Business is never a fair fight: Why some startups change the future #BookSummary

Big ideas from a new book Pattern Breakers

I do not read books around startups anymore. Running my own startup for the last many years, my general feedback with startup books is that most of them fall under ‘a-lot-of-BS’ and are completely disconnected from the real world.

For instance, every startup book wants you to believe that PMF, i.e. product-market fit is the happy ending to aim for, but if you have been a part of startups you’d know that it is always a moving target - in fact it should be (otherwise the startup rusts and dies eventually).

After The Hard thing about hard things, here is one book that I actually not just enjoyed reading, but also took a lot of notes - Pattern breakers by

Mike Maples

The book essentially helps one understand why certain startups grow bigger while others with same level of talent/funding/opportunity fail to do so.

Was it dumb luck that made Uber so successful?
Hint: no, it was iPhone 4S!

From the official description: With intriguing and entertaining storytelling based on a lifetime of experience, Pattern Breakers vividly illustrates what differentiates breakthrough ideas from those that initially seem promising but that meet with mediocre results, and why others that initially seem unworthy—even idiotic—end up radically changing how people live.

The future doesn’t happen to us. It happens because of us. It comes to life when someone dares to supplant old ways with a different way

---

Here is a summary of the Pattern Breakers book (yeah, you won’d find it anywhere else).

Pattern Breaking vs. Pattern Matching

Many founders make the mistake of trying to think of a start-up idea and then let their optimism convince them it’s an idea worth pursuing.

Humans are expert pattern matchers, which helps us find order and predictability in life. However, breakthroughs require pattern breaking. Pattern-breaking founders create something that challenges existing norms and habits.

They boldly defy current assumptions, often facing resistance from experts who are too entrenched in existing patterns to see new potential.

Inflection Theory

Inflection theory posits that inflections (external events with the potential to significantly alter behavior) and insights (ways to connect inflections to radically alter human capabilities) empower breakthrough start-ups to develop ideas that change how people live.

"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." - George Bernard Shaw

---

Inflection Theory: Key drivers

Inflection theory can help you determine whether an idea is likely a good use of your time and really worthwhile. It can help identify ideas that seem worthy on the surface but don’t contain the underlying powers that suggest it will be a breakthrough. And it can help avoid prematurely dismissing ideas that don’t seem worthwhile at first but that have breakthrough potential beneath the surface.

Inflections are external events that create the potential for radical change in how people think, feel, and act. They are powerful forces that start-ups can exploit to alter the status quo.

For example, the introduction of embedded GPS chips in smartphones enabled the rise of ridesharing services like Uber and Lyft. Inflection theory holds that inflections and insights empower breakthrough start-ups to develop ideas that radically change how people live.

Here are the Inflection theory’s key drivers:

1. Insights: Connecting Inflections to Change
   An insight is a non-obvious truth about how to harness one or more inflections to radically change human capacities or behaviors. Insights allow founders to see potential that others miss. For instance, Airbnb's insight was that ratings and reviews could build trust among strangers, creating a new category of hospitality.

2. Ideas: Embodying Insights
   An idea is an attempt to conceive of a specific product or service based on insights. Ideas that successfully embody insights harness the power of inflections to create radical change.
   Not all start-up ideas are based on insights, which explains why some achieve limited success while others breakthrough.

3. Movements: Making Change Real
   Movements are groups of people with a shared belief in moving together toward a different future. They are essential for spreading radical change throughout the population. Successful start-ups create movements that propagate their ideas and overcome resistance from established institutions.

---

Harnessing Inflections: How Pattern Breakers Change the Rules

1. The Power of Inflections
   Inflections are external events that create potential for radical change. They can be technological advancements, regulatory changes, or shifts in societal attitudes. Pattern-breaking founders exploit these inflections to redefine rules and create breakthrough products. For example, the advent of GPS-enabled smartphones was a key inflection that enabled ridesharing services.

2. Inflections as Unfair Advantages
   Inflections give start-ups an unfair advantage against established companies. While big companies benefit from existing patterns of behavior, start-ups can use inflections to introduce entirely new patterns. This allows them to compete on different terms, avoiding direct comparison with incumbents.

3. The Inflection Stress Test
   To evaluate the potential of an inflection, founders can use a stress test. This involves describing the inflection, what it enables, why it's powerful, who it affects, and the conditions for its success. This structured approach helps assess whether an inflection has the potential to drive radical change.

4. Timing and Multiple Inflections
   The power of an inflection is closely tied to its timing and adoption rate. Multiple overlapping inflections can create even more powerful opportunities for change. Recognizing these convergences can lead to breakthrough ideas that reshape entire industries.

"Business is never a fair fight. The default is an unfair fight where the status quo confers an advantage for the incumbent corporate players. It becomes an unfair fight in favor of the start-up when the start-up can change the rules."

Timing Is Everything: The Power of Dumb Ideas

"Every breakthrough will happen. The question is when, not if."

Timing plays a critical role in harnessing inflections for breakthrough success. By using the inflection stress test and being attuned to the timing of inflections, founders can better identify and capitalize on opportunities for radical change. Here is how:

1. The Importance of Timing
   Timing is crucial when harnessing inflections for breakthrough success. There's a "Goldilocks moment" when an inflection reaches a tipping point in its ability to effect change. Acting too early results in a science project, while acting too late leads to a crowded, competitive field. Founders must identify the right moment to capitalize on inflections.

2. Inflections After You Start
   Start-ups often benefit from inflections that occur after they launch. For example, Lyft began as Zimride, a web-based carpooling hub. The introduction of the iPhone 4s with embedded GPS chips later enabled them to pivot to a ridesharing service. Being aware of emerging inflections allows start-ups to adapt and capitalize on new opportunities.

3. The Power of "Dumb" Ideas
   Sometimes, ideas that seem foolish at first glance can lead to breakthroughs. The author shares the story of investing in Justin.tv, which initially seemed like "one of the dumbest business ideas" he'd ever heard. However, the underlying inflections (improvements in content delivery networks and growing interest in user-generated content) eventually led to the creation of Twitch, a hugely successful livestreaming platform.

4. Stress-Testing Inflections
   To evaluate the potential of an inflection, founders should consider: the specific new thing introduced, what it enables, why it's powerful, who it affects, and the conditions for its success. This stress test helps identify whether an idea truly harnesses powerful inflections that can lead to breakthrough success.

Force a choice..not a comparison

Successful startups are both non-consensus and right, which allows start-ups to escape the comparison trap and create entirely new categories. They force a choice rather than a comparison, and why obvious truths don't lead to transformative insights.

1. The Power of Non-Consensus Insights
   Breakthrough start-ups succeed by being both non-consensus and right. This means having an insight that most people disagree with initially, but turns out to be correct. Non-consensus insights allow start-ups to escape the comparison trap and create entirely new categories.

2. Forcing a Choice, Not a Comparison
   Successful breakthrough ideas force customers to make a choice rather than a comparison. Instead of being a better version of an existing product, they offer something entirely new. This approach allows start-ups to define their own rules and avoid direct competition with established players.

3. The Danger of Obvious Truths
   Insights cannot be obvious truths. Ideas based on obvious truths often lead to limited upside or failure because they're already known to established incumbents. True insights harness the power of inflections to change human capacities or behaviors in a radical way.

4. The Importance of Timing in Insights
   Powerful insights answer the question "Why now?" They explain why the present moment is the right time to introduce a new idea or product. This timing element is crucial for harnessing inflections effectively and creating breakthrough opportunities.

How to stress test your insights

The Four Tests of an Insight

An insight must pass four tests:

• it must be true,

• non-obvious,

• harness the power of inflections, and

• answer the question "Why now?"

These criteria help distinguish genuine insights from mere ideas or observations. True insights have the potential to radically change how people live.

1. The Insight Stress Test
   To evaluate an insight, founders can use a structured stress test. This involves describing the future enabled by the insight, who it empowers and how, the inflections that make it possible, why it's non-consensus, why it's right, and why the timing is right. This framework helps assess the potential of an insight to create breakthrough change.

2. The Danger of Consensus Ideas
   Ideas that are right but within the consensus often lead to limited success due to competition and commoditization. Non-consensus ideas that turn out to be right have the potential for much greater impact because they escape the comparison trap and allow start-ups to define new rules.

3. The Importance of Specificity
   One of the biggest pitfalls in developing insights is a lack of specificity. Vague or general statements about technology trends or market changes don't constitute insights. True insights require detailed understanding of how specific inflections can be harnessed to create radical change.

The third-rate mind is only happy when it is thinking with the majority. A second-rate mind is only happy when it is thinking with the minority. A first-rate mind is only happy when it is thinking. - A. A. Milne

NextBigWhat? Where You Will Find Your Next Insight

As a founder, it's important for you to live in the future to develope non-consensus insights that lead to transformative innovations. Here is how:

1. Immersion in Future Technologies
   Living in the future involves direct interaction with cutting-edge technologies and the people developing them. This immersion allows founders to cultivate new patterns of thinking, feeling, and acting that break free from the constraints of the present. For example, Marc Andreessen's experience at the National Center for Supercomputing Applications gave him unique insights that led to the creation of the first widely-used web browser.

2. Experiencing New Powers Firsthand
   By directly experiencing the new capabilities that emerging technologies offer, founders can grasp their transformative potential in ways that most people can't. This hands-on experience helps identify what's missing in the future and leads to insights about how to harness these new powers to create radical change.

3. Breaking Free from Present Limitations
   Living in the future enables founders to see beyond the limitations of the present. It allows them to recognize that the current way of doing things isn't compulsory and to envision radically different futures. This perspective is crucial for developing non-consensus insights that can lead to breakthroughs.

4. Finding Co-Conspirators in the Future
   Living in the future often involves interacting with other forward-thinking individuals who share a passion for emerging technologies. These interactions can lead to collaborations and insights that wouldn't be possible in more conventional settings. Platforms like Reddit, X/Twitter, and specialized online forums can be valuable resources for connecting with like-minded individuals.

"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." - Buckminster Fuller

---

Get out of the Present: Avoiding a Common Entrepreneur Mistake

"My belief has always been that timing is the major variable. It's the major form of entrepreneurial risk in the tech industry, and I think maybe by a wide margin." - Marc Andreessen

1. The Trap of Present-Focused Thinking
   Many founders fall into the trap of building start-ups based on the assumption that the future will be a continuation of the present. This approach limits their potential for creating breakthroughs. Instead, pattern-breaking founders build for a future that's radically discontinuous from the present.

2. The Mindset Shift: Living in the Future vs. Present
   Living in the future involves rejecting the path of refining what already exists and instead focusing on creating a radically different future. This mindset allows founders to discover inflections and insights that enable them to deliver pattern-breaking solutions. It requires embracing uncertainty and exploring uncharted territories.

3. The Danger of Pursuing Consensus Opportunities
   When founders live in the present, they often chase consensus opportunities that seem promising but lack true breakthrough potential. Living in the future helps avoid this pitfall by enabling founders to identify non-consensus insights that can lead to radical change.

4. Preparing Your Mind for Breakthroughs
   Living in the future helps prepare your mind to notice inflections and develop insights about the profound changes they make possible. This prepared mind is more likely to recognize breakthrough opportunities that others miss. It involves embracing uncertainty and being open to unexpected discoveries.

   ---

Before You Cross the Rubicon: The Implementation Stress Test

"Sometimes you have to believe even when you don't believe." - Todd McKinnon, cofounder and CEO of Okta

1. The Implementation Prototype
   An implementation prototype is a focused deliverable that helps engage potential early believers to identify the most important benefit and the most desperate customers. Unlike a minimum viable product (MVP), it's a step before creating your product, aimed at validating whether your idea can become a product that specific customers will desperately want.

2. Chegg's Textbookflix Example
   Chegg's founders created an implementation prototype called Textbookflix to test demand for textbook rentals. The prototype appeared to offer textbook rentals but "crashed" at checkout. This allowed them to gauge willingness to pay and prove demand to investors without actually having inventory or a functioning system.

3. The Danger of Crossing the Rubicon Too Soon
   Many founders raise money and start building an MVP before confirming the power of their insight and identifying passionate early believers. This can lead to feeling trapped in a start-up that lacks true breakthrough potential. Implementation prototypes help increase conviction before this point of no return.

4. Stress-Testing Implementation
   The implementation stress test helps founders identify specific people who desperately want a specific solution. It involves creating a prototype with simulated features tailored to resonate strongly with a select group of early adopters. This process helps validate the most crucial aspects of the idea before significant resources are committed.

---

Happy breaking patterns :)