A thread on when to stop looking
1. Stop looking when you find a great idea
How you read this tweet depends on your personality. If you’re a ’10 things before breakfast’ person it won’t make sense, of course as soon as you have an idea you should act on it; after all ideas are everywhere, the value is executing.
On the other hand, if your style is ‘10 breakfasts before things’, you know ideas are valuable, in fact you’re likely to thing ideas are everything.
To the first group this tweet says, you must search; acting on every idea is insane. To the second it says, at some point the search must stop.
Yes, ideas are a dime a dozen, but good ideas are not, great ideas even less so. A great idea, which you and not someone else, can act on, now and not some other time, is a rare and valuable thing.
So look – but when you find one, stop, and do something with it.
2. A good idea, is one, which if executed successfully, will do good – it sounds obvious, but it’s always worth asking whether it really improves people’s lives
Y Combinator, probably the world’s most successful creator of companies, famously has the tagline ‘Make something people want’.
But not everything people want is good.
I enjoy the dopamine of a constant flow of a social media stream, but it’s not good for me, and as it turns out, it’s not good for a lot of other people.
We’ll likely disagree on what things are good, but perhaps we can agree that some things are good and some are not. In any case, I think it’s a question worth asking; it’s a lot easier to stop before you start.
Of course, none of this means you should pursue an idea people don’t want, or at least not one you think people will never want. It’s a Venn diagram thing.
3. Cf. @naval puts it “you will get rich by giving society what it wants but does not yet know how to get. At scale”.
Firstly, money is the approximate value of work, stored and made flexible. And wealth is anything that generates or can be readily turned into money (including of course money itself). @naval says something similar: money is an IOU from society, you do something good for society, and they give you an IOU that you can collect later.
It’s this background that makes sense of his tweet. Wealth isn’t an arbitrary invention, but the by-product of doing something valuable, or in his words, ‘giving society what it wants’. True, society doesn’t always want things that are good for it (which we discussed in last post), and society doesn’t always know what it wants (the next post), but it holds true, albeit imperfectly, that if you deliver something good which people want, you will be rewarded with money.
But it needs to be ‘at scale’. One plumber gets some plumbing done, and therefore some good done, and in turn some reward for that good. A company with 1,000 plumbers gets a lot more plumbing done; more plumbing equals more good, more good equals more reward. Still underrated, the internet makes it possible to build scale as never before. This is especially true for products with code and content.
But even this is not enough, it matters that society ‘does not yet know how to get’ what it wants. If society has already knows how, someone else has already made money. You will need a good, and new, idea.
4. But society doesn’t always know what it wants, so good ideas are usually ‘secrets’ (Peter Thiel)
5. Secrets are things which are true, but which very few people believe or know about
Behind every great business is a great secret, and not necessarily a crime, but simply the knowledge and willingness to act on something true, which, at the time, most other people either didn’t know, didn’t believe, or dismissed.
To take hold of a secret has two steps.
Firstly, know something other people don’t.
If I were to state the tweet above more accurately I would say “because society doesn’t know how to get what it wants and because it doesn’t always know what it wants, good ideas are ‘secrets’”. The distinction is not worth labouring, in both cases society doesn’t know something important, but you do! Both elements are critical. Society doesn’t know how to teleport (although I think it would like to), but neither does anyone else. A secret, must be true and knowable.
But knowing a secret is not enough. A secret, to be useful, must be acted on, and that requires courage.
Peter Thiel famously asks prospective job candidates, ‘what do you believe that most other people don’t believe?’ It’s a great question. Firstly, it diagnoses whether you have an original thought, and secondly whether you have the courage to say something the interviewer disagrees with. Even if you could game the question ahead of time and borrow an original thought from someone else, you still end up having to say something the interviewer disagrees with.
Lastly, though, some good ideas don’t require all that much courage to start. One Silicon Valley investor (@chamath) says he likes businesses which require ascending levels of courage; a business where you take the first step up a mountain, rather than one which starts with a base jump.
6. You may not know for sure if something is true, but you know that if it is true, it will be consequential, and so is worth exploring
That Leverage is not yet a great business, but we hope it will be. We have claimed that behind every great business lies a great secret, a secret both known, and acted upon. Typically, though, it won’t be a single secret, but a cluster of secrets, mixed in with other hypotheses about the world, about product ideas, about a potential market, distribution and business model - all bound together with the assumption that those in possession of the secret are able to take advantage of it.
Well, let’s do some dogfooding, what secrets lie behind That Leverage, and what acts of courage has it taken to start?
i. We think the internet brings incredible leverage, especially the leverage of code and content. And that, despite the ubiquity of the internet, this is still very much underrated.
ii. We think this leverage compounds with other leverage, such as capital or skills, to dramatically increase, the value of good ideas, and the power of small teams.
iii. We think there is a large potential audience [e.g. people on linkedin] who will find content about this world of leverage interesting and useful.
iv. We think that despite there being huge amounts of content on start-ups and indie hacking, that this content is hard to navigate if you don’t have a lot of time and are not immersed in it.
v. We think we have the necessary time and skills to synthesise, curate and apply this content.
vi. We think a daily newsletter is a good product to achieve this goal (not so much a secret).
vii. We think we can build an audience (we have some non-secret ways to do this, but are hoping to discover some secret ones!).
viii. We think if we can build an audience we will find appropriate ways to make money (again, not a secret).
Note throughout we use ‘we think’.
That is, we are not sure we are correct, and have different conviction levels about different secrets. But as the tweet above says, we know ‘if it is true it will be consequential’.
Additionally, if we are wrong it will not be catastrophic, and so as we say above ‘it is worth exploring’.
That is, starting That Leverage only takes a modest amount of courage. If we fail we’ll have lost some time, a little money, and experienced a little shame.
But even here this is mitigated by another belief: that if this particular venture fails, we will likely have learned something or found another opportunity, such that the next venture won’t. In fact, we’re all already involved in other projects that rely in part on secrets i) and ii).
7. Secrets can be found all over the place: hidden away in a system, in the problems we encounter every day, in the impact of a new piece of legislation, or technology, or simply because a new product has been launched.
This tweet points to the twofold nature of a secret; it is at once a view about the way the world is, and a view about how it could be.
The world is full of systems, and each system has its secrets. There is a way things are done, and often the reasons are opaque. Sometimes they make sense for good reasons, sometimes they used to make sense, and sometimes they make sense for bad reasons.
Most of us probably know more of these secrets than we realise, although I wonder sometimes if we are wired not to look. A little while ago someone tweeted out ‘what do people in your industry know, that if everyone knew, they would be shocked?’. It sounded promising. I was looking forward to insight after insight cascading down my stream. But soon I was told the education system was in trouble, there was a student loan crisis, the planet was being destroyed, and that rich people were avoiding tax. These are not secrets, and the comments did not appear to originate from within the relevant industries.
This is not to say these domains do not have their secrets. For example, Michael Lewis, in his podcast recounts how one company only allows enquiries about student loans to take 7 minutes, and requires students to answer a set of specific questions that take a few minutes, so that they will never actually be able to find how their student loan situation could be improved. This is a secret, even with Michael Lewis broadcasting it.
The second aspect of a secret, though, is a view on how the world could be different. Perhaps there’s a new piece of legislation that could undermine this poor practice, or software which lets you put together a class action, or a way of funding thousands of ‘enquirers’ in a cheaper geography to swamp the business, or a new technology or cluster of technologies that let you sidestep the issue altogether.
8. Secrets can be hidden in plain sight.
9. Lots of people may know something about it, but underrate it – like the power of the internet.
10. Lots of people may know about it, but overrate it – like the value of getting feedback about the customer service you have received (if I’m not happy, I’ll let you know, and if I am happy, don’t spoil it by getting me to fill out a form to tell you so).
I enjoy playing underrated and overrated, both the challenge of comparing how something ought to be rated with how it is rated, and the, sometimes surprising, result that even very good things can still be overrated.
But here secrets can be found.
The internet, for example, is known, and it’s very highly rated. “Will there be Wi-Fi?” has become a very important holiday question. And yet, it’s still possible it’s underrated. Bill Gates said we “overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten”.
Perhaps those who tried video-sharing before YouTube overestimated how quickly the internet would make a difference. And there are businesses now, such as anything promoting remote work, built on the assumption that we are still underestimating it.
But not every change is a real change, some are fads, or at least I hope they are. I wonder for example, whether some aspects of ‘Big Data’ are overestimated. Is it just Big Noise needing to be replaced by Big Signal?
I’m more confident we overestimate the value of measuring everything. Whoever thought I would want to provide feedback my customer service experience as a matter of course. If it goes well I don’t want to think about it, and if it doesn’t I’ll let you know. And with this the obsession with limiting responses to check boxes. I remember cancelling one service, and I couldn’t without providing a reason – a bad start, but worse the reason had to be from a check box. I had a specific reason for cancelling, it might even have been useful for the company. I liked the service, but wanted less choice, something they hadn’t thought of. But they’ll never know.
Back to the point – some changes are (hopefully) just fads.
And sometimes even an enduring and significant change can have a minority report, or as I’ve written elsewhere (link) the opposite of a good idea can also be a good idea. So in a world where everything is shared, a product that promotes privacy has a place, or a restaurant where they take your jacket and your phone, or in a world of soundbites, 3 hour interviews.
And although these secrets are hidden, they are only take a question or two to uncover. Is this being underrated? Could that be a fad? Does this have a minority report?