Lately, I like to ride the bus. I don’t mean the double-decker tourist buses that, half empty, warily circle the city, like dazed displaced troop carriers, or the long-distance buses that come sighing into the Port Authority Terminal, where it is eternally 3 a.m. and everyone looks exhausted before the journey starts, or even the yellow-and-blacks that still delicately deliver children from downtown to uptown at eight in the morning. I mean the ordinary city buses, those vaguely purposeless-looking, bulbous-faced, blue-and-bone M2s and 3s and 4s and 5s that chug up and down the avenues and along the cross streets, wheezing and whining, all day and night.
For twenty-odd years in New York, I never rode the bus at all—not, at least, after a single, traumatic bus experience. On the very first day I visited Manhattan, in the anxious (though, looking back, mostly unfrightened) summer of 1978—the summer when Jimmy Carter turned down the air-conditioning all over town—I got on a bus outside the Metropolitan Museum, saw that the fare was fifty cents, and, with the unquenchable cheerfulness of the visiting Canadian, proudly pulled out a dollar bill—an American dollar bill—folded it up neatly, stuffed the dollar in the fare box, two fares, and looked up, expecting the driver to beam at my efficiency. I will never forget his look of disbelief and disgust, mingled, I think, with a certain renewed awe at the enormities that out-of-towners were capable of.
From that day on, I don’t think I ever rode another bus. I suppose I must have; transportational logic says that I must have—there must be a crosstown M86 or an uptown limited in there somewhere—but, if I did, I don’t know when. Even if I had been on a bus, I don’t think I would recall it. Bus-blindness is a standard New York illness; of all the regularities of life here, the bus is the least celebrated, the least inclined to tug at the heart, or be made into a symbol of our condition. The taxi has its checkered lore, the subway its legend, the limo a certain Michael Douglas-in-“Wall Street” icon quality—but if there is a memorable bus scene in literature, or an unforgettable moment in a movie that takes place on a New York City bus, I have not found it. (If you Google New York buses in movie scenes, you end up with a bus-enthusiasts’ site and a shot of a New York City bus from a Sylvester Stallone movie called “Driven,” and this bus turns out to be dressed up like a Chicago city bus, and filmed on location in Toronto.) There is nothing about buses that makes them intrinsically symbol-repellent: the London bus has a poetry as rich as the Tube’s—there is Mary Poppins, there is Mrs. Dalloway. In Paris, Pascal rides the bus, Zazie rides the Métro, and that is, evenly, that. But as a symbolic repository the New York City bus does not exist. The only significant symbolic figure that the New York bus has had is Ralph Kramden, and what he symbolizes about the bus is that being stuck in one is in itself one more form of comic frustration and disappointment; the New York City bus might best be described by saying that it is exactly the kind of institution that would have Ralph Kramden as its significant symbolic figure.
If you had asked me why I avoided the bus, I suppose I would have said that the bus was for old people—or that taking the bus was one step short of not actually living in New York at all, and that if you stayed on the bus long enough it would take you right out of town. Riding the bus was one of those activities, like going to Radio City, that was in New York but not really of it. My mother-in-law rode the bus when she came to New York to visit, and that, I thought, said whom the bus was made for: elegant older women who didn’t mind travelling forty-five minutes every morning to visit their grandchildren.
And then I didn’t ride the bus because I loved the subway so. Compared with the vivid and evil and lurid subway, the bus seemed a drab bourgeois necessity—Shirley Booth to the subway’s Tallulah Bankhead. When I began to ride the subway, particularly in the late seventies and early eighties, it was both grander and stranger than a newcomer can imagine now. The graffiti, for one thing, were both more sordid inside—all those “tags”—and more beautiful outside. When the wild-style cars came roaring into a station, they were as exciting and shimmering as Frank Stella birds. The air-conditioning was a lot spottier, too, and sometimes the windows were open, driving the stale and fetid air around in an illusion of cooling. When the air-conditioning worked, it was worse. You walked from steam bath to refrigerator, a change like a change of continents, and your perspiration seemed to freeze within your shirt, a phenomenon previously known only to Antarctic explorers.
Feral thugs and killer nerds rode the subway together, looking warily at one another. And yet there was something sublime about the subway. Although it was incidentally frightening, it was also systematically reassuring: it shouldn’t have worked; it had stopped working; and yet it worked—vandalized, brutalized, a canvas and a pissoir, it reliably took you wherever you wanted to go. It was a rumbling, sleepless, snorting animal presence underfoot, more a god to be appeased and admired than a thing that had been mastered by its owners. If the stations seemed, as people said, Dantesque, that was not simply because the subway was belowground, and a punishment, but also because it offered an architectural order that seemed to be free from any interfering human hand, running by itself in its own grim circles. It was religious in the narrow sense as well: terror and transportation were joined together, fear propelled you to a higher plane. (The taxis, an alternative if you had the money, were alarming then, too—a silent or determined driver in a T-shirt resting on a mat of beads and demanding, fifty blocks before your destination, which side of the street you wanted—without being at all sublime.)
Coming home in 2000 after five years abroad, I took it for granted that I would return to the subway and the taxi, only to be stunned by the transformation in them both. The subway, now graffiti free, with dully gleaming metal cars (though obviously made to be as resistant to vandalism as a prison), had recorded announcements, and for a while a picture of the station manager at every stop. It seemed obviously improved but somehow degraded, grimly utilitarian, intended to suggest the receding future vision of “RoboCop”: automatic voices encased in armor. The chaos was gone from inside the cabs, and held on only around them. After five years in Paris, where one phones for a cab or lines up in an orderly manner at a station, logically and fairly, I nearly wept tears of frustration at the anarchy of the street system—you waited for fifteen minutes and someone waltzed out into the middle of the block and stepped in front of you as a cab approached. (There is, of course, an implicit system of fair dealing in this—one block away is legitimate; the same corner is not—but I could no longer remember the rules, much less find the patience to practice them.)
And so the bus. Almost every day for the past year and a half, I’ve found myself taking a limited bus down an East Side avenue, and then, a few hours and frustrations later, taking it back uptown on the adjoining avenue. I stand or, in good hours, sit among the usual bus riders. The bus I find humane, in several ways. There is, first of all, the non-confrontational and yet collaborative nature of the seating. You look over people’s shoulders, closely, and yet only rarely look directly at them, face to face, as you must on the subway. There is a hierarchy of seating on the bus, far more articulate than that of the subway. There are seats you must give up to handicapped people, seats you ought to give up to handicapped people if you have any decency at all, and seats—the bumpy, exhaust-scented row in the very back—that you never have to give up to anyone, if you’re willing to sit there. (The reason for all those designated spaces is that law and propriety dictate that when someone in a wheelchair rolls up to a bus stop, the bus has to stop and let him on.) There is also on almost every New York bus a little single seat tucked in near the back door, which has the air of a dunce chair in a classroom. You can sit there, but you wouldn’t want to. Late at night, there is even a policy of optional stops. You ask the driver to stop the bus where you’re going and, if he can, he will.
The bus also has order, order as we know it from the fading patriarchal family, visible order kept by an irritable chief. The driver has not only control over his world but the delight of the exercise of arbitrary authority, like that of a French bureaucrat. Bus riders learn that, if your MetroCard turns out to be short fifty cents, the driver will look at you with distaste, tell you to find change from fellow-passengers (surprisingly, to a subway rider, people dig into their purses cheerfully), and, if this doesn’t work, will wearily wave you on back. You are included, fool though you are, and this often at the moment when the driver is ignoring the pounded fists and half-audible pleas for admission of the last few people who, running for the bus, arrived a second too late. The driver’s control of the back door is just as imperious. A red zone of acceptability exists around the bus stop, known only to the driver, who opens and closes the door as he senses the zone appearing and receding.
It is uniquely possible to overhear conversations on the bus. The other morning, for instance—a beautiful morning of our time, the sky blue, the alert orange, and the Times sports pages ominously upside down—a man behind me was trying to remember the names of popular Drake’s snacks from his childhood.
“What are those things? There were Ring-Dings and Drake’s cakes.”
“You mean Twinkies,” the man he was with said, with assurance. I couldn’t see either face, but their voices had the peaceable quarrelsomeness of those who have just passed from middle-aged to elderly.
“No, I don’t mean Twinkies,” he said angrily. “I mean them other things.”
Long pause. We couldn’t resist. “Devil Dogs,” someone said. “Devil Dogs.”
“Yes, thanks, Devil Dogs. How come you don’t ever see Devil Dogs these days?”
This is a typical bit of bus talk. (In a taxi you would stew on the issue all by yourself. The millionaire in his limo could ask the driver, I suppose, but he would be too embarrassed to answer. On the subway, no one would hear, in the first place; and if the words “Devil Dog” were said with enough emphasis to be heard, it would cause a panicked mass exodus.) On another morning, a man and a woman were riding together down Fifth Avenue and saw the new, comically twinned, comically misnamed AOL Time Warner Center—the Delusional States Building, as it will doubtless someday be known—come into view. (And those two towers rising, however plainly, have become a source of pride: something’s rising.) “That Trump,” the man said, chuckling. “He always does things in twos. Have you ever noticed how he always does things in twos?”
“I’ve noticed that. That’s his thing, his signature, doing two of everything.”
“Well, there he does it again. Two towers again.”
Sage nods. The fact that, as it occurred to me later, the towers are not by Trump, and that, in any case, Trump, in his long career, has never done two of anything, should not diminish the glory of this exchange. If you were on the subway, there would be nothing to look at; if you were in a limo, you would actually be Trump, building things, gloriously, in nonexistent pairs.
When I first started riding the bus, I mentioned it to people sheepishly, almost apologetically, as one might mention having had a new dental plate put in, or the advantages of low-fat yogurt—as one might mention something that, though not downright shameful, might still seem mildly embarrassing. But, to my surprise, almost everyone I talked to (and women, I think, in particular) turned out to feel the same way I do about the bus. “The bus lets you feel that you’re in control, or that someone’s in control,” one woman said to me, and another friend said flatly, “You can see what’s coming.” The bus feels safe. Of course, there is no reason for the bus to feel safe. (A friend from Jerusalem got on the bus with understandable watchfulness.) Yet we have decided to create in the city a kind of imaginary geography of fear and safety that will somehow make us safer from It—from the next attack, of course, from the Other Shoe, the Dreadful Thing that we all await.
I have thought about it a lot while I am riding the bus, and I have come to the conclusion that, while anxiety seeks out the company of excitement, fear seeks out the illusion of certainty. People tend to write these days about anxiety and fear as though they were equal, or anyway continuous, emotions, one blending into the other, but anyone who has felt them—and anyone who hasn’t felt them, at least a little, hasn’t been living in New York in the past year—knows that they are as distinct as a bus from a subway, as a Devil Dog from a Ring-Ding. Anxiety is the ordinary New York emotion. It is a form of energy, and clings, like ivy to a garden wall, to whatever is around to cling to, whether the object is nationalism or the Knicks or Lizzie Grubman, as readers of the New York Post recognize. At the height of the bubble, anxiety was all around us: the anxiety of keeping up, of not falling behind, of holding one’s place.
Fear, well earned or not, is a different thing. People who live with the higher kinds of fear—the ill, soldiers—live with it mostly by making structures of delusional domesticity. They try to create an illusion of safety, and of home. At Waterloo, soldiers welcomed the little signs of farm-keeping evident around them; in the dugouts of the Somme, every rat-ridden alley had a designation and every rat itself a pet name. The last time New Yorkers were genuinely afraid, as opposed to merely anxious, during the great crime wave of the sixties and mid-seventies, they responded in the same way: by constructing an elaborate, learn-it-by-heart geography of safe and unsafe enclaves, a map of safe rooms. The knowledge that the map could not truly protect you from what you feared then, any more than riding the bus can save you from it now, did not alter the need to have a map. People say that twentysomethings have sex out of fear—it is called terror sex—but twentysomethings have sex out of sex, and the adjective of the decade is always attached to it. In the eighties, they had safe sex, and in the nineties boom sex, and they will have sex-among-the-ruins, if it comes to that.
What we have out of fear is not sex, or any other anxiety-energized activity, but stillness. It’s said that people in the city are nicer now, or more coöperative, and I suppose this is true. But it is true for reasons that are not themselves entirely nice. The motivation of this niceness is less rectitude and reform than just plain old-fashioned fright. There are no atheists in foxholes, but there are no religious arguments in foxholes, either. The fear we feel isn’t as immediate or as real as the fear soldiers feel. But our response is the same. These structures of delusional domesticity are the mainstay of the lives of many of us in New York now. The bus, a permanently running dinner party among friends, a fiction of family for a dollar-fifty, a Starbucks on wheels, is the rolling image of the thing we dream of now as much as we wanted the Broadband Pipe to wash away our sins three years ago, and that is the Safe Room. For the first time, the bus has something to symbolize.
On the bus the other morning, the worst regularly scheduled thing that can happen on the bus happened. A guy in a wheelchair held things up for three minutes—no time at all, really, but an eternity on television, or in the subway, or, usually, in the city. As bus riders know, buses are equipped to stop and, by lowering a clever elevator device, let a wheelchair-bound rider board the bus. This, though a civic mitzvah, involves a sequence where the driver locks the front door, works the elevator at the rear door, hoists up the wheelchair on the lift, and then folds up the designated seats to give the wheelchair man room (it is nearly always a man). There is something artisanal, handmade about it—the lock, the voyage, working the elevator—in which a municipal employee is reduced, or raised, to a valet.
“It’s the lame and the halt on the bus,” one woman said.
“What’s the difference between the lame and the halt?”
“The lame are, like, lame, and the halt, halt.”
“You mean the halt don’t walk.”
“I mean they halt. But they halt because they’re lame.”
It is the kind of conversation—discursive, word-sensitive—that is possible on the bus right now, and nowhere else. I keep meaning to look up the difference. ♦
Communities can maintain themselves based on intimate acquaintance up to groups of about 150 people, often referred to as Dunbar’s number.1
However, once a group passes this number, social dynamics change. You can’t run a thousand-person business the same way you run a one hundred-person business. You can’t run a one hundred-person business the same way you run a ten-person business. And you can’t run a ten-person business the same way you you run a two-person business.
Nation-states, religions, and corporations all manage to function at even larger scales without intimate acquaintance. If you see someone you don’t know walking down the street, you don’t feel compelled to bash them over the head with a club for self defence.
Why not? The secret to how this cooperation at larger scales functions appears to be shared myths (used here as powerful, defining stories which create shared understanding – not as fictions). These are the necessary glue which bind any large-scale human cooperative endeavour together.
These shared myths need not be formalized into a syllabus.
In most areas of human coordination they rarely are. No one in high school formally decides and dictates what is “cool,” yet everyone somehow knows what (and who) is cool.
Myths, Shared stories and understanding, are understood by individuals inside the group, but members outside of a group often can’t make any sense of them. Many of us had embarrassing moments in high school when our parents did something distinctly “uncool,” oblivious to the shared myths of our school.
It made no objective sense to my parents that I would spend $300 to get a Flowmaster exhaust kit installed on my truck.
It made perfect sense to me. There was a myth that all the cool kids in the Memphis suburbs got flowmasters. I was trying (and failing) to signal that I was one of the cool kids.
While these shared myths may seem like just a silly aspect of high school, they exist in every functional community. It’s important to understand them, because signalling them effectively helps us access better opportunities within a community.
This seems stupid in the context of high school – trying to be cool in high school doesn’t do much for you after high school.
But understanding the shared myths of a community of customers you are selling to matters quite a lot. If you do understand them, your business grows, if you don’t your business dies.
We often express this understanding of shared myths by saying, “they just get it.”
If you have five designers do a mockup for your website redesign, for example, you can look at the mock-ups and say that one of them “gets it” better than others, without understanding much about design.
What you’re saying, in essence, is that they have understood, and expressed in their design, the myths you believe in.
Internet businesses and entrepreneurship, like high school, have their shared myths. If you understand the shared myths of a group, you gain an intuitive understanding of what you can and cannot do. You gain or lose access to opportunities accordingly.
Before understanding these shared myths, you are a bit like your parents were when you were in high school—you unknowingly commit faux pas.
After you understand these shared myths, you “get it.”
People often ask for reading recommendations, so I put together seven essays that capture the most important shared myths of internet business.
1. “1,000 True Fans” by Kevin Kelly
The 1,000 true fans myth is this: to be a successful creator in the internet era, you don’t need millions of fans. You need 1,000 true fans.
It is perhaps the foundational myth of internet business.
I worked with a company whose main product was a specialized piece of industrial equipment. About 400 people per month searched for that piece of equipment on Google. It cost about $400.
How much money can you make selling a product which only 400 people in the entire U.S. ( precisely 0.000125431% of the U.S. population and probably less people than you had in your high school) search for each month?
Millions of dollars.
The math behind 1,000 true fans shows how. A true fan is anyone who will spend at least $100 per year buying what you make. They buy the hardcover and audio versions of your book and the collector’s edition of your poster release each year.
Because the internet enables you to have a direct relationship with your fans, they buy directly from you, not a bookstore or Procter & Gamble, and you get to keep all one hundred of those dollars.
That’s $100,000 per year––a pretty good living for most people. 1,000 true fans is a lot more feasible to attain than a million fans. If you convince one person to become a true fan every day, it will take you three years to get there.
You can play with the math. 400 people per month buying a $400 piece of equipment is $1,920,000.
What Kevin Kelly’s essay shows is that in the internet era, most businesses are built not by aiming at the masses, but by aiming at the niches. Even the largest internet-era companies started with very small niches: Facebook was just for Harvard undergrads (about 6,700 people) and Paypal was just for Ebay powersellers (of which there were less than 20,000 at the time).
How many products are there which 1,000 people per year would spend $100 on?
This hasn’t always been true, of course. The economics of 1,000 true fans don’t work if you are Procter & Gamble selling Tide detergent. You need millions or at least hundreds of thousands of customers to get shelf space in Walmart and Target.
How many people will pay $100/year for gluten-free, fairtrade, organic certified detergent? Not many, and that’s just fine.
Find your 1,000 true fans and don’t worry about the millions.
Read 1,000 True Fans
2. “How To Make Wealth” by Paul Graham
One of the shared myths that underlies most people’s worldview is that wealth is zero sum. Why?
For the great majority of human history, this was true. The Catholic Church outlawed usury (the loaning of money at interest) because it mostly seemed to just redistribute wealth and not create more of it.
Graham’s essay points out that we conflate wealth with money. Money is not wealth––it’s just something we use to move wealth around.
He shows that wealth is simply what you want. Imagine you have a magic machine that could create anything you wanted on demand. Plane tickets to the Caribbean? Poof. A hot cup of coffee? Poof. A brand-new Tesla? Poof.
As long as you had this magic machine, would you care how much money you had?
What software makes clear is that individuals have more ability than ever to shape the future. Economic numbers only hint at the profundity of the societal impact of software and the internet.
As a simple example, a 14-year-old teenager today (too young to show up in labor statistics) can learn programming, contribute significantly to open-source projects, and become a talented professional-grade programmer before age 18.2
You can sit down in front of a computer and create wealth.
Read How to Make Wealth
3. “Do Things That Don’t Scale” by Paul Graham
A lot of would-be entrepreneurs believe that products either take off or they don’t.
You make something available and if it’s good, then people will beat a path to your door. If they don’t, it means that the market doesn’t exist.
This myth is unhelpful and does not seem to play out. The reality is that even if you make something amazing, you need to spend at least 50 per cent, if not 80 per cent of your energy in the first few years “doing things that don’t scale” in order to sell it.
Graham tells the story of Stripe, the online payments company which is now valued in the billions of dollars. Stripe was started by a few hundred instances of a “Collison installation.”
The founders, Patrick and John Collison, would ask friends in coffee shops or bars, “Will you try our beta version?” If they said yes, they didn’t do what most founders do and send them a link the next day. They immediately said, “Give me your laptop,” and set it up on the spot.
Most would-be entrepreneurs would think, “There is no way this scales” and give up. They don’t understand that most internet companies start very very small and “Collison install” their way to 1,000 true fans.
It seems most effective to think in terms of orders of ten. If you have zero customers, you only need to figure out how to get to 10. You can do that by asking friends in coffee shops. Once you have ten, you only need to figure out how to get to one hundred. You can probably do that with phone or emails or LinkedIn messages (or even a lot of coffee shops).
Read Do Things That Don’t Scale
4. “Principles” by Ray Dalio (Sections 1 and 2)
Ray Dalio is the founder of Bridgewater, the most successful hedge fund in history. That’s like being the greatest NFL player in the U.S. or the best football/soccer player in Europe. It’s probably the most competitive industry with the smartest people in the world over the past few decades, and his track record is the best.
His most fundamental principle?
“Truth––more precisely, an accurate understanding of reality––is the essential foundation for producing good outcomes.”
While this seems obvious, it’s only very recently become an accurate statement for startups and online business
If you were part of a hunter-gatherer tribe that deeply believed in the rain dance, you should do the rain dance. Even if you had good reason to believe that the rain dance wasn’t really working, it was probably best to keep believing in the rain dance anyway, or at least keep your mouth shut.
If you brought forward the truth, that the rain dance doesn’t work, you got a bad outcome: everyone thinks you’re a heretic, you get thrown out of the tribe, and die.
Going against the Roman Emperor, Medieval Pope, or English King when you felt they were wrong was about as good an idea as denying the rain dance worked.
In the early 20th century, John Maynard Keynes was not wrong in saying that, ““Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”
Even in today’s world, this is often true. There are lots of people working in companies and institutions who think the system is a complete mess, but they’re five years away from retirement or their big bonus, so they are better off just riding it out. They get a good outcome by confirming lies, not by seeking the truth.
For internet businesses or startups, this is never the case. 3
Like hedge fund managers, internet entrepreneurs subscribe to the maxim of “strong views, weakly held.” They act decisively on their current beliefs, but are quick to revise those beliefs when new information presents itself. 4
Read Principles by Ray Dalio (Or pre-order the book)
5. “Elementary Worldly Wisdom” by Charlie Munger
Charlie Munger is something of a business zen master. He speaks infrequently and softly, but when he does, you should listen. Charlie is Warren Buffett’s silent partner at Berkshire-Hathaway which makes him worth a cool $1.5 billion.
In 1994, he gave a speech to USC’s business school on Elementary Worldly Wisdom.
What is Charlie’s elementary worldly wisdom? The first rule is that you don’t really know anything if you only know isolated facts and can repeat them back. You have to have a latticework of models in your head to hang those facts on, and those models come from reading and working in a wide range of disciplines.
Without those models, you are like a man with a hammer who assumes that every problem is a nail.
Munger’s promise is that there are only “80 or 90 important models [that] will carry about 90% of the freight in making you a worldly-wise person.”
You can learn to use these models, he argues, the same way a golfer can learn to swing a club or a tennis player a racket.
The first time you play tennis or gold and “swing naturally,” you won’t get good results.
You have to learn to hold the club with a certain grip, and swing in a way that at first feels unnatural, to realize your full potential as a tennis player or golfer.
The first time you encounter a difficult problem and “think naturally,” you won’t get good results either.
If you don’t build these elementary, but unnatural, models, you are doomed to go through life like a “one-legged man in an ass-kicking contest.”
The ability to build that latticework is greater today than at any point in history. Thanks to the internet, there are more brilliant autodidacts alive today than ever before.
Read Elementary Worldly Wisdom
6. Helsinki Bus Station Theory by Arno Rafael Minkkinen
There is a bus station in Helsinki, Finland. Some two dozen platforms are laid out in a square at the heart of the city and each platform has a sign with the numbers of the buses that leave from that platform. Let’s say you’re at a platform with three buses leaving: the 21, 71, and 58.
You get on the 21. All three buses stop at the same three first stops. Metaphorically speaking, let’s say that each stop represents a year in your career.
You get to the third stop and look around to realize that everyone else is at the same stop––your work and their work look exactly alike. Shocked, you realize that what you’ve been working on for three years has already been done.
So you hop off the bus, grab a cab back to the bus station and look for another bus. You repeat the same process. Maybe at first you were in UI design and you move to marketing. Three years into your marketing career, you realize your stuff is the same as everyone else’s.
So you hop off and go back to the bus station. This goes on forever.
What should you do? Stay on the bus.
Why? Because if you do, you will start to see a difference. The buses that move out of Helsinki stay on the same line, but only for three stops or so. Then they begin to separate and each heads on its own unique path. The 21 goes north and the 71 goes southwest.
Suddenly, your work is unique and starts to get noticed.
Ira Glass, the host of the now-iconic podcast and radio show This American Life, echoed the lessons in an interview:
“All of us who do creative work, we get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good, it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase, they quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out or you are still in this phase, you gotta know its normal and the most important thing you can do is do a lot of work.”
Read The Helsinki Bus Station Theory
7. “Aggregation Theory” by Ben Thompson
The value chain for any market is divided into three parts: suppliers, distributors, and consumers/users.
In the pre-Internet era, the best way to make money was to control suppliers and distribution. This was true across every industry.
Newspapers integrated suppliers (reporters writing content) with distribution (trucks delivering newspapers).
Taxi companies integrated suppliers (taxi drivers with medallions) with distribution (dispatchers answering calls telling the drivers where to go to make money).
Consumers were mostly an afterthought. If you didn’t like your local newspaper or taxi company, tough luck.
The internet has flipped this on its head. The most successful internet businesses integrate distribution with consumers and leave suppliers as an afterthought.
Facebook controls the platform for reaching users and so suppliers (newspapers and other publishers, as well as advertisers) have to live with their rules.
Uber and Lyft modularized supply by working with independent drivers and integrating dispatch with customer management.
The most important factor for success on the internet is user experience.
The best distributors providing the best experience earn the most consumers/users, which attracts more suppliers, which enhances the user experience in a virtuous cycle.
Read Aggregation Theory
The Internet Business Entrepreneur’s Imperative
In aggregate, the internet entrepreneur’s imperative is something like:
You can create wealth by making something a very few people want very badly. You do this by focusing obsessively on your customer’s experience.
At first, you must tell them about this thing in a very manual, unscalable way.
In order to survive as the business grows, you must ruthlessly seek out truth by building a latticework of models from many different fields and always asking “Am I right? Is this true?”
Getting rich will take longer than you can imagine, but shorter than you can bear. Don’t get off the bus.
- Dunbar’s original research places thresholds at 5, 15, 50, 150, 500, and 1500. That is, everytime group size roughly triples, the organizational structure has to change. Good further reading at The New Yorker and Ribbonfarm
- Breaking Smart Season 1 builds on this premise in more detail.
- I suspect this is why so many entrepreneurs read and follow finance. There is something about interacting with markets, both public and private, which is a wonderful bullshit filter. You can BS your way up many fields using politics, but not in the markets.
- To toss in another Paul Graham piece, the best ideas are often what you can’t say
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