Category Archives: Philosophy

The 100 Most Important Words in the Bestseller “Made to Stick”

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We will give you suggestions for tailoring you ideas in a way that makes them more creative and more effective with your audience. We’ve created our checklist of six principles for precisely this purpose.

But isn’t the use of a template or a checklist confining? Surely we’re not arguing that a “color by numbers” approach will yield more creative work than a blank-canvas approach?

Actually, yes, that’s exactly what we’re saying. If you want to spread your ideas to other people, you should work within the confines of the rules that have allowed other ideas to succeed over time. You want to invent new ideas, not new rules.

-Page 24, Made to Stick

The concept described here is so powerful. It took a little while to really sink in when I first read it. But I find myself referencing this idea ALL THE TIME.

Don’t just read what this passages says, but what it implies. What they’re describing here applies to so much more than just creating sticky ideas. It describes the process for effectively doing almost ANYTHING.

The message: Don’t start from scratch and try to reinvent the wheel. The things that work almost always follow a common pattern. Research what others have said the successful pattern looks like. If you can’t find any research, at least make an attempt to infer the pattern on your own.

A page earlier the authors write,

Highly creative ads are more predictable than uncreative ones. It’s like Tolstoy’s quote: “All happy families resemble each other, but each unhappy family is unhappy in its own way.” All creatives ads resemble one another, but each loser is uncreative in its own way.

Whatever you want to do there’s a small finite number of effective approaches that are far superior to randomness or just “trying stuff and seeing what happens”, whether it’s creating sticky ideas, creating a startup, getting people to like you or achieving happiness.Taking this idea a level of abstraction higher is an homage to the patternist view of life. We are not our matter, we are our pattern.

To transcend means to “go beyond,” but this need not compel us to an ornate dualist view that regards transcendent levels of reality (e.g., the spiritual level) to be not of this world. We can “go beyond” the “ordinary” powers of the material world through the power of patterns. Rather than a materialist, I would prefer to consider myself a “patternist.” It’s through the emergent powers of the pattern that we transcend.

-Ray Kurzweil

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Why You Can’t Get More Happiness, Money and Love By Pursuing Them Directly

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Many things people strive for are actually byproducts of what the real goal should be. But by focusing on the byproduct instead of the goal, the desired byproduct is ever elusive.

Let’s look at a few examples:

Happiness

The real goal is finding activities you’re passionate about and consistently engaging in them.

That definition skews towards work, but consider spending time with people you enjoy being around an ‘activity’ and it can encompass romance and family time.

Becoming “Networked”

Lots of people want a big network, full of powerful influential people, but if you focus on that is the end goal it’s probably not going to work out very well and you’ll come off as very insincere.

Having a large, powerful network is the byproduct where the end goal is helping other people, building relationships or trying to make an important vision happen that others can get behind.

Making Money

Making money is a byproduct of focusing on creating value.

If you focus on making money, you might end up making a lot if you’re very driven, but if that drive was applied toward how you could create the most value, you’d make a lot more money.

The one caveat with making money is that it only captures the economic spectrum of “value”, but a lot of people are working on how we can measure other kinds of currencies and make them more fungible so that in addition to financial capital we can measure things like social capital and emotional capital.

Confidence

I can’t become more confident by saying to myself, “C’mon Max, be more confident”.

Confidence is a byproduct of being really good at something, which is only obtainable through practice and repetition.

Though often people can practice and practice and not improve. That’s why people will tell you, “practice doesn’t make perfect. Perfect practice makes perfect.” While that’s directionally correct, a better answer is “practice in pursuit of perfection will allow you to increasingly approach perfection and achieve excellence”

Conclusion

The list goes on and on of things that many people try to achieve directly but are actually byproducts: Enlightenment, Love, Creativity, Status, Success, etc. etc.

It’s not wrong to want byproducts, but they are not things we can get, in the capacity we want, by focusing on achieving them directly. Byproducts are the rewards we get for living our lives the right way.

And by recognizing how byproducts break down into corresponding end goals it becomes clear there are no short cuts. When we care about other people, other people care about us. When we create value for others, we are rewarded financially. When we do amazing work, we gain respect. To live a rich life where we are happy, financially abundant, surrounded by amazing people and confident in our own abilities, requires cultivating curiosity, persistence, self-reflection, self-discipline, compassion, character, drive and many other esteemed traits.There is truth in the words that our external reality is a manifestation, or a byproduct, of our internal reality.

I encourage you to look at the things you want, and figure out what’s a byproduct and what’s the actual end goal that you should authentically commit to.

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Intelligence isn’t the engine it’s the steering wheel

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Intelligence is about building up continually improving mental models of the world and correcting false assumptions as you find them. As you have more models and modules you can solve more problems and understand more things. For example, when you can cross pollinate modules from psychology to shed new light on business problems. Some people learn faster than others, but intuitively or unconsciously improving your models is more important than building them quickly.

Think of it like winning a race. A fast engine is important, but being a great navigator is a stronger competitive advantage, and is something you can control. Good navigators know what to pay attention to, they know how to read a map, they know what roads are short cuts, what roads are windy, what roads are dead ends and what roads are breathtakingly scenic.

Winning your own race of intellectual fulfillment is less about your engine—we’ve all got relatively similar equipment— and more about your ability to drive the car.

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Quote of the Day

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QOTD.

Buckminster Fuller, 1970:

“We must do away with the absolutely specious notion that everybody
has to earn a living. It is a fact today that one in ten thousand of
us can make a technological breakthrough capable of supporting all the
rest. The youth of today are absolutely right in recognizing this
nonsense of earning a living. We keep inventing jobs because of this
false idea that everybody has to be employed at some kind of drudgery
because, according to Malthusian-Darwinian theory, he must justify his
right to exist. So we have inspectors of inspectors and people making
instruments for inspectors to inspect inspectors. The true business of
people should be to go back to school and think about whatever it was
they were thinking about before somebody came along and told them they
had to earn a living.”

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When Advice Contradicts It Usually Doesn’t

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A pheonemna that really interests me is when advice from smart people clashes and there appears to be a contradiction.

However I don’t think there is actually a contradiction. Usually the contradiction can be resolved in one of 3 ways:

1) One or both people are wrong

2) They are actually both right, but they are describing different circumstances. For example the advice for a B2B business is different than that of B2C. Or what is useful advice for 5 year old may not be useful for a 25 year old. Overgeneralizing causes these different circumstances to be conflated and creates an apparent contradiction.

Note that most advice comes from people abstracting patterns from their experiences and since they likely had very different circumstances most of their advice doesn’t apply to you.

3) They are describing the same circumstance, and what they’re really describing are two different schools of thought, each viable. There is often more than one correct way to solve a problem.

Advice is not universal. It can only apply to finite number of circumstances and remain correct. But not all advice is created equal. Some statements apply to more situations than others, such as the golden rule: “Do to others as you want them to do to you.”

But even the golden rule as it’s limitations. People have come up with the platinum rule that describes even more circumstances than the golden rule. The platinum rule says: “treat others as they would like to be treated”.

What I am describing is partial truth. Things can be true but some things are more true than others.

I just wrote this post, attempting to resolve the contradictory advice given by Sean Ellis and Ash Maurya on pricing.

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The Long Tail of Innovation in an Information Economy

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Once an innovation ecosystem has successfully created the structure to consistently tackle the big billion dollar opportunities, the system possesses the energy to begin evolving greater complexity, and squeezing out more efficiency. This efficiency will be realized by evolving the ecosystem to support the long tail of opportunities, which is exactly what the startup ecosystem is doing now.

Information age innovation ecosystems start by optimizing to hit the home run and can tolerate extremely high failure rates because the opportunity is so big. This is where venture money operates. Then the industry matures and seed and angel capital becomes more prevalent to support hitting multimillion dollar markets with greater consistency. I suspect for each industry an 80/20 power law applies: 80% of the wealth will be captured by a small number of billion dollar companies a la Google, Microsoft, Apple, Oracle, Facebook etc. but 80% of the opportunities (and 20% of the wealth) exist down the long tail. Just past the head of the power law exists collaboration products like Basecamp and publishing platforms WordPress. Further down the long tail exist products like Etherpad and Disqus. Farther still are where all the little tools and widgets that help us do day-to-day tasks just a little bit better, such as the popular iPhone App Shazam. In WordPress’ case it was a critical last piece to opening up blogging and self-publishing, which has transformed the way society shares information. Having a computer, the Internet, a rich web browser, and a really smart but not technically savvy person was not enough. We needed a simple publishing platform to crack the nut for self publishing.

So we need to create the proper surrounding ecology to make sure the long tail of innovation thrives. Without the right mix of capital, community, information and tools tuned for operating at this stage, the system will not come close to realizing all the opportunities that exist down the far end of the tail.

The incentives are strong for the individual, because even playing down the far end of the long tail is very lucrative and rewarding compared to an entry level corporate job, because you are working on something that matters, have passionate users and the potential to make millions. But the opportunity cost may be very high for those who are choosing between attempting to tackle billion dollar opportunities and opportunities down the long tail. So there are challenges in getting the top talent to tackle niche problems.

But I think it’s very important we figure how to tackle these problems as it’s a flourishing long tail of innovation that will both streamline and build resiliency into our systems. The long tail of products fill the many potholes that will enable us to run smoothly.

For example, I have a few friends who have a number of great ideas about how to solve email for in demand people who are always overloaded. This is a very important problem, that if solved could unlock a lot of productivity for society, because the influential can now more effectively communicate, delegate and make things happen. But the market is simply not that big. So how do talented entrepreneurs justify working on important niche projects vs. bigger problems they could sink their teeth into?

I’m not sure. Maybe they can treat it as a side project and let someone else do the scaling. Maybe as the entrepreneurial ecosystem gets more efficient entrepreneurs who were failing before, or people who weren’t even entrepreneurs before are now able to solve these problems.

Regardless of what the solution ends up being, it’s important we end up getting the incentives right so somebody is attacking these multimillion (but not billion) dollar niche opportunities. I think this last 20% may end up being what enables humanity’s solutions to finally outpace our problems. Achieving this escape velocity will be the difference in allowing the next stage of humanity to unfold.

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Why Maximizing the Efficiency of the Startup Ecosystem Is Essential for Society’s Transition to an Information Economy

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This post is a revision of http://maxmarmer.com/2010/02/maximizing-startup-ecosystem-efficiency/ written for emergent fool.

Right now the tech industry is the most innovative industry on the planet. Its success is in large part due to it being the first information age innovation ecosystem, which has implications for the future of the world, as we transition to an information economy.

This emerging information age is just the latest epochal shift of organized society as we have already progressed through tribal, agrarian and industrial societies. Now, on the cusp of this transition, the tech industry is pioneering the movement forward. (For more on this transition see Arthur Brock’s fantastic Prezi). Many of the methodologies and organizational structures that enhance a startup’s success will be relevant not just for startups but universal to the entire information age, because much of what works for tech startups will apply to emerging industries in the information economy. This is because innovation ecosystems that operate in the information age, are likely to operate in very similar ways, regardless of sector. The tech industry is just the first to inhabit space in the information economy and therefore is a harbinger for future industries.

The startup ecosystem is now creating the blueprint for the future of the information economy because much of the startup ecosystem replicated across emerging industries in sectors diverse as social change, health, biotech, molecular manufacturing and government, as soon as these industries begin their transition into the information age. Since the startup ecosystem will be replicated, it’s important to begin focusing on maximizing the efficiency now, both to increase the output of startups today, and to figure out how a more complete system works, so that we transfer a more stable, well-understood system. And since efficiencies realized in the tech ecosystem now will cascade over into the emerging industries, every further increase in efficiency will be amplified enormously and echo for generations, as it affects not just current startups, but all future copies of information age innovation ecosystems. The cheapest and therefore by definition, best place to experiment with improving innovation ecosystems for the entire information age is right here, right now in startup world. We must attempt to make our information age innovation ecosystems as robust as possible, because they represent the foundation of the future of the world’s economy.

If companies in these emerging industries want to maximize the scalability and impact of their solutions they will not only to need imitate the structure of the startup ecosystem but they will also need to draw heavily on the rules of the information economy that startups have begun to uncover. Their war chest will need to include tools and methods such as: social networks, crowdsourcing, the cloud, virtual collaboration, lean methodology, metrics and conversion funnels, customer development, rapid iteration, handling uncertainty and many other ideas now fundamental to a startup’s success.

You can already see some early signals of people and organizations in other sectors achieving great success by cross fertilizing principles and methdology from the startup world.

The Obama campaign changed political campaigns forever with their revolutionary level of citizen engagement. This was achieved by drawing heavily on Silicon Valley credo, with the campaign spearheaded by Chris Hughes, one of the co-founders of Facebook.

Kiva brought microfinance to the masses and has raised and distributed in an unprecedented amount of money by bridging the social sector with the operating principles of a Silicon Valley startup.

Government 2.0 is essentially an experiment asking the question, what happens if we mix Sillicon Valley with Government on a larger scale than campaigns, and use the power of data, transparency and API’s to increase the effectiveness of government? Health Care, Biotech and a slew of other industries are asking similar questions.

Hello Health is attempting to turn one aspect of the health care industry upside down by cutting insurance companies out of the doctor-patient relationship, simply by applying a few Silicon Valley startup principles to health care.

The tech industry has already changed the world, but as new industries adopt similar organizational principles society will experience multiplicative networks effects that will be utterly mind blowing. When people talk about accelerating change and the singularity and you don’t know what to expect, this it: when Silicon Valley leaves the valley and sweeps across the other industries of the world and transforms them into information age innovation ecosystems.

Information Age Innovation Ecosystems

If you look at the startup ecosystem’s output compared to all other industries over the last 30 years, you might dismiss it as an anomaly that will fade with time. But the industry’s incredibly fast wealth creation is not hype that will peter out, it’s a sign of what’s to come. The tech industry is just is the first of many information age innovation ecosystems, that will also be able to create a flurry of progress at an exponential rate.

The first requirement for an innovation ecosystem is that the core practice of an industry becomes an information technology. This is key because its information technology’s inherent scalability and replicability that enables exponential progress. The second critical requirement for an industry to become an innovation ecosystems is a large number of people freely experimenting. In the startup ecosystem, this was triggered by the personal computer and the mass amateurization of computing it allowed. When using a computer was incredibly complex and expensive the industry had a huge bottle neck. When that barrier was broken down and costs fell far enough that anyone could experiment in their bedroom or garage, the creativity of the masses was unleashed and amazing breakthroughs began to happen. That was the birth of the startup ecosystem.

I believe the birth of future innovation ecosystems, will occur the moment information technology can be used in the garage. Currently the startup ecosystem is the only scalable garage industry around, but imagine the creativity that will be unleashed as the costs fall far enough to allow other industries to enter garage territory. As soon as the garage threshold for biotech is crossed, an ecosystem similar to the startup ecosystem will begin to emerge. There will be firms dedicated to investing capital at various stages of the lifecycle of the company, communities of practice will emerge, formal conferences and informal meetups will spring up everywhere, databases of knowledge will be abundant, and open source infrastructure will be created that gives people even more leverage. Imagine people playing with atoms just as easily as they play with bits. Imagine biotech companies being born out of bedrooms and garages. The moment biotech becomes a fully functioning garage industry, with an efficient supporting ecosystem, the world is in for a crazy ride.

Again, this evolutionary process will apply not just to biotech but every industry with potential in an information economy. The 4 pillars of any innovation ecosystem I believe are Capital, Community, Information, and Tools.

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Maximizing the Efficiency of the Startup Ecosystem

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This post is a revision of http://maxmarmer.com/2010/02/maximizing-startup-ecosystem-efficiency/ written for emergent fool.

Over the last 3 decades the technology entrepreneurship sector has been the primary sector driving economic growth. The sector initiated the information economy and has given life to thousands of innovative companies, four of which are ten of the biggest companies in the United States, including Google, Apple, Microsoft and IBM. By any metric the sector has been wildly successful, but it’s possible to make the ecosystem even more efficient and realize an even greater number of opportunities.

Currently, projects that succeed are squeezing through a very tight bottle neck, and only the right combination of personality, skill and luck can breakthrough. Better infrastructure widens that bottle neck, so potential impact can be realized at a greater rate.

This post will look at how we can increase efficiency in the entrepreneurship ecosystem, but the significance of this effort may extend beyond the tech sector to the future of the information economy. My post on that topic is here.

Systems Perspective on Entrepreneurship

To increase efficiency further requires looking at the entrepreneurship ecosystem as a system in order to find the holes and the greatest points of leverage. But before we focus on improving the efficiency of system we need to understand the difference between the primary and secondary causes that drive innovation. There is nearly unanimous agreement that the most important players in the startup ecosystem are the founders and CEO’s who start from nothing and go on to create and control billion dollar markets. Society can’t stop glorifying entrepreneurs like Steve Jobs, Bill Gates and Richard Branson. But while they deserve immense praise and adulation the impact they are able to have has more to do with the surrounding innovation ecosystem than their individual ability and vision.

Something new and innovative can only be created and scaled if a confluence of forces come together— market, team, systems that allow you to find your team, capital, advice, cost of production, cost of distribution and culture (whether people are ready for it) etc. Breakthroughs are the result of way more than an individual with insight; they emerge from the last iteration of the system, building on top of existing tools and a huge history of knowledge.

Products and companies do make a huge impact but their success has more to do with the state and incentives of the system than the entrepreneur. It’s not the company that changes the world, it’s the system that creates the right incentives to make the creation of world changing breakthroughs extremely probable.

As the startup ecosystem has been fine tuned it has made the existence of certain products and companies almost inevitable, because the system exerts so much pressure to make opportunities come about once the timing is right. In Apple’s and Microsoft’s case there was immense pressure exerted on bringing about computer hardware and software companies.

If you are looking to bet on an individual company than a great entrepreneur is certainly the centerpiece. But if you want to maximize the innovation of a certain sector then you must look at the system, in this case the startup ecosystem. From the system perspective you just want a need to be filled and you don’t care who fills it. Thus the individual matters less, because there’s enough talent out there that if the incentives are strong enough someone will capitalize. But taking the system perspective far from trivializes the entrepreneur. In fact, talent development, which must have a very humanistic lens to be effective, is a critical part of an efficient startup ecosystem because potential talent needs to be actualized at a high rate.

The startup ecosystem is already extremely effective, just look around at the mark it has already left on the world in only a few decades, but if we want to make the system even more efficient and increase both the quality and quantity of innovative breakthroughs and great companies, we must identify places where friction is reducing the possibility of successful ventures and create solutions to remove this friction.

How The Startup Ecosystem Works Now

If we look at the rise of 3 of Silicon Valley’s fastest growing companies: Google, Facebook, and Twitter, in the context of the startup ecosystem it’s possible to see the existence of a category leader as almost inevitable, and the eventual winner as extremely unlikely. This matters because as long as someone can seize the opportunity and fill the market need, the battle from a macroeconomic perspective has already been won, it’s just a matter of which individual player will earn the spoils and how long they can maintain relevance before a new competitor overtakes them or the market becomes mature and commoditized.

Google, Facebook and Twitter now each dominate a category: Search, Social Networks and Microblogging, but there was plenty of competition and uncertainty at one point (remember Altavista, Yahoo, Myspace and Friendster? With better execution these companies could have also won). Once these categories were identified either consciously or by accident, the startup ecosystem was effective enough to support the formation of many teams, supplying them with capital, services, people, and advisors in hopes of capitalizing on a billion dollar market opportunity. And the team that executed the best won. The individual winner was unpredictable but the system was good enough to make sure someone won. That humans’ evolved a system that can create many competitors and then naturally select the winner based on merit or “fitness” is a tremendous accomplishment for this industry and for the world, and it is what makes tech the most innovative industry on the planet.

The success of these companies had a lot more to do the size of the market, the timing for when it was ready to be capitalized on and the resources in the startup ecosystem that supported effective scaling than the founders or the idea. The markets they operated in were big enough that inevitably an industry giant would emerge who would be able to use the lucrativeness of the market to generate a runaway positive feedback loop up until saturation, using their momentum to continually take market share and capture the best talent.

This evolutionary competitive process continues even after an industry giant has saturated a market, because there are always new markets emerging. While it would be very hard for Facebook and Google to screw up and concede supremacy in their primary markets, it is probable a new company will beat them in the new markets that they try to extend to that fall outside of their core competencies. (For more on why the market is the most important factor for a startup’s success check out this Marc Andressen’s post).

In summary, once the timing and conditions are ripe there will be enough people trying to tackle the clear billion dollar markets that somebody will get the execution right. The startup ecosystem is that good at providing all the puzzle pieces to make sure this happens!

Future billion dollar companies will ride trends such as the move to the cloud, mobile information, the real-time web, extreme personalization, and new kinds of data enabled by smaller and cheaper sensors.

The Evolving Startup Ecosystem

The tech industry has cracked the nut for how to tackle billion dollar market opportunities, making it better than any other industry at capitalizing on opportunity. But there is still a lot of room for growth. Increasing the effectiveness of the startup ecosystem matters as long as their are markets to be filled. The faster we can fill unmet with greater effectiveness the better off the world will be.

The tech ecosystem is now well tuned to hit the home run in billion dollar markets, but there is a shift happening as people began to realize there’s more opportunity and less risk to be had in aiming for singles and doubles, and hitting them consistently. The home runs of the previous era have created a new playing field and there is now a wealth of opportunities on the long tail with all kinds of business and consumer needs waiting to be met.

As the information economy has developed and become more complex, an increasing number of lucrative niches now make market sense to pursue. Whereas previously the opportunities either weren’t there (you couldn’t have a million dollar facebook app before facebook) or the costs were too high to have certain opportunities make sense (startups needed venture capitalists and VC’s only wanted to play in markets bigger than 100 million). But in recent years startups have become disentangled from their dependence on VC’s as the costs of starting a startup have continued to fall due to cheaper hardware and services moving to the cloud. This is driving a growing seed stage ecology where the primary actors are startup accelerators, angel investors and seed stage venture capitalists.

The focus now is on startups attacking smaller opportunities (though still in the 10′s of millions) with less investment capital. There will be an abundance of lucrative, unserved niches for startups to tackle. This coincides well with a number of trends:

- Science will be injected into the art of running a startup

Structure and methodology will be experimented with to increase the success rate of startups and startups will fail less because of self-destruction and more because of getting beat by competitors. As the overall number of startups in the ecosystem increase over the next few years, many of the startups in big markets will fail due to competitors, but in the huge number of opportunities in smaller markets startups will be more dispersed and there will be few direct competitors. In these markets startups that use a more scientific approach should be able to figure out how to hit the 10-100 million dollar markets with great consistency.

This consistency will enable the funding ecosystem to make sense for these smaller opportunities. When many investments are made in these smaller markets (<500 Million) the venture community’s approach of haphazardly throwing money at many petri dishes won’t work, because the upside potential is capped. Home run hitters can afford to strike out a lot, singles hitters can’t.

Even startups that lose to competitors in niche markets will find it easier to pivot, than pack it in and start from scratch, because the farther down the long tail you go the closer the adjacent verticals.

A fractal tree is a good analogy for why it’s easier to pivot in <100 million niches vs. billion dollar markets, if you consider the thickness of the branch equal to the size of the market. The core branches are very far apart. If your startup is set up to tackle a billion dollar opportunity it’s hard to pivot all the way over to another one, or shift gears and attack a smaller opportunity. But if you follow the analogy and you’re a startup attacking a niche as the tree branches further away from the trunk the twigs become closer together. The larger branches are too far away from each other to pivot from one to the other, but the small branches just require a little back tracking and a slight change in direction.

Creating a startup where the goal is to make something people want will still be a chaotic, iterative process but it’s possible to induce predictability and stability into chaotic systems.

- The potential for more collaboration horizontally and vertically across markets to create a more seamless experiences for the customer and more leverage for the startup. (I’ve started exploring this process, naming it the lego model)

- An increased demand for entrepreneurs due to clear ~10 million dollar opportunities just waiting to be tackled. This demand in the ecosystem for entrepreneurs coincides perfectly with changing cultural values about work, which will drive huge increase in the number of people pursuing entrepreneurship. And that in combination with a more entrepreneur friendly ecosystem evolving, will unleash a new golden age of entrepreneurship.

Here are two good posts on the changing seed stage ecology: Dave Mcclure’s presentation on the evolution of the startup ecosystem and Nathaniel Whittemore’s take on the seed stage ecology in the social sector..

New Efficiencies in the Startup Ecosystem

The startup ecosystem is certainly past its infancy, but it is still evolving rapidly and there are many more efficiencies to be unlocked that increase the success of startups further and support the long tail of innovation. Here’s my opinion on where we have opportunities to improve the system:

- Talent development

- Better conversion rate of people with ideas for companies, to entrepreneurs actually starting companies

- Pushing world’s brightest to choose entrepreneurship over other industries (college students starting companies instead of becoming an investment banker. Creating incentives for experienced execs to take risks starting something new instead of languishing in the rungs of the corporate ladder)

- Reducing friction in team formation, and better “deal flow” by interacting with more potential co-founders

- Aggregating startup services and service providers in order to remove distractions and allow startup teams to focus fully on the new innovation they’re trying to create

- Networks becoming more efficient in sharing assets (knowledge, people, code, strategy)

- More fluid and less cumbersome funding rounds, all the way from idea to scalable profitability

- Collaboration amongst startups to attack new verticals and interlink their advances to create networked impact— where success exists behind an activation energy only realizable by coordinated efforts of multiple startups

- Connecting entrepreneurs to the people and information at the time they need to support maximization of potential— time and energy will consistently be put in highest leverage places

- Better filters by injecting personalization and social graph into many tools

- Systems that use psychology and persuasion to nudge people to act in their own long term self interest, mitigating human kind’s insidious propensity for short term thinking

And what I’m personally targeting right now with Founders First: accelerated just in time learning.

Finally, a few projects and trends I think are very important:

Rise of startup accelerators and therefore an emerging market for post-startup accelerators and pre-startup accelerators. (I’m working on the post startup accelerator phase with Founders First. See all the new startup accelerators here and many of the companies here)

Venture Hacks Angel List and Startup List to reduce friction in the funding of startups.

Right Side Capital Management— A new kind of investment fund trying to dramatically increase deal flow to 100-200 investments a year. This will support faster expansion into niches.

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5 Steps of Entrepreneurial Growth

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I defined 5 steps in the entrepreneurial journey that I think most people go through. The distribution is a pyramid and only a small percentage of people make it through each stage.

(1) No Desire —intrinsic motivation suppressed (usually by the school system) (2) Desire to make an impact and be entrepreneurial, but uncertainty about how to channel that desire (3) Possess an idea for a project but lack the knowledge and ability to know how to begin (4) A prototype has been built but need help gaining traction (5) The project has succeeded on a small scale but needs support going mainstream.

I believe the world’s biggest problem is not one of the many challenges we face such as global warming or extreme poverty, but rather that we have too few people engaged in working on solutions. The root of this problem stems from the ineffectiveness of the world’s institutions to support people in finding their passions, and their inability to help people align their work with these passions. Entrepreneurship in its broadest sense can give people the intrinsic motivation to solve these problems. And the way to solve the world’s biggest problem is to support a greater percentage of the population through each of these 5 stages of the entrepreneurial journey.

Founders First, my current focus right now, is trying to support groups 4 and 5. In hindsight, I can see that what I’ve been working on has evolved through solving problems in each of these stages.

1- Technology Club — One major goal was to find exciting people, projects and companies and integrate into my uninspiring education

2- Youth Action Research Network — Bring together all the people inspired to do something more and actually start doing

3- Force For the Future stage 1 – targeting college students with ideas who are having trouble making waves

4, 5 – Force For the Future stage 2: Founders First — targeting founders who are alumni of start accelerators

I’m confident that the best way to approach solving the problem of liquidity through the 5 stages, is to start from stage 5 and work backwards.

It is actually the most doable, because by the time people are there, they are very motivated. And the ecosystem for people in that stage is the most developed, because enough people in this stage have been able to create profitable or impactful organizations.

Tackling the other stages is much more complicated, and requires a lot more infrastructure. To affect stages 1-3 where most of the world’s population resides, we requires resolving political conflicts, alleviating poverty, overhauling institutions, and overcoming pressures from peers, family and other lower level Maslovian needs. And while it’s important for work to be done there, I don’t think we can create any lasting change until the higher stages are more organized and developed, otherwise we’ll just have people temporarily reaching new levels and then falling back down to tell all their peers that it isn’t possible and isn’t worth trying.

I have a philosophy called the T Model - A framework for learning, work, personal growth and non-linear career progression that describes evolving through these stages from an individual’s perspective.

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The Lego Model

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Original post can be found here.

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There are two types of organizations that are driving a majority of our economic growth: the startup and the large corporation.

On one hand, we have startups, which are where the innovation is happening and on the other hand, we have corporations, which have the advantages of scale and abundant resources. We need a new kind of organizational structure that can bridge the gap, combining the strengths they each possess.

I’ve come up with a model that explains how startups can gain the advantages of scale and have access to greater resources while staying agile and preserving their penchant for innovation. This model is called the lego model.

In this model you can think of a startup like a rectangular block and a large corporation like a tower. Startups can create a tower by collaborating with other startups. When enough startups are seamlessly working together they have created a tower that is functionally equivalent to the towers of corporations that can take advantage of the efficiencies at scale. But the tower startups create is not a single indivisible entity, it’s more like a tower made of lego pieces. And that has a lot of advantages the indivisible tower doesn’t. It is more resilient, more flexible, more modular and can quickly be assembled and disassembled. This process incorporates principles from both evolution and nature selection. It enables unlimited experimentation and also fast replication for the stuff that works. (This is good that it mirrors nature, because we know nature works, because it created us). The modularity also gives much greater control over optimization, because it’s much easier to isolate and test particular variables. Best practices can easily move across the ecosystem because as things get increasingly quantized, they are easier to replicate. If one lego piece is shown to be particularly versatile or adaptive it can be plugged into many existing towers. If a particular lego piece is poorly constructed and not doing its job very well, there are plenty of pieces waiting in the wings that can replace this ineffective lego piece. That provides great resiliency because while you’re still only as strong as your weakest link, the chain isn’t fixed anymore.

Towers only have to live as long as they are still creating increasing value for the customer. As the vertical the tower is operating in begins becoming saturated, essential pieces can shift their focus from growth, to becoming as lean as possible— doing the same job with many fewer employees and much greater efficiency. The pieces that are no longer essential  as the vertical matures can leave while still highly profitable, and move into an area where they are still adaptive or regroup and plan to start from scratch with the resources they’ve gained.

What we don’t want are companies trying to milk past innovations for all they are worth, through monopolies and legal manuerving. This is terrible for customers because it closes down the space and prevents further innovation. It’s terrible for companies too, because as soon as they stop innovating, a death knell has been sounded, and they are now fighting an uphill batter that will only get steeper. All utters have a limited amount of milk.

Why do large companies stop innovating? There are many reasons, a few are because: they become too large and innovation requires being flexible. The people in the organization age and become tired and complacent. It’s easier and more certain to incrementally improve existing products and services than venture into the uncertain waters of innovation.

What we want to have happen is to have successful organizations in a mature market release both their financial and human resources back into the ecosystem to begin creating more innovative lego pieces that will eventually be formed into more lego towers that serve new verticals.

But why can’t startups form these lego towers currently? Because currently they are just rectangular blocks without the knobs and holes. If the pieces are just flat rectangular blocks, the structure is more akin to a disjointed Jenga tower, which certainly isn’t adaptable or sustainable.

If theory is to be taken seriously, what does it mean practically for how we should be organizing startups?

In order to start building lego-like structures startups need to have greater interconnectivity and more standardization for interoperability. To achieve either requires a more mature startup ecosystem which will need to evolve to encompass many new things including: more transparency, more portable data, a more collaborative culture that focuses more on creating value than capturing it (meaning share more and worry less about protecting IP or being ripped off); a tighter community with more fluid relationships between first time entrepreneurs, entrepreneurial veterans and mentors. Startups also need better information including: roadmaps, templates, and organized, actionable guides. And the ecosystem needs more startups for startups—companies creating tools designed specifically to help other startups grow their businesses. We want to be one of them.

As these tools develop and the ecosystem matures achieving lego like startups will begin becoming feasible, but the culture must evolve in parallel, too.

What we’re trying to look at and understand is what the innovation landscape might look like in the future, I think the lego model is a step in the right direction. Let us know what you think. We’ll be sharing more implications of the lego model and complimentary ideas that could shape the innovation landscape.

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