no 2. | Strategy part 1 … and some ramblings about the upper class

“There are two types of statues on this fountain” (Photo credit the author)

Before getting into the actual practical advice on how to startup from a standstill, some last notes on the upper class.

As an anarchist, my goals is obviously not to teach you how to become a sycophant of the upper class in your quest to success. First, “success” in these articles is defined by accomplishing what you want to do, which “startup skills” will help whatever it is. So just having a stable income doing something you actually like is pretty successful. Likewise, homesteading or vagabonding in some sustainable way with minimal income is also completely welcome as a success metric here. These examples are clearly in no way joining the upper class.

However, no matter how much material wealth your goals imply (in the sense the wealth is needed to accomplish the goal, not that the goal is simply the wealth), whether a little or a lot, interacting with members of the upper class, or their representatives, is nearly inevitable. The upper classes have immense power, both individually and collectively, control directly or indirectly most of the surface of the planet, and so — whatever the level of one’s ambition — it is simply naive folly to not be weary of power that can easily destroy you as easily as help.

So, navigating the real power structure of society (where you actually live) will be a prominent theme in this series of articles — although coming much later after more basic skills are considered — but, nevertheless, it can benefit the student here to remove their emotions about the upper class here at the start.

My hope is not that you simply join the upper class and adopt their prevailing ideas and attitudes; that you hate them is no less my goal. Nearly all members of the upper class are born into it, and so have biases they can’t do anything about; it leads them to collectively keep society the way it is with the upper class on top, that’s why it’s the upperest one of the classes, but they are, individually, usually no more morally condemnable than those from the lower classes who do as much. Certainly, some members of the upper class are worthy of condemnation for their real actions they’ve done, just as there are such condembable people from every class. Of course, what is frustrating is the rich and powerful often get away with their crimes, as other members of their class, such as judges, look out for their own in a systematic way, and partake in the corruption.

The system is indeed perverse, but each individual member of the upper class can do little about it, even if they agree with the disparity in access to effective protection from the law and other nominal rights and do not wish it.

And indeed, many upper class people put real effort and do real things about injustice, and such efforts are laudable (even when ultimately counter productive, it is nearly always better that someone tries and other learn from the results, than nothing happening at all).

There is of course much to discuss on what efforts from the rich are a “genuine effort” and what efforts, whether conscious or subconsciously, are mere smoke and mirrors to drum up praise by their servants in the media. No subject is clear from a superficial inspection of hypothetical cases.

But, for now, it is sufficient to point out assuming any upper class person is “bad” is as foolish as assuming every lower class person is “good”. Again, what can be morally expected from a members of the upper class is debatable, and likewise what efforts exactly are be in a laudable or condemnable direction, and how far is significant or trivial, is all likewise debatable.

What is not debatable, is that at the gates of nearly any real power structure of society are guarded and, if not controlled outright then heavily influenced, by members of the upper class and their representatives.

Which all may seem obvious when you think about it, but I stress this issue here at the start as it is a common theme of most startup advice that you want to be best friends with upper class masters and puppets, “one of the boys”, and, of course, do what you’re told and learn your lesson when sternly scorned and spanked on the butt.

Such advice may excite or revile you, but, it’s unfortunate both ways. Those too reviled will not get the benefits of real knowledge and lessons from experience these startuppers are sharing, and they are sharing it, often with a genuine desire that everyone has a “good life” in at least some vague technie sense — perhaps not with any deep thinking about structures in society preventing people from living a “good life” regardless of technology innovatin — but a vague and genuine desire that people generally don’t suffer needlessly and also have resources and creative opportunity like the upper class do.

These upper class startuppers aredisposition saying “hey, listen to how things actually work, I’ll teach you what I know”; that they share in the context of their upperclass biases one cannot expect anything else, but only a fool would ignore the knowledge freely given by the upper classes, when it occurs. Frederique Douglas did not refuse to learn how to read from a slave master, insisting only to be instructed by a fellow illiterate slaves so as the teachings to be morally purer and free from upper class bias; Frederique Douglas took what was freely given as wise person would, and later tricked upper class children into teaching him more after the slave master’s slave master forbid further literacy teachings on punishment of severe beatings.

One should be weary of the biases, but always thirsty for the knowledge.

For, the upper class is essentially defined as the possessors and practitioners of that knowledge which can be used to create and sustain existing and new institutions. That is what keeps the structures of society persistent through time at the end of the day, for better or for worse, in life and in death. All attempts to do better by simply liquidating this class of people has resulted in a significant amount of the death part. One need not join their attitudes, but only a fool would not seek out their knowledge — seeing through the smoke and illusions, as well as seek to cooperate with those among them when interests to in fact a line.

What is this knowledge then?

Strategy: the only important skill

There is one and only one important skill in starting up any project, or accomplishing anything at all, and that is strategy. For, with a good strategy, one can strategize around any other weakness.

Although there are a large number of skills I’ll be explaining and recommending in the following articles, if one is simply bad at one or a number of them, a good strategy will make the best of that. For instance, it’s very useful and important to write good letters and emails, but if one is simply terrible at that, then doing everything by phone and in person is a better option than writing bad emails and letters (and, furthermore, one can get someone else to re-draft one’s letters when really needed). A strategist makes the best of things with what’s available and includes within the strategy gradually gaining experience in unfamiliar skills at times and in subject matters where there is little risk of catastrophic failure.

Strategy vs tactics

Before going deeper into strategy, it is instructive to differentiate it with tactics. It is often said that strategy is long term and tactics are short term. Although this is not said for no reason, it is a superficial understanding.

Strategy can be extremely short term, for instance in recognizing a temporary change in strategic conditions in which several things previously impossible become possible. Only a strategist, and not a tactition, will be able to recognize such changes in conditions and implement without hesitation the corresponding actions to take advantage of the opportunity. For instance, it is on the order of strategy to recognize there are no plausible paths to success, and capitulation is the only move (surrendering is clearly not a “tactic”, but may be done in very short order due to sudden changes— of course, evaluating the strategic options involves considering the future strategic scenarios over long periods of time, but getting new information today and surrendering tomorrow is not a plan executed over a long period of time).

Likewise, some tactics, in particular legal tactics, may take decades to execute and resolve, but that does not make the legal tactic suddenly a strategy because it drags on for years and years.

A better way to think about strategy and tactics, is that tactics are known and strategy is unknown; tactics are evaluated given the context of the strategy, and strategy is evaluated to decide what’s contexts to create. One may easily know the tactics available to one’s opponent, but the strategy they are pursuing is completely unknown. In other words, a good tactition can competently execute the best practices in their field. In the legal realm, a lawyer with good tactics will know the relevant laws and precedents, and can file motions with the best, or at least good, arguments and without clerical errors or other mistakes. Legal strategy, however, is not simply a collection of best practices the adepts in a field have accumulated over time, but deals with evaluations and judgments. A good legal strategy will evaluate whether the opposing side will be willing to settle and for how much, and also be able to judge whether a settlement is even desirable or not, and, following such evaluation, set out a plan to execute a series of legal tactics that will, if the decision is it is wise to settle, encourage the settlement in the most encouraging circumstances for the best possible terms.

Not to say developing the legal tactics is trivial, but only that once those tactics are developed — i.e. what motions, objections, claims etc. will be filed and in what sequence — mere good tactics does not inform whether the opposing side is even likely of making, absent a settlement, the best counter-moves (and what their strategy is likely to be, and it’s potential for effectiveness), and what will be the likely result if so. Likewise, mere tactics does not inform whether it is a good idea to demonstrate the legal tactics that will be executed if no settlement is reached, to encourage a settlement, for doing so is simply incurring a disadvantage if a settlement is rejected.

To summarize, it is the unknowns, and what to do about them, that is the domain of the strategist, whereas what plans to draw up concerning known information that is the domain of tactics. A good general will predict where the enemy is likely to strike, and a good colonel will actually get effective reinforcements to those places in time and in a manner that does not simply inform the enemy and cause the opposing general to change plans accordingly and strike elsewhere.

Of course, it is always a good strategy to train in the tactics that are likely to be required. But, here again, as all tactics cannot be trained and prepared for equally, it requires strategy to determine what tactics are best to prepare for.

Speaking abstractly, tactics are skills and maneuvers of one sort or another that are context independent, and represent knowledge and skill that has value in itself; all else being equal, it is best to know as many tactics as possible, and it is only due to constraints on time that we must choose between them. Strategy, however, relates to the decisions that are context dependent; that it is only because the situation has these particular things that we are considering doing these set of actions; the set of actions in questions are not a formula in any book and may never be repeated again; a particular strategy, or elements of it, maybe a good idea once, and only one time.

Marching a army with elephants over the alps occurred exactly once, and, if it was a good strategy, it was a good strategy that only occurred to a single person to actually do one single time.

“Snow elephants” was not part of any field manual or collection of best practices (and all the elephants died; so, again, if it was a good idea to march elephants over the alps and have them all perish anyway, it was a good idea only one time).

It is obviously in domains of direct conflict, such as warfare or litigation, where the unknowns strategy deals with that are the most obvious, as one doesn’t know the plan of one’s opponent who is doing their best to take advantage of your ignorance, but it is mistake to believe such a perspective is limited to such conflicts.

Indeed, it can be far more effective to consider the unknowns and what is unusual is situations that lack conflict, as, without an opponent, one can often implement unexpected plans with far fewer risks (in any conflict, there is always the risk that one’s opposition is simply better than oneself, and what seems like progress is simply a trap).

Strategy will be a recurring theme; but as a very first lesson it is best to put aside conflict situations for now, and consider the basic framework of the business activity, in which direct conflict with another organization the exception.

This basic framework is the separation of business process into 3 separate parts: ideas, utility and capital. What the business world generally refers to as ideation, value creation and monetization.

For, in order to any business at all, things obviously must start with an idea (whether it is an existing idea and one is simply choosing to go with that or an entirely new idea does not matter right now, just that clearly before decisions are made we must think up ideas about what to do), but clearly once an idea is thought of and a decision made, nothing immediately “exists” and so, essentially by definition, work must be done to develop the idea through an intermediate phase that is not yet some sort of business product of service yet but only the potential to become so (and so has value relative this future potential), and finally with enough work the value can be converted to a sale of one kind or another.

This is a pretty standard and obvious conception of business: ideas are turned into something physically existing in some sense which can be turned into sales. If the sales exceed the cost of the whole process then it’s good business.

There is of course many analytical tools to help calculate “the worth of things” at any given stage in order to both predict how much sales and in what time frame will be required to render the whole venture profitable as well as to place some monetary value on the process “so far” in the event that it is maybe mortgaged against a loan, partly sold (a.k.a. sell shares and raise equity investment) or sold in whole (a.k.a. buyout from a larger company). Of course, at the end of the day something is worth, in terms of money, what someone is willing to actually pay for it, and the analytical tools often do not provide any good prediction of this, but they are, in any case, worthwhile analytical tools, of which it is a critical mistake to ignore. For, even if there are too many unknowns for such formula to provide any accurate result in the present, the future may reveal such unknowns and, therefore, if one ignores such analytical frameworks along the way because one is adept and convincing people in a context of uncertainty it is usually a setup for disastrous failure when that uncertainty becomes definite, and definitely not what one told people.

We shall get deeper into these “value evaluation frameworks”, or valuation methodologies, after much more basic skills.

For now, what is important is an sometimes implied, but I find never stressed enough, assumption of the general paradigm, which is that that one must create more value than can be monetized, that the process of conversion is inefficient and therefore one needs more units of value than result in money, and likewise for ideas into money. Indeed, these processes of conversion are so inneficient that one should start with a expectation that at least ten times more value much be created than can be converted to money, and at least ten times the ideas must be thought of or discusses as can be converted to value. And so, from start to finish, the process starts with a hundred ideas for anything that can be pointed to as actually accomplished.

So much strife, for the lower classes, results from this basic misunderstanding, holding too tightly to one idea when there is no effective strategy to realize it or then creating some value that you, or even many other people, praise you for, and believing the process of monetization will be an efficient one.

The upperclasses learn from an early age how to intuit this overall flow of vaguely intuitive concepts towards bits flipped in a bank ledger, because they have resources to try and fail at things, as well as the benefits of accumulation of generations of experience doing so; and, as a class, there it is overall a conflictual situation with other classes, and so this advantage in knowledge is exceedingly proficient at continusously renewing the institutjions of society to keep things as they are.

To an upperclass mentor, the long list of areas of work that will be required to actually convert an idea into money, such as business plans, slide shows, prototypes, sales material, negotiation documents, and so on, and just how much work maybe required in each area, is obvious.

However, to someone in the lower class, it may seem that there’s a quite direct pathway between ideas and what they see on the shelves or on the screen. For, any final product obviously corresponds to an idea, and both the final product and the originating idea is easy to discern. If one sees a product that does A, clearly at some point someone had the idea to make a product that does A; generally speaking, the idea is manifest in what one is looking at.

However, what is unseen is the amount of ideas that were discarded, or the transformation of the original idea along the way, as well as all the planning, contractual, engineering, marketing, testing and other kinds of intermediate work done along the way.

If one is not familiar with “what goes on behind the scenes” it is nearly impossible to avoid either underestimating or overestimating the tasks and costs required. There is no theoretical resolution, mark it well, only experience provides some view plausibly accurate enough to accomplish things (even then, it is usually wildy off, but the bar to pass is something more workable than a completely impossible plan; with some remotely workable basis, one can attract the allies required to realize it).

If you are from the lower classes, then, a strategy that compensates this disadvantage, is to play with resources wherever possible, always accomplishing new things when possible or putting significant effort into accomplishing old things in a new and hopefully more efficient way, but simply a different way, that at least works, is already better learning than doing it the usual way.

The general lesson being that one should not be surprised that many ideas must be thought of and discarded to arrive at one good idea, which is good because a strategy can be elaborated to actually realize it (and what is being realized is actually a good thing), and also a large amount of work is required in an intermediate phase to start bringing form the idea, and the monitization process isn’t trivial either. Where strategy comes in is in identifying where attention must be spent. For, even if one sees all the various areas and different disciplines that will be required, everything cannot possibly be done professionally well. At many stages of realization many things, indeed most things, need be done at an amateurs level, and not only is this not simply an advantage in saving money and time it is also often an advantage in itself, as both existing and the new potential partners and allies increase their confidence when they see resources aren’t wasted. Of course, everyone will also decrease their confidence when they see things requiring resources and attention neglected. A good strategy, essentially by definition, apportions resources in a reasonable way, which not only saves resources but also attracts new resources as a good strategy attracts new partners and energy, whereas a bad strategy chases away those allies one already has. Everything, therefore, comes down to strategy.

Not that everyone will be convinced by a good strategy, most people, especially those in the lower classes trained to believe things cannot be changed, will not be incapable of identifying a good strategy but will actively desire it fail anyways, to reassure themselves that they can do nothing about their circumstance. Of course, a good strategy takes this into account and so makes of itself a good strategy for either at least enough random people to identify as good and attract the needed support, or then be identified as a good strategy by very specific people one has identified, as a group or individually, as likely to identify one’s strategy as good and provide the needed skills and resources (and getting the needed skills and resources, even for money, is not a trivial task and even professional are often required to be convinced the plan is good to be motivated to do a good job, or even participate at all; and again, a good plan attracts good skills for less money and inspires more interest and curiosity to see things through, rather than simply fulfill the short term obligations enough not to be sued (which a lower class person can’t effectively do anyways), saving resources once again).

Point being there is what professionals like to call “a funnel” of many things coming in at the top and relatively few corresponding things coming out the bottom. It is building this contraption that turns an idea into some real tangible thing that is the art and skill of business.

However, the above is simply a numerical ration between elements at different stages of the business process. What it does not capture is the dynamic element that makes things even more complicated and hard to navigate.

For, capital is rarely, and essentially never if one is a member of the lower classes, simply inputted at the line that separates the idea and the value creation process, and, likewise, it is nearly never the case that investment capital is completely spent right before the line separating value creation with monetization after which revenue immediately covers the cost of sustaining and growing the enterprise.

Resources, money as well as contributed skills and materials in exchange for something (stocks, favours, promise of future compensation) or then nothing (a gift), are raised throughout the process often in an unpredicable way. Likewise, once monetization even starts at all it is generally far from sustaining anything and further investment must keep things afloat to arrive at the self sustaining point (after which staying self sustained is not somehow magically guaranteed). When business people talk about “cash flow” they are referring to this messy and unpredictable process.

If view things in terms of cash flow, what we have is that every unit of cash in the future is tied to some process of a much larger units of value creation, themselves resulting from many more units of ideas.

There is unpredictability and statistical variations of all processes, but one’s need to eat is a constant, and this makes planning exceedingly difficult. For, one must not only have a strategy in which there is enough money to pay for the value creation process and the time sitting around and thinking of the best ideas, but things must be organized in such a way that the basic needs of everyone involved as well as critical resources of the endeavor itself, being met at all points in time. A single disruption to needs, essentially by definition, spells disaster.

The only solution is to continuously come up with ideas and create new value, so that an entirely new strategy can be implemented as soon as resources available go beyond the critical point of necessity for that idea and that plan. Startup people call this “pivoting”, which just means that people wasted resources, or the idea was stupid to begin with, and the situation must be looked at again “as is” and an entire,y new strategy thought up that best takes advantage of the resources still available. This may require being a homeless vagabond for a while, it is still better than dying. And a homeless vagabond with a good strategy, is far better than being a homeless vagabond with defeatism and no ideas. Ideas aren’t free, you still need to eat to think them up, but they don’t require capitalists to produce, that is the key thing; that is the lower classes only real advantage, owning more of the means of productions of thoughts; why the first thing one always signs away to the capitalist is one’s ideas one generates in working at the place: the entirely legal work around is to just not mention them out loud (no thinking out loud in the presence of capitalists and their representatives! They will appropriate your ideas from the very air you breath).

Now, how to visualize all this is creating first a useful quantify of money as a thinking unit. The definition of this unit is that below this quantity one simply cannot accomplish anything of relevance, but with at least one unit one could accomplish something. This useful unit of money is very different for one’s project, compared to one’s personal life of consumption.

As one develops one’s project this unit will also change. Nearly all lower-class entrepreneurs marvel at how what seemed like a lot of money at the start now seems like a small amount of money. This is not due to simply encountering larger amount of money, as usually lower class people keep relatively close idea of what’s a lot of money in their personal life (even if they have more money, they usually still appreciate what was a lot of money to them before), but rather, only in their project does a lot of money no longer seem like a lot of money. The cause in this change of perspective, is simply that all the small tasks requiring a small amount of money get done or then formalized in some process, and the tasks requiring a large amount of money get left for later, there is no other choice. Lot’s of stuff can be done for a 10 Euros, or 100 Euros, or 1000 Euros, or 10 000 Euros, 100 000 Euros etc. but once one is accessing the next order of magnitude of cash for any period of time, all the useful tasks available for smaller amounts of money get easily done.

For instance, when I started in solar thermal, 1000 Euros was a lot of investment, as I was living with extremely small expenses and several prototypes could be built for a 1000 Euros resulting in a radically different strategic position in terms of knowledge and something to show. However, many years later all the (clearly) useful prototypes that can be built for under 1000 have been built and no longer impress anyone, and new knowledge and something to show is only efficiently created with much more money.

So, it is natural that this unit of money will change. How to identify what is a useful amount to you now, is to just think of different quantifies of money and what causes a satisfactory feeling and clear visualization of accomplishment with that quantity of money; not consumption of entertainment of a feeling of prestige, but actually accomplishing something. For example, for an artist it maybe what it actually costs to produce a painting or a song in terms of materials and living expenses.

In songs and paintings it’s easy to see that (for someone starting) a significant amount of drafts (that all have value and someone [i]might[/i] purchase) are required to make a few “good” finalized pieces, that in turn even less will be purchased.

Behold the following diagram!

Diagram 1 (credit to the Author)

The diagram simply shows that a significant amount of work creating value is required to have a chance at converting some of it to money in order to sustain the value creation process.

I won’t even bother to place square representing ideas, which will be many times the value of “things that could be done, and would have value, just aren’t the best things so you’re not going to do them”.

For those with experience, it goes without saying that it takes a lot of work to get anywhere, and, certainly, this is the most often repeated advice.

What is less often mentioned, is that the critical thing is that value creation is persistent rather than ephemeral. Startuppers (of any kind) that make ephemeral value, will burn themselves out (unless they are at the same time building a reputation … in which case none of it was mere ephemeral value), whereas creating persistent value makes life easier with time. This is where the strategy comes in, as it’s not at all trivial to distinguish ephemeral value from persistent value. I’ll will devote an entire article to it, but likely the only way to learn is through experience and always reflecting on whether one is benefiting now from what one did months and years ago; with particular attention to things that one thought at the time were great accomplishments but in retrospect accomplished basically nothing.

Obviously, working for a wage is nearly always ephemeral value, as all the real value goes to your employer the capitalist. Getting out of such a system is the whole point of starting up something of your own; whether alone, or in a group.

What is presented above is merely a useful thinking tool of a condition your strategy must satisfy. For, if you’re plan is to monetize [i]value that does not exist[/i], you should probably rethink your plan.

I focus on money, here, because you probably actually need it to eat and live. Your plan can be to lower expenses to a minimum (that still allows creating the value you want to create) but you will still likely need at least some money … of course, if you don’t for some reason, well you’re probably upper class in that case and good for you.

The other point to keep in mind is that converting value to money can be a painfully long process, so even if you need resources to create value, you may need periods of extreme asceticism in order to wait for that value to turn into money. When you are starting, a lot of processes are painfully slow as you are no one’s priority; doesn’t mean there aren’t people desiring genuinely to help you out or give you a chance, but those people are certainly busy and may take time to get to your case; playing the waiting game at the right time maybe nearly as critical as the actual value you create. Of course, even with minimal expenses some value can always be created, so be sure to do that.

Once value creation is linked up with money that keeps the value creation process going, call it value-money synchronization if you will, which is obviously the hardest part, there is, unfortunately, further hard parts at each step. Preparing for these next difficult steps early on helps maintain the process.

Now, sustainability of resources is foundational to accomplish anything, and should be the first sanity check of any plan, however, I am not saying here that making money is the goal. If you’re goal is to do something “good”, yes, you will need resources (which may involve a lot, a little, or even no money), but if you’re goal is really to do something good then the strategy must obviously accomplish that also.

I will focus on the strategizing for actual good in the next article … maybe, if not, I’ll focus on some basic skills building.

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