As of July, it’s been a whole year since I’ve moved to California. A whole year. But can I say I’m a Californian yet? The DMV didn’t seem to give me any trouble, but I wasn't sure if I felt quite ready. I’ve had the burritos in Dolo, been climbing at Movement Sunnyvale, I work 50 hours a week at my software engineering job. But something was missing.
I still felt like I hadn’t quite gotten the startup thing. Living in San Francisco, working in Silicon Valley, this is simply the greatest place in the world to become completely inundated with startup culture. I could hear the city hum with buzz words, but it was like I hadn’t yet tuned into the right frequency.
So, quick, how do I catch up?
I present to you: The Startup Playbook Series. At the start of August, I curated a curriculum for myself of 3 books with the intent to get the context I needed to join the craze.
Why these three? For one (pun intended), Zero to One is possibly the most referenced startup book in the Bay. I’d honestly been using the phrase “zero to one” before I even knew it was from a book. Next, I thought it was necessary to have representation from one of the primary Silicon Valley archetypes: the seed stage VC. Pattern Breakers is narrated by Mike Maples Jr, one of the cofounders of the pioneering seed stage venture capital firm Floodgate. And finally, I included Sam Walton’s autobiography, Made in America, because I’m a Midwestern girl at heart, and I had to honor my roots in America's heartland. I hoped that Made in America would be a sobering narrative about entrepreneurship outside of the Silicon Valley bubble that would ground the "startup” in the context of classic American entrepreneurship.
For the sake of honesty, I want to declare my biases. I set out on this adventure on a bit of a high horse. I had always grouped startup books alongside their symbolic neighbor, the self-help book, as the kind of books you read to make yourself feel like you’re being productive without actually producing anything. I had mentally prepared myself to drudge hundreds of pages of self-aggrandizing, non-actionable drivel meant to drive up page count.
I’m glad I was wrong.
The concept of sales has long been completely mystical to me - I simply couldn’t fathom how someone could possibly convince people to spend millions on a new product. How could you possibly convince someone they need they didn't already want? My mental model of sales was of someone relentless, aggressive, and honestly, maybe a little annoying. But I think I finally get it a little now - Thiel explained that sales is actually everywhere, and the better it is, the less I’ve been able to recognize it.
“Like acting, sales works best when hidden. This explains why almost everyone whose jobs involves distribution - whether they’re in sales, marketing, or advertising - has a job title that has nothing to do with those things. People who sell advertising are called ‘account executives.’ People who sell customers work in ‘business development.’ People who sell companies are ‘investment bankers.’ And people who sell themselves are called ‘politicians.’ There’s a reason for these redescriptions: none of us wants to be reminded when we’re being sold.” (Zero to One, 129)
Maples approaches the topic of selling specifically in terms of pitching to VCs, and explains that pitching a startup should be like telling a story, where the customer is the hero, and you’re the mentor helping them self-actualize.
“When you leverage the hero’s narrative to recruit people to your movement, you need to show them the massive gap between the reigning status quo they currently must accept and what could be if they pursue the higher purpose you present. You need them to see you as a mentor offering them a new type of power or magic to use a tool that will help them succeed. And you need to tell them about the transformation they’ll undergo; you need to persuade them that undertaking the journey will change them for the better - that there are important stakes involved. That’s essential to a compelling story.” (Pattern Breakers, 212)
When Maples analogized pitching as story-telling, something clicked for me - I'd already been thinking of interviewing as story-telling. In behavioral interviews, when I introduce myself, or talk about my life, I treat it sort of like a performance. Not the on-stage kind, but maybe like the kind of performance you give out at dinner with a group of friends friends when you’re telling them a funny story you’ve told a handful of times before, so you know you can really nail the comedic timing. Now that I can see that this was a form of selling I’d already been doing, all of a sudden sales doesn't feel as opaque.
I recently read Cultish by Amanda Montell with some friends, and it spooked me. The anthropological exploration exposes the ubiquity of cults in all of our lives. If you've ever been to a San Francisco party full of people who don't work in tech, you might be familiar with what they really think of us tech startup individuals: we're all part of a big cult. If I ever accidentally mention the absence of shoes in my office, my business fraternity pledgeship, or my high school roommate, I brace myself for the impact of a cult-association joke. This kind of thing gets you thinking - are they right? How many cults have I racked up? Is this something I need to fix?
On cultish activities at Wal-Mart, Walton comments
“We know that our antics - our company cheers or our songs or my hula - can sometimes be pretty corny or hokey. We couldn’t care less. Sure it’s a little strange for a vice president to dress in pink tights and a long blond wig and ride a white horse around the Bentonville town square, as Charlie Self did in 1987, after he lost a Saturday morning meeting bet that December sales wouldn't top $1.3 billion… [there’s a long list of some of the hilarious things they’ve done in these pages. I recommend you read it yourself.] As we've grown, we've gotten away from the circus approach, but we've made it a point to keep encouraging the spirit of fun in the stores. We want the associates and the management to do things together that contribute to the community and make them feel like a team, even if they don't directly relate to selling or promoting our merchandise.“ (Made in America, 203)When Walton describes their cutesy company traditions, it doesn't sound scary - rather, it sounds endearing. And when I truly consider each of the organizations that might have had me do something silly, I remember rather enjoying it. As strange as they might be, culty behaviors build a culture that’s fun to be in.
As Thiel comments cheekily,
“better to be called a cult - or even a mafia” (Zero to One, 125)
This one’s my first turkey - all three books explicitly emphasized the importance of targeting an extremely small market when starting out a company.
Thiel, on initial markets.
“This is why successful network businesses rarely get started by MBA types: the initial markets are so small that they often don’t even seem to be business opportunities at all.” (Zero to One, 50)
On Wal-Mart’s initial expansion strategy, Walton explains,
“But while the big guys were leapfrogging from large city to large city, they became so spread out and so involved in real estate and zoning laws and city politics that they left huge pockets of business out there for us.” (Made in America, 140)
On the initial days of AirBnb, Maples hilariously describes their first pitch meeting with the young organization,
“We walked into the conference room, where I was surprised to see… cereal boxes.” (Pattern Breakers, 74)
When prompted, Brian Chesky explained that they had been raising money by selling Democratic convention themed cereal boxes.
“‘What you do,’ Brian [Chesky] said, ‘is you stay at somebody’s house. They give you an airbed to sleep on, and the next morning they give you breakfast. AirBed and Breakfast. It’s going to be valuable in places where they have unpredictable patterns of hotel occupancy, like Denver hosting the Democratic Convention. There aren’t any hotel rooms left here.” (Pattern Breakers, 76)
I rewrote this sentence a couple of times because I couldn’t think of a way to talk about how insane AI has been in the past 2 years without being trite. So I just won’t write it. We all know.
For context on how truly insane things have gotten, in 2014, Thiel described humanity's relationship with computers like this:
“People have intentionality - we form plans and make decisions in complicated situations. We’re less good at making sense of enormous amounts of data. Computers are exactly the opposite; they excel at efficient data processing, but they struggle to make basic judgements that would be simple for any human.” (Zero to One. 143)
Who knew that efficient data processing would soon unlock making those very judgements. Thiel in 2014 couldn’t imagine how good computers were going to get, let alone Walton in 1992.
But perhaps as a glimmer of hope, perhaps as evidence of naivety, I leave with their humanist opinions.
“Computers are complements for humans, not substitutes. The most valuable businesses of the coming decades will be built by entrepreneurs who seek to empower people rather than make them obsolete.” (Zero to One, 141)
“But truthfully, I never viewed computers as anything more than necessary overhead. A computer is not - and will never be - a substitute for getting out in your stores and learning what’s going on.” (Made in America, 285)
Pattern Breakers had this incredible concept of “inflections,” which Maples used to refer to the concept of something that
“disrupts our established ways of being. There’s an event that introduces something new - a new technology, a new regulation, a new idea - and that new thing radically changes how people think, feel, and act.” (Pattern Breakers, 24)
I’d heard of disruptive technologies in my college Technology and Management courses, but before this, I was always under the impression that your start-up has to be the disruption. I hadn’t realized that many successful startups are not the first to shake the ocean floor to make the wave - they just have to know how to ride it.
For Walton, this was when he came across discounting, which motivated him to shift from variety stores to discount stores.
“We knew we had to act. [Gibson] was the only one discounting out this way, and, because I had made all those trips back East, I was probably one of the few out there who understood what he was up to. By then, I knew the discount idea was the future.” (Made in America, 54)
Also, a quote from Abe Marks on Walton’s embracing of technology.
“By being at that [IBM computing school for retailers], he was absolutely in the right place at the right time. There were no such things in those days as mini computers and microcomputers. He was really ten years away from the computer world coming. And this is a very important point: without the computer, Sam Walton could not have done what he’s done. He could not have built a retailing empire the size of what he’s built, the way he built it. He’s done a lot of other things right, too, but he could not have it without the computer. It would have been impossible.” (Made in America, 111)
In modern times, Maples points out the origins of Uber and Lyft, and which inflections they utilized that made the timing right for them.
“Consider Lyft and its arch rival Uber. Both capitalized on two powerful inflections: the advent of GPS-enabled smartphones that could track location for free and Facebook Connect, which enabled websites and smartphone apps to incorporate Facebook’s profile information, allowing other users to see it.” (Pattern Breakers, 42)
Perhaps it’s a bad sign that I was on my phone enough this Labor Day weekend to read Founder Mode, but I did. I had to! It was all over my Twitter feed. It raises an interesting question: what does successful leadership look like? Does it take different skills to make a big company work compared to a small company?
Maples on whether big companies can be pattern breakers:
“Can elephants dance to the different beat of a pattern-breaking rhythm? We believe the answer is yes. Large corporations can harness inflection theory to wage offensive battles. But an asterisk looms large: transformational innovation is no small feat, especially for well-run businesses.” (Pattern Breakers, 239)
Walton devotes an entire chapter to the importance of leading a big company like a small company, and I strongly recommend reading the Thinking Small chapter of Made in America because I definitely can’t do justice to all of his nuance here (but really you should read the entire book).
Walton, on his goals for Wal-Mart:
“I always wanted to be the best retailer in the world, not necessarily the biggest.” (Made in America, 277)
Walton, on what he’s like as a manager:
“I think really I’m more of a manager by walking and flying around, and in the process I stick my fingers into everything I can to see how it’s coming along. I’ve let our executives make their decisions - and their mistakes - But I’ve critiqued and advised them.” (Made in America, 147)
A long quote from Thinking Small that I think is worth the length:
“Here's the point: the bigger Wal-Mart gets, the more essential it is that we think small. Because that's exactly how we have become a huge corporation—by not acting like one. Above all, we are small-town merchants, and I can't tell you how important it is for us to remember—when we puff up our chests and brag about all those huge sales and profits—that they were all made one day at a time, one store at a time, mostly by the hard work, good attitude, and teamwork of all those hourly associates and their store managers, as well as by all those folks in the distribution centers. If we ever get carried away with how important we are because we're a great big $50 billion chain—instead of one store in Blytheville, Arkansas, or McComb, Mississippi, or Oak Ridge, Tennessee—then you probably can close the book on us. If we ever forget that looking a customer in the eye, and greeting him or her, and asking politely if we can be of help is just as important in every Wal-Mart today as it was in that little Ben Franklin in Newport, then we just ought to go into a different business because we'll never survive in this one.” (Made in America, 277)
Honestly, I’m not quite sure what I should take away here, but the contrasting dialogue about competition amongst the writers is worth noting. Thiel and Maples argue tooth and nail that competition is the worst possible thing for a startup and you should avoid it like the plague. But Walton? He chased competition down with an obsession. Perhaps this can be attributed to the difference in industries. Maybe they honestly agree, and they’re just defining competition differently. Honestly, I don’t really know what the answer is, but I’ll attach the relevant quotes for your reading pleasure.
Thiel, on defining your company in comparison to its competitors:
“If you truly want to make something new, the act of creation is far more important than the old industries that might not like what you create. Indeed, if your company can be summed up by its opposition to already existing firms, it can’t be completely new and it’s probably not going to become a monopoly.” (Zero to One, 56)
Maples, also on defining your company in comparison to its competitors:
“When you frame your story around being ‘better,’ you inadvertently accept the existing standard set by established players. This tacitly concedes that the prevailing model defined by the status quo remains relevant. In doing so, you forfeit the opportunity to redefine the game on your own terms, without fully realizing what you’ve given up.” (Pattern Breakers, 216)
But, Walton, on competition:
“For twenty years back East, they always said Wal-Mart never had any competition, and that we wouldn’t know what to do with it when it bit us. They forgot that the heartland was the home ground for practically all the regional variety chains that developed in the U.S. In our Ben Franklin days, we had all the competition you could ever want from Sterling and TG&Y and Kuhn’s and all those other regionals. So while we may not have had any competition for discounting in those little towns, we weren’t strangers to competition. We were always looking at Gibson’s and any other regionals that might decide to come our way, and we knew what to do when they did: keep our prices as low as possible by keeping our costs as low as possible.” (Made in America, 151)
While reading, I noticed a fun pattern in each book: each author draws some kind of deterministic conclusion about generational identity, and explains how it has resulted in some modern state of entrepreneurship.
“The strange history of the Baby Boom produced a generation of indefinite optimists so used to effortless progress that they feel entitled to it. Whether you were born in 1945, 1950, or 1955, things got better every year for the first 18 years of your life, and it had nothing to do with you” (Zero to One, 68)
“Millennials [value] artisanal experiences over corporate-branded ones. Their generation, empowered by the vast and competing information on the internet, grew skeptical of traditional advertising and the intentions of big corporations, often perceived as faceless. They gravitated toward genuine, transparent brands and experiences. This was evident in the rise of farm-to-table restaurants, handcrafted goods on platforms like Etsy, craft breweries, and independent coffee shops.” (Pattern Breakers, 95)
“I am absolutely convinced that the only way we can improve one another’s quality of life, which is something very real to those of us who grew up in the Depression, is through what we call free enterprise - practiced correctly and morally. And I really believe that there haven’t been many companies that have done the things we’ve done down at Wal-Mart. We’ve improved the standard of living of our customers, whom we’ve saved billions of dollars, and of our associates, who have been able to share profits.” (Made in America, 320)
I, for one, can’t wait for the Gen-Z startup thinkpieces.
Ok fine! I get it. I get the hype now. The cultural education worked. Each book was incredibly compelling, and this reading list has shifted my perspective in how I ingest startup news.
And I’ll also say this - while trying to sound as little like a corporate shill as humanly possible, this exercise increased the faith I have in the company I work for. Each book gave out a lot of advice describing signs of successful companies, and the issuer of my W2 seemed to check off every one! That’s pretty exciting.
It’s been truly thrilling to read about the physical manifestation of something that once literally just existed in someone’s imagination. I now see the magic in entrepreneurship - it's a world full of hallowed beings finding rare ingredients in the wild to make mystical concoctions that fundamentally change the world around us.
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