If you aspire to do something legendary, Mike Maples argues, the biggest breakthroughs come from pursuing insights that defy conventional wisdom:
In the startup world, this translates to having what PayPal founder and Facebook investor Peter Thiel calls a “secret” or what Benchmark co-founder Andy Rachleff would describe as an idea that is “non-consensus and right.” Before diving into why this is true, let’s summarize these two views.
From his days as a Stanford student, Peter Thiel was influenced by the French philosopher René Girard. I learned of his work a little over a decade ago and loved it. One of Girard’s fundamental ideas is that human desire is mimetic, which means that most of our desires come from our observations of the desires of other people, rather than the desires we generate internally for ourselves. There are lots of implications to this for society, and Peter describes them in his book Zero to One as they relate to startups. The first is that the vast majority of us act out of mimetic desire as if by reflex, starting early in life. We compete for trophies. We get rewarded in school for giving the exact answers the teacher is looking for, but we are often discouraged from providing answers that are too different. “Successful” people often double down on this by seeking education at prestigious Universities, by earning high-paying jobs, and by using the money to live a lifestyle that is broadly desired and admired. It becomes so ingrained in most people’s thinking that it no longer seems to be a conscious choice.
The problem with mimetic desire is that it’s the wrong “personal operating system” for coming up with a breakthrough idea — it is by definition an incrementalist view of the world that emphasizes following the rules and outcompeting others, rather than re-inventing the rules and transcending competition. His second point is that most of us, having been programmed by mimetic desires our entire lives, find it hard not to be reactive to what others are doing. As an investor, I can relate to the many pitches with multiple competitors in a matrix, and their product has more checks than all the others. A typical “mimetic” person will think this way. But a non-conventional founder will notice that chart and immediately two words will come to mind — mindless competition.
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Andy Rachleff views unconventional success through a slightly different lens but with the same broad takeaway. Andy’s argument, influenced by Howard Marks of Oak Tree Capital, goes as follows: Startup ideas have two dimensions. On one dimension, you can be right or wrong. On the other, you can be consensus or non-consensus.
Wrong is always bad. Obviously, if you are wrong, you are wrong. That’s bad. You fail. But being right is not enough.
Most people don’t realize that if you are right and consensus, you are usually not successful enough to make a significant impact. Your startup might be onto a good idea that has customers eager to adopt the product. But as your company races toward product/market fit, it encounters severe obstacles. Because the opportunity is widely believed to have promise, multiple me-too competitors are funded by me-too VCs. As competition floods the market, prices erode, sales cycles lengthen, and more money gets poured into the sector. These markets often turn into a VC funding arms race, and each round of financing comes with massive dilution for the founders and employees. In the meantime, potential acquirers gain increasing power to choose among many worthy and well-financed competitors when they consider M&A opportunities, further capping the upside for founders and employees.
Nice. Very nice.
“…But a non-conventional founder will notice that chart and immediately two words will come to mind — mindless competition….”
I may have to read some Maples.