Better ideas aren’t enough

“Pattern Breakers: The Secrets Behind the World’s Most Successful Start-Ups” is a must-read for every entrepreneur. The book is a start-up version of “Difference”. There is no point starting another me-too business. There is no point in going incremental. The power of different favours the start-up because it forces a choice and not a comparison.

The general questions

• Which start-ups will form a non-consensus insight that differentiates them from both established companies and fellow start-ups?
• What can we uniquely offer that people are desperate for?

The specific questions

• Can you help me understand the inflections that are happening outside your start-up that have enabled you to do this just now?
• Have you connected a specific and powerful change from the outside world to the opportunity to empower people with something they never imagined possible?
• Who are the people this capability would empower, and why would they desperately want the new capabilities?
• Under what circumstances might the inflection significantly change people’s lives, and when might it not be impactful enough?
• Why is now the time it’s going to work? What inflection has emerged that makes this time different?

Quotes

The book quotes George Bernard Shaw: The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man. And Steve Jobs: The people who are crazy enough to think they can change the world are the ones that do.

Unreasonable ideas

As a venture capitalists the authors jobs are to back unreasonable people who have unreasonable ideas long before the rest of the world believes in them. Better ideas aren’t enough. Remarkably different ideas are essential for achieving a massive impact. To be super successful you need to be breaking patterns. Founders don’t create outlier start-ups by mastering established recipes or best practices. Instead, they embrace pattern-breaking as a core part of their job description and start-up journey. Being extraordinarily different is a crucial aspect of the breakthrough founder’s job description.

Inflection points

To do that you need inflection points and insights. An inflection is an event that creates the potential for radical change in how people think, feel, and act. An insight is a non-obvious truth about how one or more inflections can be harnessed to radically change human capacities and behaviours. Inflections and insights are mutual multipliers.

Powerful forces

They are powerful forces below the surface of a breakthrough start-up idea — forces far more important for start-up success than just the idea itself. Inflections and insights empower breakthrough start-ups to develop ideas that radically change how people live. A pattern-breaking idea is a specific product or service based on an insight.

“Only the Paranoid Survive”

The term inflection point was first applied to business by Andy Grove in the 1990s when he was the CEO of Intel. In his book Only the Paranoid Survive, Grove described “strategic inflections” as a turning point in the way people think, feel, and act: a change in what they value, what they believe, what they can do, or what they’re willing to do. Companies that fail to identify and adapt to these changes risk becoming irrelevant.

Change the rules

The fundamental difference between ordinary and extraordinary start-ups is their ability to deliver pattern-breaking products that change the rules rather than simply finding gaps in markets and solutions according to the rules as they are currently defined. Founders need to carry people along with them into a radically different future. Founders accomplish this by creating movements that propagate radical change throughout the human population. Such movements sweep across the human landscape and usher in a new future that differs radically from the recent present.

Movements

Such ideas make radical change possible. Movements make radical change real. Founders who successfully create a movement take the assets, advantages, and assumptions of the status quo — the strengths enjoyed by incumbents — and turn them into the incumbents’ greatest weaknesses, just as judo masters use their opponents’ size and strength against them.

Storytelling

Using storytelling as the main tool. A provocative story defines what’s at stake in the movement and energises specific people with specific calls to action. It starts by defining a larger purpose. Your story must also have an enemy. That enemy is not a specific product or company. It’s the status quo.

What inflections does your idea harness?

Inflections aren’t caused by start-ups. They happen externally to start-ups. Thus, in your elevator pitch, you should use inflection and insight versus problem, solution and magic. When a venture capitalist responds to your pitch by asking, “Why now?” they’re really asking, “What inflections does your idea harness? And why is now the time to harness it?

Future framing

That is why, in my workshops, I talk extensively about the need for future framing, passion, authenticity, and being purpose and movement-driven, supported by a powerful narrative (slides available on request).

New rules

An incremental start-up in this field can only battle for their share of that market, largely according to the current competitive rules of that market — rules set by formidable incumbents. By contrast, people didn’t tweet before Twitter, a breakthrough start-up that changed the shape of human behaviour. Instead of outperforming competitors, these start-ups redefine the game by introducing entirely new rules based on their unique insights. Bleu ocean stuff.

Unfair advantage

Using inflections gives start-ups an unfair advantage — and they need it. Big companies have employees, customers, supply chains, competitive moats, an established reputation or brand, and many other assets a start-up lacks. A start-up’s advantage, by contrast, depends on redefining people’s patterns of behaviour — on replacing established patterns with new ones. Breakthrough start-ups use the power of inflections to create a new game with new rules that they define.

Old rules

If not, you will likely encounter lots of obstacles: new competitors, pricing pressure, longer sales cycles, faster retaliation from incumbents, and many other factors that can all contribute to arbitraging your profits away. A good example in recent years was the mindless competition between scooter start-ups.

No choice

If people have a good enough alternative relative to what you propose, you won’t be different enough. You want an implementation that causes potential customers to exclaim, “Where have you been all my life?!” Find desperate people. If you solve their problem, they will spread the word about your unique advantages to their friends.

The conformity trap

The challenge for inflection and insight-driven start-ups is to stick with it. If your idea is non-consensus, it follows that most people will dislike it — even if you are right. You should not focus on early adopters but focus on early believers. Ignore false positives. Go for non-consensus instead of consensus. Focus on being different rather than being better. Take your time and ensure that you are NOT driven by market demands and customer needs in the here and now. Be on a genuine quest for enduring truth rather than fleeting affirmation. Deeply care about the problem, not the solution. Do not focus on an MVP but on a minimum viable future. Focus on proofing the inflection point and insights by creating implementation prototypes.

Surprise versus validation

Look for the surprises. Because surprises are so important to understand because you are pursuing a non-consensus idea for a future that is mostly unknown or at least ambiguous.

Pitfalls and the curse

Apart from the difficulty of sticking with it, there are other pitfalls:

• The first is a lack of clarity about what constitutes a specific change event. Many people have ideas about opportunities presented by technologies that are improving rapidly.
• The second possible pitfall is not understanding the empowerment offered by an inflection, who it affects, and the extent of its impact.
• The third pitfall is becoming attached to “being right” about how an inflection will play out in the future.

And then there is the curse of plausibly good ideas that aren’t driven by any sort of inflection at all. Forcing you to play according to the old rules.

The good news

Start-ups don’t win because of excellent management. If they did, there wouldn’t be any successful start-ups. The big companies would crush them. Start-ups succeed because you have smart people who are willing to work very hard and run into and over obstacles again and again. And in the early days, nobody cares about your start-up anyway, so the consequences of screwing up aren’t that great. You’ve got nothing to lose. You have no users; there’s no one to hurt.

The cultural keywords to remember

Keywords are non-confirm, authentic, transformational, bold, decisive, idiosyncratic, belief, optimism, asymmetric, courage, tenacity, unwillingness to concede, trust, respect, determination, audacity, disagreeableness, integrity, and resilience. Resilience is crucial, requiring an intrinsic confidence that doesn’t waver in the face of naysayers but is fueled by an unwavering belief in the vision. Also, read “The geek way”.

Live in the future

Finding inflection points is hard. The only to find them is by living in the future. If you are living in the present, your starting point is the present and you extrapolate into the future. If your starting point is living in the future, you can’t extrapolate from the present. People living in the future have a better vantage point to develop an insight earlier; those in the present will be playing catch-up. That is why I invented mind candy/scenario prompts to immerse you into future scenarios and force you to surf the waves of the future. You can subscribe here.

Some (random) tips from the book

• Have a superbuilder on your team. A superbuilder is someone endowed with not just technical prowess but also insatiable curiosity, unwavering tenacity, and a staunch belief in their capability to surmount any technical hurdle.
• Be interested in the ideas themselves. The transactional is characteristic of the mundane present that these people have been trying to escape.
• Get familiar with the unfamiliar and become enabled to see the transformative potential that everyone else misses — the pockets of the future distributed unevenly among us.
• Be a builder.
• Focus. By spreading too thin over numerous benefits, you risk being forgettable or failing to effectively communicate any one compelling reason for early customers to engage.
• Many start-ups have a huge theoretical market opportunity but never find a single customer desperate for what they propose to build.
• Don’t settle
• You’re going to need a crew as nuts as you are. You want pirates, not people motivated to join the navy.
• To champion a radical idea, you need true believers, including your start-up team, initial customers and collaborators, and investors.
• Belief should be your focus. Not sales traction, The best start-ups have a set of co-conspirators who all believe the same insight and go to battle together to convince the nonbelievers of
• Breakthrough start-ups succeed by animating the beliefs of the right co-conspirators, beginning with your start-up team. They need to think, feel, and act differently than employees and managers at a normal business.
• Hire to take out key risks. Survival depends on identifying the biggest risks you face and gathering the people who can take out the risks, one by one.
• Maintain an Undiscovered Awesome People (UAP) list.
• There’s no single minimum viable future. Futures vary based on the future you’re trying to create and what it takes to validate the beliefs of your early believers.
• Focus on visionary customers. The visionary customer is likely not living in the present; they are one of the few who live in the future.
• Your story must villainise the status quo by describing its problems and sharply contrasting between the world governed by the status quo and a world freed from its dominance.
• Effective language is vital to launching a movement. Breakthrough language creates demarcations in thinking, which lead to demarcations in how people feel and act.
• Co-conspirators are not normal people. They’re zealots who steal the whiteboard pen out of your hand when you deliver a presentation to them. They’re animated by belief more than utility. Just as it is essential to find co-conspirators who believe in your insight, it is an equally important second step to avoid the temptation to be liked by ordinary people who still believe in the status quo.
• The “us versus the rest of the world” positioning requires you to make courageous choices in the products you build.
• The more disagreeable you are, the lonelier your existence.
• Tesla Roadster is powerful. Nobody looked at it and asked, “But how does it compare with a Porsche 911?”

About investors

Potential customers are not created equal. Neither are potential investors. The world of raising venture capital is one of the most murky and misunderstood fields. Many founders make the mistake of believing that fundraising is like a sales cycle. They think you need to develop a funnel of VC prospects. The problem with this approach is that it falls into a different version of the same trap: selling to normal people. Attract the VCs you care about and repel the nonbelievers.

Look for believers

A raw start-up has two things: the start-up team and the insight. Many founders feel like it’s a bad sign if most VCs dislike their start-up ideas. But in my experience, it’s far better if a handful of VCs say, “Where have you been all my life?” once they understand your insight. Ultimately, investors believe, or they don’t believe. If they don’t believe at first, you won’t convince them until you’ve proven yourself in the future. You should move on. It’s a mistake to focus much energy on a pitch to nonbelievers.

Your pitch

Potential co-conspirators crave a sharp, direct pitch. They want you to explain what you are doing quickly and with straight talk. Founders should treat every investor like a potential partner in crime, and they should pitch with that mindset. You’re really trading ideas in the realm of your insight. The author suggests the following opening: “Before I get too far with this pitch, I need to tell you about my non-obvious belief in the future and why I think I’m right. If you conclude at any point that you disagree with this, nothing else I say will make sense to you, and I can give you the rest of your time back.”

Large companies

At the end, the book covers infection and insights for large companies and how to break away from incrementalism. Breaking free from incremental success is a long shot. I suggest you read my book about books about intrapreneurship.

The conclusion

All of us unwittingly let our own self-imposed limits govern how we think and act throughout our lives. We often fall into conventional thinking when coming up with start-up ideas. Many others will take this common path to come up with ideas, raising the odds of fierce competition. Breakthroughs are undiscovered, which means you have to answer a question that hasn’t been answered yet. To make a breakthrough real, you can’t just think unconventionally; you must act unconventionally as well. As a breakthrough founder, you must choose to prioritise your mission for the long term, even if it means that people in the present will attack your status or sense of belonging in the short term. Have the courage to be disliked.