Avoid trying to force a startup idea by looking for market gaps in the present; instead, immerse yourself in the future and notice what is missing or problematic to uncover breakthrough insights.
Define your decisions and objective function based on truth-seeking rather than approval-seeking, as this allows you to pursue novel ideas and challenge existing norms.
To generate proprietary insights for a startup, immerse yourself in future trends and technologies to notice what’s missing or what problems will arise.
To succeed, a startup must achieve a breakthrough insight, a breakthrough value proposition, and a breakthrough killer predictable growth strategy, as these are foundational to becoming a viable company.
Understand that a startup is fundamentally a set of founders with proprietary insights from “living in the future,” rather than a traditional company with established products or value chains.
As a startup leader, you must be a “learn-it-all,” willing to constantly upgrade your own and your team’s skills to adapt to how value is created differently at each phase of the company’s growth.
Successful leaders possess a combination of determination and a lack of ego regarding their knowledge, coupled with a strong willingness to actively fill any gaps in their understanding.
Cultivate a startup team that operates like an improv jazz band, embracing ambiguity and improvisation, rather than a rigid marching band, as this adaptability is crucial for navigating the uncertainties of a startup.
To build a successful startup, you must inspire people to join a movement they believe in and are emotionally moved by, as logic alone is insufficient to convince them to do something most people think is crazy.
Focus on cultivating a powerful vision that compels like-minded people to feel “in on a secret” and believe they can convert others, as this shared belief is more impactful than charisma in attracting followers.
In the value hacking phase, aim to build something unique that people are desperate for, ensuring your solution is novel and an order of magnitude better to connect with those deeply in need.
First, validate your value hypothesis by finding people who believe in your vision and are desperate for your product; only after proving this truth should you begin testing your growth hypothesis.
Aim to create a value proposition so powerful that your target audience would be irrational not to buy if they fully understood its truth, making growth a process of teaching rather than persuading.
A truly compelling value proposition enables growth by “syndicating the truth” to customers, whereas a weak value proposition forces expensive marketing and persuasion efforts.
Identify the “Herbie” – the slowest or most limiting constraint in your startup (e.g., customer retention, product-market fit) – and prioritize addressing it, as all other efforts will be limited by its pace.
Achieve product-market fit by progressively eliminating all “Herbies” (slowest constraints) until growth becomes frictionless, at which point you can confidently invest in scaling.
The best founders identify the most important “boogeyman” risks to their success and tackle them early, as eliminating these risks significantly improves winning probabilities and company value.
Avoid letting your ego influence customer interactions; instead of trying to convince people your product is awesome, focus on objectively seeking the truth about their needs and the value you provide.
Embrace invalidated hypotheses as valuable learning opportunities, recognizing that even negative data provides new knowledge, while experiments that merely confirm existing beliefs are a waste of time.
Challenge incumbents by “thinking wrong” and doing the opposite of conventional approaches, particularly in business models, to create an orthogonal, asymmetric attack that disorients competitors.
Do not operate within an incumbent’s value network, as they can easily lobby, co-opt, or handicap your business; instead, find fundamentally orthogonal approaches.
Design your business to be so fundamentally orthogonal to incumbents that they would have to change their entire business model to counterattack, which they typically lack the internal skills or values to do effectively.
Utilize a “sword and shield” strategy by having a unique go-to-market and customer context (shield) that incumbents ignore, giving you time to build unique skills (sword) that will eventually overpower them.
Recognize that incumbents often make seemingly rational business decisions, like ceding low-profit market segments, which can be exploited by startups to gain a foothold and eventually make the incumbent irrelevant.
Focus on finding “non-consensus and right” insights, as this is the best competitive strategy, giving you more time to develop your idea without the immediate threat of competition.
When evaluating an idea, identify both technology inflections (new or exponentially improving enabling technologies) and adoption inflections (widespread user adoption) to understand the crucial “why now.”
To evaluate a founder’s insight, ask “Why now is the time for this to happen? Why hasn’t it happened before? Why won’t it happen later?” as a strong answer indicates deep understanding.
After identifying a breakthrough insight from the future, actively recruit early “true believers” who share your vision to help build and accelerate the movement towards that future.
To understand customer needs, conduct “needs experiments” by interviewing 20 target market individuals; for the first five, only ask about their job and processes, saying nothing about your product.
After understanding needs, conduct “solution experiments” by discussing observed problems and asking if an automated solution would be beneficial, listening for their past attempts and failures.
When conducting assumption experiments, a strong positive signal is when customers reveal they’ve already tried to solve the problem you’re addressing and failed, indicating a visceral pain point.
During validation experiments, look for active customer engagement, such as them taking over to describe their ideal solution or eagerly asking when they can see your product, as this indicates strong resonance.
Charge a price for your product even if it’s “half done” to immediately determine how visceral the customer’s pain is and how compelling your value proposition is to them.
Founders seeking investment should demonstrate full-time commitment to their startup, as a lack of passion to leave a current job signals a lack of conviction to potential investors.
Cultivate an unwavering commitment to your startup, acting as if it will happen regardless of external funding, as this conviction attracts investors who want to join a movement already in motion.
Take action when the regret of not trying something feels much stronger than the fear of failing, especially if you have a strong conviction that it should be done.
For a startup to succeed, every team member must be 100% committed, as the inherent impossibility of startups means a lack of full commitment almost guarantees failure.
Be willing to be disagreeable and prioritize the actualization of your vision over seeking approval, as this non-mimetic behavior is essential for challenging norms and leading truly innovative startups.
Strive to be “anti-fragile,” meaning you get stronger under stress and can improvise creative, kooky solutions in impossible situations, much like MacGyver.
Form a founding team that includes both a “persuader” (a leader who is a compelling storyteller) and a “builder” (a technical visionary who understands how to build and co-create the future).
When telling your story, realize that the audience is the hero, and your role is to guide them on a hero’s journey to co-create a better future, whether pitching customers, employees, or VCs.
Employ “contrarian recruiting strategies” to find undiscovered talent who will one day be great, as these individuals are more likely to join a startup for less money and more risk than established talent.
Develop entrepreneurial artistry by being sensitive to emergent signals you weren’t explicitly looking for, perceiving them with the same depth an artist sees emotional things, and acting on these insights.
Manage growth by ensuring four interconnected “gears” — acquisition, engagement, monetization, and enlistment — operate in harmony, optimizing each for efficiency and predictable growth.
To optimize growth, identify the slowest of your four growth gears (acquisition, engagement, monetization, enlistment) and focus on making it no longer the slowest, as the entire system operates at its pace.
In the growth phase, after validating what works, shift your focus to predictably copying and scaling that proven model, moving from experimentation to efficient execution.
In the growth phase, founders should transition to a “VP of Nothing” role and hire experienced professionals who already know how to execute growth strategies, as on-the-job training is too slow for rapid scaling.
Foster an egoless, reality-based, truth-seeking culture within your organization, especially given the abundance of data available today to uncover the truth.
Anticipate and drive the transformation of every economic sector from traditional hierarchical corporations to “software-defined networks” that integrate machine, platform, and crowd intelligence, as this model is poised for success.
Dedicate your time to connecting with people who are “living in the future” and are actively working to bring forward new ideas, as this is where significant innovation and impact will come from.
Recognize that you have limited hours in a day and must actively decide how to spend them and with whom, even if it means saying no to maintain focus on your priorities.
Understand that increasing the number of meetings you take will proportionally increase your follow-up obligations, making it harder to complete everything if you try to help everyone.
Don’t be too dogmatic about who you meet; allow for serendipitous encounters to potentially discover unexpected opportunities or connections.
Recognize that traditional mental models for established companies often fail to predict startup success; dedicate time to developing and refining mental models specifically for evaluating the unique dynamics of startups.
To become a great investor or decision-maker, commit to reading a lot, maintaining genuine curiosity, and actively working to avoid repeating past, avoidable mistakes.
Conduct forensic analyses of past investment decisions, both successes and failures, by reviewing original documents and interviewing founders years later, to understand what went right or wrong and identify patterns.
When a decision leads to a big win, avoid “breathing your own fumes” and instead, critically analyze whether the success was achieved on purpose or by accident to genuinely understand the contributing factors.
Focus on developing and asking questions that reveal the critical answers needed to make a positive decision, and simultaneously learn what information is irrelevant and should be disregarded.
When a successful outcome contradicts your initial negative assessment (e.g., a “terrible pitch”), practice humility and re-evaluate whether your original criteria were truly the most important factors.
In high-stakes environments like startup investing, the primary goal is to understand and identify which specific risks are worth taking, rather than attempting to avoid all risk.
Early in discussions, ask founders about their core motivation for starting their venture to discern if their idea is rooted in a genuine, deeply felt insight rather than just a market opportunity.
Do not actively try to “think of a startup” because this approach often anchors your ideas in the present, making it harder to develop truly disruptive insights that come from living in the future.
Be highly cautious of individuals who lie about details unrelated to their business, as this indicates a difficult relationship with truth and reality, which is a major red flag.
Leverage mentors to help avoid common mistakes, improve processes like hiring, and strategically sequence risks and iterations, drawing on their database of successful and unsuccessful examples.
Adjust your monetization strategy based on the specific type of product and market, understanding that approaches for consumer mobile apps differ significantly from those for B2B enterprise software.
Utilize mental models as frameworks to improve your thinking and decision-making, thereby maximizing the probability of achieving the best possible outcomes.
Engage in the necessary work to discover non-intuitive insights or “earned secrets” that others overlook, as these unique understandings can form the bedrock of a powerful startup.
When advising founders, focus on identifying and discussing their current “Herbie” (the slowest constraint) rather than offering diffuse advice, to ensure efforts are concentrated on the most impactful issue.
As an investor, recognize that involuntarily replacing a CEO almost always makes the company’s situation worse, so this action should generally be avoided.
As a VC, empower strong founders by providing support without dictating how to run their business, recognizing that if a founder isn’t strong, the investment is likely doomed regardless.