(2024-07-18) Armstrong A New Book Of The Startup Bible

Evan Armstrong: A New Book of the Startup Bible. The average business book is a blog post stretched to 250 pages by an underpaid ghost writer who hates what their life has become. That said, there are some that really do matter

by a.) offering robust data analysis that can be analyzed by outside experts

or b.) relying on case studies from the author’s unique experiences and putting forward a genuinely novel business idea

By my count, the number of books that satisfies either of these conditions is fewer than 30.

Today, I’m excited to announce that there is a new book that deserves to be added to that painfully short list of required reading: Pattern Breakers: Why Some Startups Change the Future by Mike Maples, Jr. and Peter Ziebelman.

In Pattern Breakers, the venture-capitalist authors tackle a core conundrum of startups: Many of the most successful startups pivoted from their original business idea.

The book is almost entirely written in Maples's voice and from his perspective as a successful seed investor at the venture capital firm Floodgate

A few years ago, Maples noticed that “something like 80 percent of [his] investment profits had come from pivots”

This was an uncomfortable realization for Maples. If his biggest winners were pivots, does that mean he just got lucky? Or did he invest in the wrong companies but the right people

what does that mean for everyone else looking to start or pick the next great startup?

Their answer is to propose a new theory of startup formation they call inflection theory, which has wholly shifted my perspective on company building

Making a better product is a good way for a startup to die. Incumbents are so powerful that in order to challenge them, startups usually need to offer something radically different

The only way to win is to completely alter the paradigm in such a way that incumbents can’t reconcile it with their current mode of operating. (disruptive innovation)

What startups are looking for is called an inflection point. In mathematics, an inflection is a change in a curve, the point where things start changing. (Technological Revolution, paradigm shift)

Inflection theory takes this same bend-in-the-curve idea and applies it to the world beyond math. An inflection can be a large change in technology (such as LLMs), in regulation (the allowance of cross-state telehealth services), in consumer culture (such as the dawning age of digital minimalism), or in any other significant arena.

Successful founders are able to time these inflection points so that when the world starts to change, they are ready, such as creating software products that benefit from LLMs in 2021 or from smartphones in 2008.

now is an excellent time to be working in biotech. We’ve hit an inflection point on what you can do with deep learning and biology. There are billions of dollars to be made—if a founder can understand the science.

A founder’s initial job is not to even have an idea. It is to discover inflection points.

Once they have discovered an inflection point, they must derive an insight from them. What’s an insight? The authors say it’s a “non-obvious truth about how one or more inflections can be harnessed to change human capacities and behaviors.”

It is enormously challenging to specify how the change will occur and what new behaviors it will enable. It is only when they’ve nailed the latter that great founders start to think up an idea for their startup.

Take this very publication: We originally thought we could build a bundle of every type of business writer. Our insight was that the creator economy could enable a new type of expert-led publication to be built. For various reasons, we were wrong

current version of the company, where we still empower expert writers but also make software around the ideas they have

Our insight—that creators would be amazing distribution engines—stayed the same

Finally, even if you have identified an inflection point, insight, and idea that makes sense, it still is not enough. Venture-backed startups are fighting to change the world, so if you have any smaller amount of ambition, the risk-to-reward ratio doesn’t make sense. To do so requires a movement that believes in the idea.

All of this information is contained in the first 100 pages or so of Pattern Breakers

Even though the argument is convincing, I do not find this analysis, as described, very rigorous

Why inflection theory matters

For most of my career in startups, the right way to build was some variation on The Lean Startup by Eric Ries.

Since the failure rates for startups haven't budged since the book was published in 2011 (99 percent failed both then and now), it’s clear that the formation of world-changing companies cannot simply be engineered.

Inflection theory explains why the lean startup methodology in isolation fails. It shows that a startup is movement-dependent

Inflection theory matters because it is the first framework, I feel, that correctly posits the relationship between market changes and company excellence. It is now the single best way to answer the “Why now?” question every startup faces.

Perhaps the strongest case for inflection theory is that it had me furiously scribbling down startup ideas. It took vague inflections I had noticed in the world—changes in media, LLMs, enterprise software—into insights and ideas. I can’t remember the last time a business book made me feel empowered as a founder.

Weaknesses and questions

The second half of the book is devoted to the implications of applying inflection theory to company management.

These sections were weaker.