Essay #1 — On scaling companies at the family stage:
For any early stage company, it seems like one can divide the operation into actions that contribute to content and actions that contribute to form. Content is simply the core product that the company produces. The form is whatever is necessary to support the content: the right team, a clear vision, and the right work ethic.
Throughout the speaker series at the CS183C class at Stanford, many of our speakers have told us about building and maintaining the right form. Insights in how to create an early team (small number of co-founders with shared history), staying away from what Sam Altman calls “Fake Work”, and treating your first customers like consulting clients all fall within this category. However, while arguably immensely valuable, these insights offer little help in how to generate good content. As many previous essays on the speaker series have focused on insights concerning form, and I find that those concerning content have resonated the most with me, I shall focus on the latter in this essay.
An idea that was presented and touched upon by multiple speakers, including Ann Miura-Ko, is the idea that an insight can only valuable if it is contrarian. This seems to be a rather common narrative in the Valley; in Zero-to-One, Thiel calls these valuable insights secrets, and argues that a secret is at the core of all good startups. Concerning secrets, I would go so far as to argue that for a good company, that is one that will quickly grow out of the family stage and beyond, secrets are exponentially more important than the current state of the form. The rationale for this is simple: form can be revised and learned quickly from others (save for some unique organizational challenges some startups experience), while content cannot. This resonates with our intuition about what gives an edge in a market: thinking about the state of competition in a given sector (say, search engines before Google) as perfectly competitive, the only thing that could possibly give an edge is information not available to the broader market (PageRank). However, this doesn’t mean that good execution, or exercising good form, isn’t necessary. On the contrary, it is often integral to the success of the company, as is evident by the many busts of Valley companies with arguably solid content. So, what gives? How can content arguably be vastly more important than form, while form often makes or breaks the company?
I think this paradox is something that is very surprising about both content and form. Disregarding the possibility that I am wrong about the importance of content, I think that one can model it this way: for any idea capable of bringing an industry from a local maximum in the value it creates for its customers to a another, higher, local maximum, some work must be required. This work, on the most abstract level, is simply convincing the broader market of your idea. In reality, this is fine-tuning customer-market fit, advertising, and customer on boarding. The success of this work is mostly a function of the form. Visualizing this on a 2-d landscape, this would be the work required to move down the local maximum into the valley that ultimately leads to a higher maximum. Through competition, the sector naturally floats towards the higher maximum of created value.
Given this model, a startup can encapsulate an insight or secret that ultimately leads to a higher or lower local maximum. This is not known ahead of time and arguably cannot be known. It seems, from the model, that a startup can fail by either having an incorrect insight (one that leads to a lower or equal local max), or by having a correct insight (good content), but failing to the work to move down the valley (bad form).
Though I am not sure this model offers any actual insight into the landscape startups navigate (it might be even me a trivial model), it neatly resolves the paradox concerning the value of content and the importance of form; the impact and importance of both cannot be directly compared. In my life, I hope to use these insights to better understand the startup industry around me, which at first seems chaotic and impossible to understand, let alone predict.
