Epistemology

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Penicillin was discovered on September 28, 1928 by the serendipitous efforts of Scottish scientist, Alexander Fleming. Legend has it that Fleming noticed an open petri dish that had failed to show bacterial growth due to a mold growing in the agar. The penicillium mold produced a toxin that inhibited bacterial reproduction.

A short 17 years later, Fleming was (jointly) awarded the Nobel Prize in Physiology or Medicine in 1945 for “the discovery of penicillin and its curative effect in various infectious diseases”.

By 1945, it was crystal clear that the discovery of penicillin was a good idea – in the parlance of the Silicon Valley, was a truly BIG idea — penicillin and related discoveries are credited with saving more than 100 million lives in the 20th century.

Which is why we, as entrepreneurs, intrapreneurs, developers, hackers, designers and investors should endeavor to work on truly big ideas, because it is our labor invested into big ideas that make the world a better place.

Discovery and Rediscovery

Yet…

The antibiotic effects of penicillin were independently discovered as folk medicine and empirically harvested science — and forgotten — multiple times before Fleming’s accidental re-discovery in his laboratory in the basement of St. Mary’s Hospital in London.

Not only did Lister discover penicillin in 1870 – a 58 or so years before Fleming is credited with the same discovery, but Fleming himself pursued the purification and manufacture of penicillin in fits and starts before giving up in 1940.

Now stories of independent discovery and re-discovery in the history of science are nothing new – so what is it that you, as someone involved in innovation, can learn from my reinterpretation of medical history?

Simply put, the history of penicillin puts a lie to the most arrogant and self-serving of notions – oft repeated and tacitly accepted – that humans have any facility in determining the intrinsic quality of innovative ideas.

If we did, the venture capital industry wouldn’t be fundamentally broken.

If we did, penicillin wouldn’t have been treated as a small idea, and would have been explored and exploited much much earlier.

 Good Ideas vs. Bad Ideas

 In the world of technology innovation, good ideas are often referred to as BIG ideas, while bad ideas are often referred to as small ideas, as if there were two, discrete and easily identifiable populations of ideas.

We imagine one set of ideas, seen to be, very clearly to all observers, bad and small abutting a separate population of ideas, good and big.  Sometimes, we make casual reference to the notion that truly disruptive ideas often appear to be cute toys, which implies that there is some overlap between good and bad ideas.

While this illusion may be how we perceive innovative ideas, not a lot in the history of innovation and technology suggests this is an accurate or usable reflection of reality.  In fact, with a bit of reading, the exact opposite appears to be true – as a brief review of the history of penicillin demonstrates, we are remarkably bad at discerning the difference between good and bad ideas at early stages.

Another example from the history of medicine: Leeuwenhoek peered at bacteria through a crude version of a microscope in 1677; yet the microscope wasn’t put to wide-scale in medical research until about the 1880s.

This explains the many apocryphal stories in Silicon Valley wherein plucky entrepreneurs pitching their startups are laughed at by potential investors and potential employees; only to have the last laugh when their startup hockey-sticks to the moon, disrupts the giants of the day, and begins to rain cash into the founders’ pockets…much to the chagrin of all the people that passed on them.

For a contemporary example, read this remarkable Quora thread that demonstrates how hard it was for Instragram to hire developers.

Aside: Good investors understand this and maintain a sense of humor about it. Hence, the hilariously self-deprecating Bessemer Anti-Portfolio.

Lack of Context

Because at early stages we lack the context and data to judge innovative ideas on merit – instead, we filter them through our own cramped, personal paradigms, biases and experiences.

Contrary to popular opinion, there is nothing intrinsically wrong with filtering ideas vis-à-vis personal biases – even if you try to remove all personal biases from your life and attempt to imitate Art by becoming Spock-like – you will fail.

Ultimately, your mind will conspire against you and provide (biased) context in the vacuum of hyper-logic.

The failure is not in applying your personal filter – the failure is not admitting you have applied a personal filter and pretending to be both omniscient and hyper-rational (and not having a sense of humor about it).

So how do we in innovation-land coax ideas to reveal their true selves?

Firstly, we accept that a landscape of innovative ideas isn’t composed of two separate mountains, clearly labeled GOOD and BAD – rather, we are looking at a bi-modal distribution where most ideas are of an indeterminate quality until proven otherwise.  Yes, with some confidence, we can clearly identify some bad ideas and some good ideas at the tails – but the vast majority is unknown to us until we begin to manufacture context and data through application and manipulation of the idea.

Secondly, what motivates us more: the risk of an idea being a False Negative or a False Positive?

The False Positive is what most startups fear. A startup is born with a terminal illness and has nothing to lose. Knowing you will die is liberating in that you are not afraid that an ugly but big idea will get away from you – but rather that a seductive idea that ultimately reveals itself to be nothing more than a cruel illusion.

On the other hand, The False Negative is what the enterprise is concerned about. Large organizations, especially public traded ones, have a lot to lose, and are constantly in fear of missing an idea that initially looks to be bad, but upon further inspection is a truly BIG idea.

Knowing our motivations will help determine if the decision-making processes – either formal or informal – are suitably calibrated.  This means different things for startups and for enterprise level organizations. I’ll write more about this in a future post.

Written on June 20, 2013 at Callas in Budapest, Hungary.

Is your advice killing startups?

Today, the 500 Startups Mentor thread has had some very interesting back and forth about how to mentor startups  and more importantly,  how to measure mentor quality and advice.  While I cannot share the previous thoughts on the thread, I can share my two cents:

A lot of thoughtful comments on the topic of mentoring — allow me to throw something into the mix:

I wonder how much of our advice is actually iatrogenic in nature. How often have we done our best to give what we thought was pure contextual gold, the hapless patie—- I mean, startup founder,
followed it to the letter and they became measurably worse off because it? Like a doctor accidentally prescribing the wrong medicine, we, unintentionally but well-meaningly, have caused damage or injury.

The concept of iatrogenesis for startup founders isn’t ever discussed in startup-land, but should be.

If you want to extend this line of thinking — how do startup incubators/accelerators measure & prevent ”nosocomial infections” between startups? In other words, how does one identify and prevent bad habits/practices from spreading amongst startups within the confines of an investment vehicle?

In the past, I have suggested to Bjorn and Max from Startup Genome think about this for their purposes. Someone please run with this.

PS — Go pre-buy The Lean Entrepreneur. Thanks.

PPS — Who is the Ignác Semmelweis of startups?

A Bit About The Lean Entrepreneur

TL;DR: Brant Cooper & I have a new book coming soon. Go buy The Lean Entrepreneur AppSumo Bundle while you can. It is 96% off, has a bunch of apps + pre-order of The Lean Entrepreneur.

 

Lean Entrepreneurs Surf The Wave

Surf The Wave Art by @FAKEGRIMLOCK for The LeanEntrepreneur.co

 

It has been too long since I last blogged. This blog post will update you as to what Brant Cooper and I have been up to for the last few months, namely: finishing our new book, The Lean Entrepreneur.

We’re excited about The Lean Entrepreneur. It is a wholly new book that takes what we wrote about in The Entrepreneur’s Guide to Customer Development to another level, demonstrates the application of Lean Startup-like thinking in anywhere one desires innovation: social entrepreneurship, automotive manufacturing (ironic, right?), tech startups, music and artist development, and finance and investing, to name a few.

All of that, in it and of itself, is deeply interesting. But what we are most excited to cover in the book is the context and landscape of Lean Startup thinking.

Many a time, Brant and I have asked ourselves, “Why Lean Startup now? Why not 10 years ago? Or even 50 years ago?” The answers to those questions are explained by the coming social, economic and cultural sea changes we are rushing into headlong…whether we like it or not.

Think of yourself sitting on surfboard a hundred yards offshore, and a set of massive waves are visible on the horizon as they build towards the shore.

These waves are powered by the mobile internet and mobile devices, by the read/write digital fabrication technologies such as 3D scanning/3D printing, by “cultural technologies” such as crowdfunding, crowdsourcing and of course, by *Lean Startup-like methods themselves.

Currently mid-2012, we have only begun to feel the power of these disruptive waves. And when they start to converge upon the shore, suffice to say, we will be living in interesting times.

In the Lean Entrepreneur, we interview amazing entrepreneurs who are living in this future, and are kind enough to report back to us.

But back to the you on your surfboard – you have two choices:

1) You can paddle back to shore and build a fortification to protect yourself. (Think music labels in the last +10 years or so)

2) You can swallow hard, paddle farther outside (ie away from shore) and position your board and yourself to surf. (Think Lean Entrepreneurs)

If you choose 1) — you will be obliterated and washed away. Maybe not immediately, but certainly very soon. And when you do, it will be ugly; kicking and screaming the whole way.

Let me give you a contemporary example:

Entrepreneurial education (and education as we now know it) has just begun to feel the cold spray of this wave, and entrenched stakeholders aren’t happy about it. Direct competition like MIT OCW, New.edu, Udacity, Udemy and other learning platforms are going to displace traditional education. Moreover, hackathons like Lean Startup Machine and Startup Weekend are also disrupting entrepreneurial education. As are incubators — incubators aren’t just at the bottom of the investment ladder but also they are the top of the education ladder. Why go into debt for MBA, when someone will pay you to take a crack at a startup?.

Online learning platforms, hackathons, incubators are all initiatives that are surfing these waves, ie they have chosen 2). Now, listen for the unsheathing of the knives as those (eg student-debt-financial-industrial complex, tenured faculty, textbook publishers etc etc) in their fortifications find themselves about to be washed away.

Personally, I am very bullish about the prospects of unlocking human capital and creativity globally vis-a-vis this sort of disruption in education. This will make the world a better place, but the transition to this will be painful.

Now back to you: WHO are you? Where are you relative to these coming waves? Are you paddling out into deeper waters? Or are you scrambling to get to shore?

More on this later….

BUT TODAY you should get go buy The Lean Entrepreneur AppSumo Bundle while you can. It is 96% off, has a bunch of apps + pre-order of The Lean Entrepreneur.

*Yes, that is an argument for endogenous effects.

Next LeanLA Meetup & Henry Ford

I really should update my blog more often — but, until I do….

1) If you’re in the Los Angeles area, come by the next LeanLA meetup and see Jason Calacanis interview Eric Ries.  All attendees also get a copy of the The Lean Startup.  You should RSVP ASAP.

2)  I wrote an article that kind people at Harvard Business Review blog deemed fit enough to publish. My takeaway — it doesn’t really matter where your “vision” comes from (divine inspiration or customer feedback) — but you probably should check it against reality.  Henry Ford’s steadfast adherence vision to his vision served him well initially, when he found “Product-Market Fit” with the Model T, but when the markets changed, his vision no longer resembled reality.  Read the whole thing on HBR.  (Thanks to Brant Cooper, Eric Ries, Ben Yoskovitz, Sean Murphy & Steve Cheney for reading drafts and giving me their thoughts.  Much appreciated.)

I see dead startups

My buddy, Dave Binetti of Votizen came down this last Monday to present on False Prophets at LeanLA.com’s last meetup (a meetup I co-organize).  In his talk, about the subject of False  Negatives and False Positives came up.

In the context of startups, a False Negative means that while your startup is not getting any traction or love with the market, investors and talent and doesn’t appear to be inching close to Product-Market Fit  —–  there is a high probability that it is actually a really, really super-duper idea and you could exit for $100m in 3 years.  You don’t want to give up because you, in your heart of hearts, know this — even though no one else believes it.  The fear of the False Negative is giving up too early and letting a good idea die or worse yet, seeing someone else take it and blow it up in a big way.   IMO this is a very legitimate fear.

In contrast, a False Positive is a lot like the living dead, a zombie (Dave’s analogy) or even better yet, Malcom Crowe of The Sixth Sense*.

Cole Sear: I see dead startups.
Malcolm Crowe: On TechCrunch?
[Cole shakes his head no]
Malcolm Crowe: At Coupa Cafe?
[Cole nods]
Malcolm Crowe: Dead startups like, in books about startups? In textbooks?
Cole Sear: Operating like regular startups. They don’t see each other. They only see what they want to see. They don’t know they’re dead.
Malcolm Crowe: How often do you see them?
Cole Sear: All the time. They’re everywhere.

Remember, neither Malcolm Crowe nor the audience know Malcolm is actually dead until the end of the movie.  And that is the danger of the False Positive; the high probability that your idea really doesn’t have any merit but you limp along and persevere because you a) ignore or eschew relevant negative feedback b)  listen to false prophets that look and feel like progress but are anything but —- all the while, hoping for a positive Black Swan to stumble over.  And then when your money runs out, it all comes back to you, in a scary montage, about how you had ignored all the creepy signs of being dead.

Every startup founder has to ask oneself is:  How do I avoid them?  Which is more likely?  The probability of a False Positive or that of a False Negative?  They’re both real fears — but which is materially worse?

As always, there are no easy answers to questions like these.

However, you might guess that I (and Dave btw) think that the False Positive is orders of magnitude more likely, more insidious and more evil — and that one reason why Customer Development and Lean Startups make sense to me.

*Thanks to Robin Ahn for suggesting this analogy.  Brilliant.

The “Shu, Ha, Ri” of Lean Startups

I wanted to clarify Slide 18 “There are no rules” from Top 10 Reasons to NOT be a Lean Startup – which apparently has caused some confusion.

I also referenced “there are no rules” in an earlier post, which Andrew Skotzko picked up and riffed upon.

What I am attempting to get across to people interested in Lean Startup/Customer Development is two-fold:

1)  Don’t miss the forest for the trees by mistaking the tactics currently popular now with the actual principles, as well as, perhaps more importantly, the concepts of “shu, ha, ri” applied to Lean Startups.  Bear with me here – I promise you this isn’t bullshit hand-waving territory here.

In the phase of Shu, the person tries to abide by the rules. She tries to learn all the principles and informations by heart. But she can’t abide by all the rules while she is doing the practice. Her body(including her brain) starts to remember them bit by bit through repetitious practices. When the time comes she can internalize and abide by all the rules — when Shu is achieved, Shu phase is finished and she enters into Ha phase.

“Shu” is achieved by actively reading about Lean Startups and Customer Development and talking/writing about them on LSC – and making every effort to learn “The Rules”.

In the phase of Ha, she tries to break the (old) rules. She tries to self-reflect on herself and her knowledge, and come up with anti-theses such as exceptions of the rules in the real world. But she can’t break all the old rules while she is doing the practice. Her rules start to get more complete(or becomes more like “case-by-case”) as the rules encompass exceptions bit by bit. When the time comes she can break all the rules and see the both sides of every rule (maybe substituting with a set of her own rules) — when Ha is achieved, Ha phase is finished and she enters into Ri phase.

“Ha” is achieved when one tries to go out into the real-world and apply Lean Startups/Customer Development and quickly stumbles and falls.  But one gets up and sees some success, often with shins bleeding.  Or doesn’t see any success.  Only failure.  Often the data come back entirely and irritatingly, inconclusive.   This is often very, very frustrating because what we talk about in the blogosphere doesn’t match neatly, if at all, with what actually happens in the chaotic real-life in your startup.  Getting to Ha is accelerated by events like Lean Startup Machine.

In the phase of Ri, she tries to leave the rules. She tries to get free from all the rules, and get into the state of no distinction, or into a new dimension. But she can’t leave all the rules while she is doing the practice. Her body starts to forget them bit by bit through following natural laws and flows (or Tao). When the time comes she can leave all the rules – when Ri is achieved, Ri phase is finished and she enters into a new dimension of Shu.

At the end of Shu, what she sees is nothing but the rules — everything looks like the rules.

At the end of Ha, what she sees is nothing like the rules.

At the end of Ri, she doesn’t see but work with her mind.

Jason Evanish has a great post detailing what is effectively his Lean Startup journey from Shu to Ha and onto Ri.  I have written previously about judo as a Lean Startup metaphor and this fits expands upon that.  Contrary to popular belief, earning a black belt does NOT mean one is considered a expert judo player.  Earning a black belt indicates one has learned the fundamentals and is now ready to unlearn to forget The Rules.

In judo, that means the difference between throwing someone technically perfectly in a sterile fashion and controlled environment.

The throw above, (morote seoi-nage for those of you keeping track at home) is a picture-perfect of the Platonic ideal of that throw.  The throw is executed quickly, without hesitation or flaw.

In the heat of the moment, at the All-Japan judo championships it looks something like this.

Notice how this throw was much less smooth and less elegant, and even a bit jerky and almost off-beat.  Not surprising considering the judo player being thrown didn’t want to be thrown.  But an experienced judo competitor would tell you, for all of its faults relative to the Platonic ideal, it was no less beautiful because it won the match.

To be an effective judo player on the “real-world” of the tatami mat – one has to adapt specific judo techniques to one’s specific anthropometry – but this can only be done once one has mastered the rules of these techniques. Lean Startup and Customer Development are no different.  One has to learn The Rules and specific tactics to really understand that there are no rules.

PS Thanks to Hacker Chick for pointing me to the link on Shu, Ha, Ri.

————————————–

It is a bit after 9pm here in Boston and both the quantity and quality of validated learning that Lean Startup Machine (Boston) teams have generated is mind-blowing. I am simply in awe. Don’t want to spoil the punchline, but we have had two teams invalidate their startup idea, with pretty strong confidence, in about 1.5 days. Interestingly enough, one team ran into a company that has been at the same idea for 3 years (!) and has been limping along.

Think about the opportunity cost of 3 years. Think about not really knowing for 3 years whether or not your idea has legs —- and then some young punks from LSM Boston crush that idea by getting in front of the major stakeholders and doing a few targeted Customer Development interviews.

Those teams are actually buying future time. Incredible.

Evidence Snobbery and Data

After reading the The Entrepreneur’s Guide to Customer Development, David Beyer of Y-Combinator backed Chart.io has done a quick interview with me wherein we get a bit into the epistemology of startups.  I think the interview raises a few interesting points that I will explore further in a forthcoming blog post.

David:  So, just to get started, what do you think in general terms about the role data plays in customer development?

Patrick: I think data is paramount – but I think we should understand about what we mean when we use the word “data”. Many people, especially those handicapped with a graduate level education, like myself, think that data is only interesting and can only be acted upon if it is “statistically significant”. In the context of early stage Customer Development, I believe this is well-intentioned, but ultimately, misguided.

We should be informed by data, but we shouldn’t let it walk us around on a leash. Evidence comes in a diversity of forms. It can be anecdotal, it can be in aggregate or it can be a trend line. If you take an open-minded approach to the types of evidence you’ll accept, and adjust for their biases/problems/problems accordingly, you’ll likely fare better in the chaos of startup-land than just simply jettisoning what you feel is low-quality data.

I should add, this is what my friend, psychologist and blogger, Seth Roberts calls “evidence snobbery”.

Seth defines evidence snobs as:

“An evidence snob is not someone who “want[s] evidence that something works.” An evidence snob is someone who disregards evidence — evidence that doesn’t reach a sufficient level of quality.

…”

Check out the entire interview.