Today marks the beginning of the Starting Greatness podcast.
Although it’s a new effort, Starting Greatness pulls together things I’ve worked on my whole life. I have built startups since the sixth grade, helped take two public as an operator and founder, and have invested in raw startups since 2005.
Every week, on Starting Greatness, we’ll learn from startup super performers, like Marc Andreesen and Kevin Systrom, about how to take a startup from nothing to awesome. But we will talk about what it was like before their startups were successful- about the daunting uncertainty, scary pivots, near-death experiences — and ultimately, what made these startups blow up.
You can listen here for the Starting Greatness overview episode “Why Greatness is a Decision:”
The roots of Starting Greatness
Only recently have people tried to understand how startups work in a truly fundamental way. And when people describe how to build or invest in awesome startups, the ideas are often fragmented, anecdotal, or lacking a broader context.
In contrast, most fields of business are far better understood. Business Schools have existed for over 100 years. And the investing strategies and learnings of people like Benjamin Graham, Warren Buffett, and Charlie Munger, Ray Dalio, Howard Marks, Jim Simons, and even many others have been well-documented.
As I studied how these people developed ways to think better, I stumbled across Shane Parrish’s Farnam Street blog and went down the rabbit hole.
Farnam Street exists to help people make better decisions in everyday life. It is centered around the notion of Mental Models and their application to how to think better.
I spent a lot of time thinking about how mental models could be applied to understanding what it takes to build an awesome startup.
What is a Mental Model?
We can’t keep all of the details of the world in our brains, so we use mental models to simplify complexities to make sense of situations we face.
Examples of mental models are The Scientific Method, The Pareto Principle, Bayesian Updating, Circle of Competence, and Inversion. Mental Models exist for every type of decision or problem-solving process, from investing, to invention, to happiness, and even for parenting and nutrition.
The quality of our thinking relates directly to the quality and breadth of our mental models and their usefulness to the situations we face. The more models you have, the bigger your toolbox for making better decisions when life throws something unexpected your way. Warren Buffet’s investing partner, Charlie Munger, says it well.
“The first rule is that you can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form.” — Charlie Munger
When I studied Charlie Munger, I got very interested in his approaches to decision making and spent time reading Poor Charlie’s Almanack, a fascinating look at his wit and wisdom. It would take far too much time to go through the dozens of models Charlie Munger has described. But to give you a flavor for what he is talking about, here are three good examples:
Inversion is a problem-solving technique that runs a thought experiment: Suppose you can’t identify the ideal outcome and the steps to get there? Sometimes, you can make better decisions by removing the things that produce worse results. For example, suppose you want to be more productive: You might ask, “What can derail my efforts?” Examples could be not enough sleep, Too much time on social media, etc. By removing these things, you will likely get closer to the outcome you seek. Inversion is very useful when there is no clear path because it buys you time to gather info as your options improve.
The Circle of Competence is an approach to screening opportunities. Warren Buffett and Charlie Munger don’t believe they need to know about every business or be experts in everything. Instead, they say “yes” to only the opportunities where they think they have a clear advantage in expertise and market power. Knowing the boundaries of your circle of competence is the key thing here.
The “Do Something” Bias reminds us that being busy and doing more doesn’t mean we are more effective. Very often, it’s better not to act, but then act decisively when you know you can win big. The desire to do more, whether it’s in business or investing — can often lead to errors of commission.
There are currently 109 examples like this on the Farnam Street blog if you want to geek out on this.
Startup Mental Models
At Floodgate, we noticed that a lot of mental models existed for decision making in traditional businesses, but few existed for startups. We also observed that mental models for startups might be even more valuable for founders when assessing or implementing startup ideas. When it comes to startups, the investor has a portfolio. But for the founder, their startup is the only startup.
As we studied mental models for traditional businesses, we quickly saw that they didn’t line up with what we observed when it came to awesome startups. Traditional investing (particularly value investing) often focuses on avoiding avoidable risks and mistakes. It treats risk as a form of “not knowing what you’re doing.”
We realized that starting something great is about understanding the risks that are worth *taking*.
For example, Brian Chesky of Airbnb offered me a $250,000 allocation in their seed round in 2008. I said no.
That investment would be worth over $1 billion today. Ouch!
That was a risk worth taking!
FLOODGATE Startup Mental Models
In Starting Greatness, we will explore a few dozen mental models for the top .1% of startups. We have spent many years working on these. Here are a few examples to provide a flavor:
- The earned secret
- The why now
- The idea maze
- The non-consensus insight
- Anti-fragile founders
- Living in the future
- and many dozens more
Half of our episodes will be interviews with people who have applied these models successfully in creating massive startup success stories. The discussions are useful for making the models tangible and real, as well as applicable to any founder’s startup challenges.
The other episodes will explore foundations of the “lessons of greatness” and how you can fully apply them in your startups or in your understanding of how the very best startups succeed. They will tease out specific mental models that we believe are key for enhancing the toolbox of any startup founder or investor. We at FLOODGATE have worked hard to understand the lessons of greatness on an increasingly deep level and would like to share what we have found with the ambitious founders who want to build extraordinary startups.
I am very thankful to people like Marc Andreessen, Reid Hoffman, Sarah Leary, Steve Blank, Andy Rachleff, Geoffrey Moore, Kevin Systrom and Mike Krieger, Osman Rashid, Todd McKinnon, Keith Rabois, Eric Ries, and many others for sharing their insights about how to succeed before a startup has reached product-market fit. And I’m grateful to work every day with my colleagues at FLOODGATE as well as current founders who are destined to be the heroes and revolutionaries of tomorrow.
Where You can find Starting Greatness:
Here, if you use Apple Podcasts
or here if you get your podcasts at places like Spotify, Google, Overcast, or almost anywhere else.
And Tim Ferriss — thanks for featuring an early episode with Andy Rachleff and me on your podcast here.
Starting Greatness is for entrepreneurs or other people who care about deeply understanding great startups. We want to provide state of the art tools and methods for helping them.
I’ll talk to founders and thought leaders who have created the top .1% of all startup outcomes.
Most of these founders faced crazy near-death experiences in their startups. They had periods of significant self-doubt. They are more like you than you might think. They have given us the gift of getting real in our discussions. They stared down impossible — and so can you.
Ultimately, I hope this podcast will be a way to connect with more people throughout the world who are seeking greatness — Not just the people I’ve had the privilege to work with in person.
Ambitious startup founders are vital to forging a path to a better future. Whether you are in San Francisco or Shanghai, Zimbabwe or Caracas, Berlin or Brazil, Austin, or Algeria, I’m rooting for you and hope this podcast helps you win.
I hope to help founders feel empowered in the face of uncertainty.
I hope to inspire people with the realization that greatness is not a hope — it’s a decision.
Time will tell :)
Follow @m2jr on Twitter.
Thanks to David Johnson-Igra, Nicholas Firchau, and Julia Lipton for their help in getting this started…and, of course, Shane Parrish from the Farnam Street blog.