Domino, a famous stallion, was buried in a grave with a worn marker just on the side of the road. Domino only produced nineteen foals yet is in the pedigree of the greatest horses that ever lived: Secretariat, Seattle Slew, Affirmed, Assault, Bold Ruler, Whirlaway, War Admiral, Gallant Fox, Omaha, Native Dancer, American Pharoah. Of the thirteen horses to win the Triple Crown, nine have Domino in their family tree. Now he was forgotten on the side of a road.Wright Thompson, Pappyland
This is from the Daily Entrepreneur Newsletter.
Research suggests that 93% of successful companies “had to abandon their original strategy – because the original plan proved not to be viable.”
That was the case for Ben & Jerry’s which pivoted from a retail shop to B2B to B2C pints.
That was the case for Chobani, which pivoted from feta cheese to Greek yogurt.
That was the case for LEGO, which pivoted from buildings to furnishings to toys.
But how do you know when to pivot and where?
Harvard professor Clayton Christensen wrote, “when the winning strategy is not yet clear in the initial stages of a new business, good money from investors needs to be patient for growth but impatient for profit.”
That is, if growth is slow, profit is essential.
But if growth is fast, profits can wait.
If both are slow, pivot!
It’s messy out there. There are no hard and fast rules. There is no one-size fits all solution.
But it helps to know. Businesses change. Profits and growth are contextual.
The Daily Entrepreneur newsletter delivers brief meditations on the principles & practices of the world’s greatest business builders. This newsletter will always remain free and dedicated to helping you get a little better each day.
How to Run Your Brain
Sports psychologist Josephine Perry was on the Bad Boys of Running podcast to talk about the mental aspects of the sport and how to design your life to work with your brain.
Want to use your phone less?, asked Atomic Habits author James Clear, put it out of reach. The need to “check things” is small and easily clears any friction when the phone is in our pocket or on the table. But make yourself get up, a small but significant task, and we simply don’t do it as often.
A design approach works for our brains too.
1/ Your brain is a relative thinker, from Instagram to other runners, what we see sets the terms.
We prioritize information based on its availability. Change what’s easily available, change what we compare ourselves to, like a PR.
2/ Your brain is designed for danger, food, and sex (aka survival). Don’t you dare start into the unknown it sternly warns.
One solution is to deconstruct large problems into small ones. Writing a book is hard. Writing something every day is easier. Collecting ideas from a podcast is easier yet. Each big and scary attempt is a collection of small and doable attempts.
Another is to create a jar of wins. Write down accomplishments and put them in a jar. The visual is good – we’re visual creatures – and it uses the brain against itself. Rather than being fearful, our brain has evidence of hard things we’ve already done and we’re more likely to start.
3/ Your brain is lazy. Our how ya feeling language is limited. We only use words like: fine, angry, frustrated, tired, good, or excited. Limited words mean we have limited responses.
But precise language changes our description and consequently our reactions. Rather than be tired we can be worn out mentally from work. That’s different from I’m an introvert and need a break from people. Different triggers, different actions.
Personal growth is a challenge. We’re working on the thing while we’re working with the thing. But it’s easier with tips like these.
It Costs More and It’s Worth It
“This carton contains some of the finest ice cream available anywhere,” begins the original copywriting on Ben & Jerry’s pints.
“We know because we’re the guys who make it. We start with lots of fresh Vermont cream and the finest flavorings available. We never use any fillers or artificial ingredients of any kind.”
It was the 1980s. European style was the flavor of the month. Häagen-Daz, the ice cream market leader.
“With our specially modified equipment, we stir less air into the ice cream creating a denser, richer, creamier product of uncompromisingly high quality. It costs more and it’s worth it.”
It costs more and it’s worth it.
Customers tell a story about your product. Is it the same one you tell?
Discount airlines tell a story. They highlight what you don’t get: free checked bags, snacks and drinks, and premium services. It’s not pilot quality, aircraft age, or mechanic training. It’s the little stuff. That’s why you save.
People tell a story about your business. Is it the one you want?
This is from a daily email I write with my friend Aaron.
The Lego Story (book review)
The LEGO Group was founded in 1932 by Ole Kirk Kristiansen and the story is told in The Lego Story by Jens Andersen.
The takeaway, like all successes, is to work hard and get lucky. Rather than a review, let’s tour history through industry.
1919, Denmark’s economy slows. “Farmers in Billund and other districts benefited from Denmark’s neutrality during the First World War, by selling grain and meat to the warring nations and earning some extra hard cash by producing peat.” When farmers have money they can pay carpenters like Ole Kristiansen. And if farmers don’t, they can’t.
1925, a fire in Ole’s woodshop. This will be a recurring theme.
1929, the depression. “For a while, the future looked promisingly bright, but shock waves from the Wall Street Crash in October 1929 that wiped out billions of dollars in wealth quickly spread to Europe. Germany and England, Denmark’s biggest trading partners, were badly affected, and the price of grain, butter, and pork crashed.”
1932, anything that sells. Though woodworking had been his trade, it was the 1931 Yo-Yo craze that inspired Ole to make toys. “By the 1930s, yo-yo-ing had become a nationwide fad,” writes Chat GPT, “with tournaments and competitions being held across the country.” Ole’s brothers and sisters want to know why a good carpenter would waste his time, “I think you’re much too good for that, Christiansen—why don’t you find something more useful to do!”
1933. “We worked like dogs, my wife, my children, and I, and gradually things began to pick up. Many days we were working from morning till midnight, and I bought a cart with rubber wheels so the neighbors wouldn’t be disturbed when I took the packages to the station late at night.”
1940, Germany invades Denmark. Though occupied (and part of the resistance group, running grenades to saboteurs in LEGO boxes) it was a good time for LEGO. Parents were “keen to protect their children from hardship,” and during the five years of occupation, LEGO’s revenue grew.
1942, another fire in the woodshop.
1946, plastics? Ole buys a plastic molding machine. Through the early 1950s executives at LEGO will say no no no, plastic toys will never take off.
1947, Ole sees his first plastic brick from an English toy manufacturer. This is the seed for LEGO but will prove a thorn in their intellectual property side for decades to come.
1951, the top-selling LEGO toy is the (plastic molded) Marshal Plan-delivered Ferguson tractor.
1955, LEGO bricks roll out to toy stores.
1956, LEGO bricks roll out to Germany. Andersen writes, “Selling toys in Germany would be like selling sand in the Sahara.” LEGO advertises in one city, Hamburg, creating a two-minute film to play before features. Word spreads.
1958, good news, LEGO invents the tube on the underside of the LEGO brick. Ole Kirk passes away and his son Godtfred takes over.
1962, the Scale Model Line. Godtfred grows up playing LEGO, so do other people. What if we make LEGO for professional adults? The Scale Model line is for engineers to design with LEGOs. Even the everyman could create his own house. The project fails but leads to the 1/3 size pieces ubiquitous in today’s sets.
1968 LEGOLAND Denmark opens. It’s a hit.
1976 oil crisis. “A significant part of LEGO’s challenges in the 1970s could be ascribed to two separate oil crises, a stagnating global economy, Denmark’s falling birth rate, and a declining toy market abroad.”
1978 minifig enters. Lego, Kjeld Kristiansen notes, has three phases: blocks, wheels, and mini-figures.
1989 LEGO pirates. But Gameboy too.
If there’s one consistent lesson through each decade of LEGO it’s the importance of sales. Every few years someone comes along and says the toys are good enough and every few years someone else reminds them but we have to sell these things. It’s just hard work.
All Barkers, No Biters
Our local bank sponsored a stand at a local fundraiser. Use our debit card the barkers offered, and we’ll donate ten cents to the local school’s scholarship fund.
Our local school is great. Every graduate gets a scholarship based on the number of years at the school.
The bank didn’t have many takers.
How to solve this problem? Ask Chat GPT!
Meh. Fees, poor service, better offers or rates elsewhere, relocation.
Not that helpful.
According to Jobs theory, the aim is to understand the context, casual structures, and forces of progress. “Don’t think it works,” says Greg Engle about Chat GPT, “just because it spits out an answer.”
As of April 2023, the best way to think about Chat GPT (or maybe any answer!) is as the tip of the iceberg. Good copywriting is based on the part of the iceberg we don’t see. So is Jobs. It’s why the barkers didn’t get many biters.
We’re just a bunch of blind men around the elephant. Be curious. Explore. Seek the other parts. Dig in.
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Helpful Lessons & Directions
Why is India a good place to walk, Tyler Cowen asks Paul Salopek as he retraces the steps of the first human migration.
India is good, Salopek says, because the people there have walked the walk.
“Whereas in motorized societies — and I’ve written about this — it’s pointless to talk to somebody in a car — if you’re on foot — about directions because the scale of their sense of landscape is limited to these strips of asphalt that are a few meters wide that wheeled vehicles can go on. Beyond that, it’s just this moving tableau that’s an abstraction.
“In India, people can tell you shortcuts. They can tell you where the best tree is to take a break, where the best temple is to sleep at night, where the next jug of water waiting the foot traveler lies ahead. India was marvelous. I felt among a brotherhood and sisterhood of walkers there.”Paul Salopek, Conversations with Tyler
Our This Time is Different is about understanding this idea. Walkers and drivers travel through the same physical space but travel through different temporal spaces.
When there are different rules then this time is different.
“As president,” David Brooks writes about Dwight Eisenhower, “he was personally willing to appear stupider than he really was if it would help him perform his assigned role.”
“I didn’t think you were that smart,” a friend told Bob Moesta, “because you ask all these, almost stupid questions. But those questions are how you understand contexts.”
We’ve looked at looking stupid before but it’s an idea worth repeating.
Is the goal progress or satisfaction?
These aren’t mutually exclusive. Often progress and satisfaction accompany one another.
But sometimes they don’t.
Arguments carry this tradeoff. Is the point to prove how smart you are, or something else?
Annie Duke offers an alternative. When she coaches poker players they gripe that nothing is happening. Good players, Annie advises, sit out a lot of hands.
But, there’s still a lot going on! It’s in your head.
What’s happening is the decisions. Framing the ‘action’ as mental appeals to progressing players.
Looking stupid isn’t stupid. It’s a path to the destination, a choice even our ego can love.
The End of Average (book review)
If markets have a limited supply but high demand then prices will be high. Disney vacations are one example. Human capital is another. Computer science majors earn the highest salary out of college and humanities majors earn the least. Employers distinguish students (supply) by their degrees.
But how do you distinguish among the computer science majors? The answer is included in Todd Rose’s 2017 book, The End of Average.
Rose’s big idea is economic – society overpays for talent!
Throughout the 1800s and 1900s, modernization has been an experience of measurement. At first, the outcomes were crude because the measures were crude. Take the twenty years of Moneyball progress and stretch that through two centuries. In the same way that baseball teams overpaid for home runs, society overpays for talent.
Rose offers three explanations for our mistake.
1/ Jaggedness. What makes a good first baseman? That depends. What makes a good leader? That depends too. Unfortunately, nuance is neglected in our day-to-day functions. We tend to use loss-aversion-based heuristics. When you evolve from mammals focused on danger, food, and sex there’s only so much digging our default allows.
Winston Churchill is an example of a jagged leader. He excelled in oration and “stature” but less in collaboration. During the war, certain skills were more important than others. This brings us to…
2/ Context. Brent Beshore’s people are messy comment summarizes Rose’s idea. Instead, think of people as complicated creatures who act using If/Then statements. Someone may be honest or careful or diligent based on the situation.
We miss this, Rose writes, because our samples of other people aren’t wide enough. Jessica from the office may act snooty or kind at work – the only place we see her. But does that encompass her at church, at home, and with her family?
3/ Paths. There are not a million ways to do something, Rose writes, but there’s also not one. Think of a situation like being lost in the forest. The goal is to get out. One option is to find the path and follow it. But one could forge their own as well. Too often the focus is on the path and not forging a way out.
If a group undervalues these explanations then it restricts the possible outcomes. Imagine a rule that in order to start a business someone had to give up listening to podcasts. There are a lot of great business podcasts and the budding entrepreneur would be worse off – and so would we, missing out on the upside of their creation.
The End of Average is a Bob Moesta book suggestion and reading it from his point of view offers additional information.
Moesta is a product designer, researcher, and marketer. Put on that POV and we can see how products fit within Rose’s explanations as well. Our hunger is jagged, hence the difference between Snickers and Milky Way. Our purchases are context-based, Moesta comments that hot dogs and steaks are both the right meal for the right context. Lastly, consumers end up at a product in a variety of ways, there’s not a single sequence of “I need a new car”, but there’s not an infinite either.
My first impression of The End of Average was that I kinda already understood these topics and didn’t need to spend time on the macro-educational angle. Both impressions were true but there were deeper ideas too and giving names to jaggedness, context, and paths is and will be helpful.
Final Four Seeds 2023
What is the sum of the seeds of the Final Four?
It’s madness baby!
We’ve previously asked this question as part of our numeracy series. As the high school kids say: Gotta get those (mathematical mindset) gainz.
“If you asked me right now to update my belief,” Wharton Professor Eric Bradlow said before the Sweet Sixteen, “about the sum of the seeds of the Final Four I’m trying to decide if I would be over or under 10.5.”
One seeds account for about 40% of the Final Four teams, and two seeds account for 20%.
The historical mean has been 12 and the average sum 11.
But things are trending higher.
Bradlow’s reasoning went on. A number of top seeds had lost.
Maxims for Thinking Analytically suggests we use extreme examples, like Bradlow. What’s the lowest possible sum? It sounds like 10.5 is a lot. But if one region’s best case is three and another is two how low can the total go? The book also reminds the reader, “the world is more uncertain than you think.”
That thinking leads to something like the Aaron Rodgers touchdowns graph. Though more unlikely individually, there are many ways for the sum of the seeds to be higher than the historical average.