportation – everything. Something which survives a long time has, by definition, gone through the crucible of time…and survived. That bodes very well for its future survivability.
While not true 100% of the time, the Lindy Effect can be a useful tool for predicting which new technologies or ideas will survive and which are just blips on the radar. A great example of this is the butter vs margarine debate. For literally thousands of years, humans have consumed butter. Then, for a brief stint during the twentieth century, humans were told butter was bad for them and many people switched to margarine. But as is becoming readily apparent, butter isn’t nearly as bad as once thought and margarine may literally kill you. And accordingly, butter has made a comeback. Which is more likely to be around in a hundred years?
Thanks to what I do for a living, I’ve been thinking about the current state of the beer industry and looking at it through the “Lindy Lens”. I’ve made a series of predictions with explanations below that arise from following the Lindy Effect to its logical conclusions in the beer realm:
The Way of Zen by Alan Watts is a book I had heard a lot about over the years but had never actually taken the time to read.
Similarly, the concept of “zen” is pervasive in popular culture yet I would argue that very few of us know what the word is referring to.
A quick disclaimer about everything in the key takeaways below: these notes are the parts of the book which spoke to me. I make no claims on it being a comprehensive overview of Zen Buddhism or of The Way of Zen. If the ideas below intrigue you, reading the book will give you a much better grasp of these (admittedly) difficult to verbalize ideas.
You can also listen to a deep dive discussion of this book from the Made You Think Podcast:
I’ve been making a point to ask startup founders I hang out with for advice, particularly about management, priorities, and growth. I’m mainly trying to preemptively ensure we at Unlimited Brewing don’t fall into the same traps that others have already solved.
A few weeks ago, my friend (and East Village neighbor!) Sebastian Metti gave some advice which really stuck with me. I asked Sebastian how founders should spend their time. His response was super simple:
“You should spend your time planting seeds.”
This is brilliant advice. The idea of “planting seeds” loosely translates to building relationships, which applies to sales, business development, hiring, fundraising, press, and pretty much everything else. Some of these “seeds” will flourish and yield gigantic harvests. Most of them will go nowhere. And that’s totally fine.
When a business is just getting off the ground, the founder is the entire company. They need to build, sell, market, pick up the trash – everything. But as a company grows, there’s no way the founder will be the most skilled in every function. Nor should they want to be. That said, the founder will still be the only person with a high enough view of the company AND the ability to steer the company where it needs to go. And that’s where building the right strategic relationships becomes super important.
I first came across Mihir Desai and his ideas when I encountered the transcript of his Harvard commencement speech on optionality. His speech (among others) helped inspire my Optionality Trap blog post. Mihir and I eventually connected via email and I learned that he had written what I now know to be an excellent book, called The Wisdom of Finance.
Finance is something I’ve had more than a passing interest in for the better part of a decade. Back in high school, I was pretty sure I wanted to go into finance. Even the 2008-2009 financial crisis did nothing to shake that belief. What did eventually shake it, however, was an Introduction to Mathematical Finance class, which I found to be so abstract and irrelevant to the “real world” that I eventually dropped both the class and the idea of studying finance altogether.
While reading TheWisdom of Finance, I re-learned why I was interested in finance in the first place – namely, its intimate connection to real, human problems.
As a side note: It’s always an awesome experience to read an author with erudition like Mihir Desai. I got something like twenty other book recommendations out of this book, many of them fiction.
In a verified publicly available email, Tesla CEO Elon Musk revealed his thoughts on corporate silos and hierarchical information flow. Here’s the email:
Subject: Communication Within Tesla
There are two schools of thought about how information should flow within companies. By far the most common way is chain of command, which means that you always flow communication through your manager. The problem with this approach is that, while it serves to enhance the power of the manager, it fails to serve the company.
Instead of a problem getting solved quickly, where a person in one dept talks to a person in another dept and makes the right thing happen, people are forced to talk to their manager who talks to their manager who talks to the manager in the other dept who talks to someone on his team. Then the info has to flow back the other way again. This is incredibly dumb. Any manager who allows this to happen, let alone encourages it, will soon find themselves working at another company. No kidding.
Anyone at Tesla can and should email/talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. You can talk to your manager’s manager without his permission, you can talk directly to a VP in another dept, you can talk to me, you can talk to anyone without anyone else’s permission. Moreover, you should consider yourself obligated to do so until the right thing happens. The point here is not random chitchat, but rather ensuring that we execute ultra-fast and well. We obviously cannot compete with the big car companies in size, so we must do so with intelligence and agility.
One final point is that managers should work hard to ensure that they are not creating silos within the company that create an us vs. them mentality or impede communication in any way. This is unfortunately a natural tendency and needs to be actively fought. How can it possibly help Tesla for depts to erect barriers between themselves or see their success as relative within the company instead of collective? We are all in the same boat. Always view yourself as working for the good of the company and never your dept.
Thanks, Elon
There are sooo many great points in this email. Let’s break them down:
500 Startups, one of the world’s leading startup accelerators, recently released a report on how large companies can best work with startups. Given their unique position in the market, 500 Startups surveyed executives at companies like General Motors, Simon Ventures, Embraer, and more to learn what they’re doing to drive collaboration with startups.
The 500 Startups Corporate report has tons of useful takeaways for both startups and corporate innovation teams. Here are their best practices for corporate innovation teams and my take below:
Disclaimer: When I first heard of The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael Gerber, I was extremely skeptical. I was catching up with my friend Spencer Whitman, who is the General Manager of Rent Jungle, and asked him if there’s anything he recommend I read as I embark on my journey of growing and scaling Unlimited Brewing Company. He immediately mentioned The E-Myth Revisited, whose title made me recoil in horror. My first thought was that this was some weird book about how the dot-com era was a fluke and that technology is overrated. Luckily, Spencer went on to explain that The E-Myth Revisited title stands for “The Entrepreneur Myth Revisited”, not the electronic myth. I immediately bought the book because I knew if I thought too much about the decision, I wouldn’t read it.
The E-Myth Revisited turned out to be one of the better business books I’ve ever read. Part philosophical treatise, part business advice, and part psychology manifesto, this book provides a whole new way to think about the personal development of an entrepreneur. Key takeaways are below.
“Get good grades in school. You’ll have more options when choosing a college.” -Parents
“Pick a major that applies to many different industries. That way you’ll have more job options.” -College Counselor
“Consulting is a great field. From there, you can do whatever you want.” -Career Advisor
While this advice isn’t necessarily wrong, very rarely do we take a step back and examine what exactly we’re collecting all these options for. Perhaps at the beginning of our careers, we have some vague idea of a goal or accomplishment we want to reach but we’re not quite sure: a) how to reach the goal and b) if we even want to reach the goal in the first place. So naturally we choose the path that keeps the maximum number of future possibilities available to us. Unfortunately, this fuzzy goal mindset is often carried through to adulthood and leaves us grasping for optionality with all of our major life decisions. And over the course of a lifetime, this optionality maximization mentality turns us into habitual option collectors and prevents us from reaching our goals.
But I’m getting ahead of myself. Let’s start with the basics.
Crucial Conversations: Tools For Talking When Stakes Are High was recommended to me by my brother, Jay. Like many of us, I have a bad habit of shying away from confrontation and difficult conversations. It’s a natural reaction. Tough conversations are usually unpleasant and have the potential to escalate into full blown conflicts. But the truth is, by avoiding difficult conversations, we suppress disagreement and emotion until they bubble to the surface and blow up. Crucial Conversations provides a toolkit for those of us not naturally gifted at the art of handling difficult conversations.
Biggest Takeaway: Crucial conversations require finding “The Pool of Shared Meaning”
If there’s one thing to take away from this book, it’s the idea of creating a “pool of shared meaning” between key stakeholders. In their research for the book, the authors examined what unique conversational tactics are used by those who are more skilled at dialogue than the average person. Here’s one of their key findings:
People who are skilled at dialogue do their best to make it safe for everyone to add their meaning to the shared pool – even ideas that at first glance appear controversial, wrong, or at odds with their own beliefs.
The pool of shared meaning is essentially where a group’s collective knowledge goes. When the group has more accurate or relevant collective information, they can make a better decision. And when people don’t feel safe or comfortable adding their opinions to the pool of shared meaning, it means people are operating with different information, which of course will lead to differences of opinion and conflicts.
Equally important, since by definition the pool of shared knowledge is shared, people are much more willing to follow through on whatever decision the group makes. As Samuel Butler once said:
He that complies against his will is of his own opinion still.
When a group needs to take an action, you don’t want to be using force or authority to convince them. It’s much better, both for long-term and short-term cohesiveness, for individuals to willingly go along with whatever the group collectively decides.
Start With Heart: The Mindset For Crucial Conversations
If you’ve read Extreme Ownership by Jocko Willink and Leif Babin, the mentality expressed in the following quote from Crucial Conversations will sound very, very familiar:
The first step to achieving the results we really want is to fix the problem of believing that others are the source of all that ails us. It’s our dogmatic conviction that “if we could just fix those losers, all would go better” that keeps us from taking action that could lead to dialogue and progress. Which is why it’s no surprise that those who are best at dialogue tend to turn this logic around. They believe the best way to work on “us” is to start with “me”.
The key framework here is to understand what you really want out of a crucial conversation, what you want for others, and what you want for the relationship moving forward. Once you’re clear on those things, it becomes a lot easier to operate with a cool head and take a skillful approach to crucial conversations.
Part of the reason this technique works so well is it allows you to hijack the normal physiological response to conflict. Normally, when engaging in crucial conversations, our body has difficulty distinguishing between a tough social encounter and a physical threat. Accordingly, blood will be diverted to your muscles and less will flow to your brain, leading your mental facilities t0 decline – at the worst possible moment! But by applying a logical framework and thinking about goals, your body realizes that this is not a physical altercation, and you’ll be able to think clearly.
Apart from the physiological benefit to using this framework, the other advantage is that by working on yourself first, you may find that you are the reason the conflict is happening! Taking this moment to stop and reflect can nip conflicts in the bud before they really escalate.
Getting Others To Share: AMPP Framework
It’s all well and good to understand the concepts above but without getting the other person/people to open up and share, there’s not really a “conversation” happening. The AMPP Framework shared in Crucial Conversations is a useful one in getting others to open up. You may already use some of these techniques but it’s useful to see the entire framework:
Ask to Get Things Rolling
This technique is simple – you just need to be willing to stop sharing your thoughts and step back to invite the other person to talk about their viewpoint. This far easier to say than to actually do in practice.
An example of asking: “I’d really like to hear your opinion on this.”
Mirror to Confirm Feelings
The main purpose of this technique is to convey to the other person that it’s ok to share their feelings. Conveying this doesn’t have much to do with the words coming out of your mouth. Instead, your body language, tone of voice, and attitude are going to give the other person the confidence to share their feelings with you.
An example of mirroring: “You say you’re okay, but by the tone of your voice, you seem upset.”
Paraphrase to Acknowledge the Story
Again, this technique will either work or fall apart based on your body language. Paraphrasing is exactly what it sounds like: repeat what you’ve heard in your own words to confirm you understand correctly. It also helps the other person see that you truly want to understand what they’re saying.
An example of paraphrasing: “Let me see if I understand this correctly. You’re saying….”
Prime When You’re Getting Nowhere
This is mostly a last resort technique but in cases where you’re pretty sure what the problem is, you can share your best guess as to what the other person is thinking. Crucial Conversations recommends you use this technique only when the other party still doesn’t feel comfortable sharing, even after trying all the other tactics. In my experience, priming can be pretty helpful – it shows the other person that you’re aware of what they’re feeling.
An example of priming: “Are you thinking that…”
Resolving Differences of Opinion: The ABC Framework
Differences of opinion are a fact of life. So how do we resolve them? The ABC framework is a good place to start:
Agree
This is something I can personally attest to: In many, if not most, disagreements with other people, I agree with 90% of what they’re saying. But in the heat of the moment, that 10% difference escalates into a standoff. The authors of Crucial Conversations are instead suggesting that you first find the places you and the other person agree. Which then sets the stage for…
Build
Instead of looking for trivial differences between your opinion and the other person’s opinion, skilled communicators take the areas of agreement and build from there. For example, when the other person leaves out an element of the argument, an unskilled communicator will say something like: “Wrong. You forgot to include…” while a skilled communicator will say: “I agree. In addition, I noticed that…”. It’s so simple but this little switch takes a conversation from confrontational to friendly.
Compare
When there is a difference of opinion, instead of pronouncing the other person’s ideas as wrong or conveying your opinion as if it’s confirmed truth, it’s more effective to treat both opinions as two sides to a story. This can be conveyed through phrases like “I see things a bit differently”. Again, this invites others to share their opinions and test your ideas. While you may not ultimately end up agreeing, communicating in this manner creates a larger pool of shared meaning and a more productive conversation.
I recently had the pleasure of joining Nat Eliason on his podcast ‘Nat Chat’ to discuss Antifragile by Nassim Taleb, which if you don’t know, is one of my all-time favorite books. During the podcast, Nat gave an example of a “naive intervention” that’s been percolating in my mind ever since: In response to children being distracted in class, doctors have, for years, been liberally prescribing Ritalin to “help” students focus. Instead of examining and redesigning the distractions and flawed class structure that leads to almost 20% of American boys being diagnosed with ADHD, the education and medical industries have decided to drug students into submission. And this naive intervention leads to long-term issues, as there seems to be a link between taking Ritalin and cocaine addiction later in life, due to the similarity between the two drugs. Nat referred to this overprescription trend as “trying to fix the terrain, instead of fixing your map”, the terrain in this case being children and their attention span while the map is the solution to capturing their attention.
To put it more broadly, your map is yourmodel of the world while the terrain is the actual world. Models are always, always, always (I can’t stress this enough) an approximation of reality. When models are effective, there is very little difference between the model and reality. When models fail, there’s a large difference. And because the world is constantly changing, models require continual feedback loops and updates to remain effective. Changing the model is much more in your control than changing reality, yet many notable screw-ups (like the ADHD example above) happen when humans try to re-shape reality instead of re-shape their model.
This terrain/map concept is so powerful and broadly applicable. Through the work I do, I see a ton of parallels with both corporate innovators and startups trying to force the landscape to adapt to their expectations instead of adjusting their solutions to the new reality.
Retail: Legacy Brands vs Adaptive Brands
In retail, the vast majority of legacy brands still base their strategy on a terrain that existed pre-Internet and pre-social media: namely, the supply-driven retail business model. Spotting these companies is fairly simple: they are the ones who are late to the game on almost every trend. Why? Because trends now emerge organically through “the public” (sometimes influencers but often just the dregs of the interwebz) instead of through corporate tastemakers.
The old model for retail was for a buyer or tastemaker to decide which products would be released in a given season. These buyers were/are extremely skilled at understanding consumer preferences and the model worked well for a long time. But now that we’re able to access products from around the world, taste has simply become too complex for any single human being (or in my opinion, an algorithm alone) to control or predict. Instead of a top down model of tastemaking, trends now generally emerge from the vast pool of humanity, without an easily determined reason – though people will try (and fail) to analyze trends in hindsight.
Brands that have embraced this new model (like Zara) are able to identify emerging trends through rapid piloting, kick the design and supply chain processes into action for successful experiments, and get products in-store before the trend has really taken off. Equally important, they can economically halt the process and respond to the next trend when the current one is over. Brands that have built processes like this to adapt to the new retail environment are exemplifying the idea of “fixing their map” to adapt to the new terrain.
Startup Sales Process
Likewise, over the years, I’ve seen plenty of startups miscalculate just how long and involved the enterprise sales process is, how many stakeholders there are, and the risks involved when a large company works with a small one. The startups who successfully navigate this process are the ones who, often through trial and error, develop an accurate model for the organization they’re selling to. This includes knowing who the key decision-makers are, what they are being judged on, what their top priorities are, and most importantly, how your startup fits into the picture.
The startups who get frustrated in this process are usually those who come into it with unrealistic expectations of how quickly a deal will get done, simply because of how much sense it makes…on paper. While mapping a deal on paper is important, it isn’t nearly enough to move things along.
To successfully close a deal with a large company, it takes an understanding of who in the company is actually buying your product, what that person or department is tasked with, what they’re succeeding and failing at, and so much more. All of this deep, detailed knowledge can only be gathered through research and many interactions with the target company. And this knowledge is then used to build and iterate on your map (i.e. model) for how to get the deal done.
But if a startup runs into a wall during the sales process and attempts to change the procurement process (i.e. change the terrain) – good luck. Those processes were likely created by a painstaking process involving dozens of people and months of debate. Most importantly, you – a little startup – don’t have the leverage to demand that the large company change their process. If the startup has a ton of leverage, it’s possible (though unlikely) that the large company may volunteer to fast-track the deal. But I have never seen a startup successfully demand that the large company change their process.
Conclusion
When things aren’t going right or are more difficult than expected, it’s easy to look externally and blame outside forces. But more often than not, it’s our model that’s flawed, driven by expectations which don’t match the reality of the terrain. Taking a step back and evaluating our map is often all we need to do to correct things. An even better tactic is to build in opportunities to check and adjust your map as you go along, for example interacting with customers often to continuously test your assumptions. These feedback loops are the only way to make sure the map you’re using is an accurate representation of the terrain and not a forced fit “solution” that has little connection to reality.
