Book: The Dip

The Dip
by Seth Godin

ISBN: 1591841666

From the blogging sphere I came across one of the most popular marketing gurus – Seth Godin. I have read posts online, so when I walked in Barnes and Noble and saw a little cute blue book with his name on it, it immediately drew my attention. I read those 70 pages on the spot, and then bought the book for home. Its one of those treasure books, that if you start underlining you will have to underline half the stuff.

Every project starts with excitement, energy, and resources. However, as it get progressively difficult, long, and tiresome you experience the dip, where people naturally feel like quitting. The Book is about how you should recognize that pushing a little harder to get to the ultimate returns is what separates the superstars from the rest.

“Winners never quit and quitters never win” We have all heard that expression. Well, Seth Godin explains that there is nothing worse than this advice, because our success depends on the ability to quit the right things at the right moment, and stick to the ones that payoff.
One of my favorite examples is the weight lifting example. When you exercise, your muscle gets tired. Only the last few seconds when the muscle starts hurting is when it actually grows. The problem is that most people naturally quit when pain appears, so they do all the work but get none of the benefits.

One of the best advices that I have heard is the following quotation:
Decide before the race the conditions that will cause you to stop and drop out [of the marathon]. You don’t want to be out there saying, “Well gee, my leg hurts, I’m a little dehydrated, I’m sleepy, I’m tired, and it’s cold and windy.” And talk yourself into quitting. If you are making a decision based on how you feel at the moment, you will probably make the wrong decision.

One other thing that loved — Seth says at one point that almost everything we learn in school is wrong, but the wrongest things of all is the notion that we need to be well rounded. You can only be the best if you quit the rest of the things you are doing, simply because you don’t have enough resources to be the best in anything you do.

So many things in this book can change your life. Buy it. Link to Amazon’s The Dip.

Fear Drives Our Lives

My mom’s favorite joke goes somewhat like that:

Poor man prays to God, “Please God, let me win the lottery, let me become rich, please…”
Next day he goes on praying, “Please God, let me win only once the lottery, I only one 1 single million, not more…”
Next day again, “Let me win, I will be nice to people, I will do good …” It goes on for weeks and weeks. One day God’s mighty voice falls from the sky, “Bro, you have to fill in at least one ticket …”

Today also, I had the following situation. I found out that one of my $20’s had a ripped corner. The missing piece was not small enough so that it can go unnoticed, but it also wasn’t big enough to be completely unacceptable. So I was getting food at Chipotle (the best fast food you can get) and I faced the following dilemma — should I try to get away with my ripped 20 or should I gave them a regular one. I gave them 2 tens but before the cashier put them away, I pulled my ripped banknote and asked naively, “Would you ever take those ripped 20’s under some circumstances or should I not even try?”, the guy smiled at me, gave me back my tens, took the scarred 20 and joked, “I will get extra 15c for that missing part” I was left in amazement, I got away with it so easy!

So then I thought, why on Earth would people have that completely irrational fear to avoid chances that come with barely any risk? Why did I not give the banknote at first place? Was I afraid of being denied? [so what?] Was I afraid they are going to laugh at me? [so what, I am never going to see them] Was I just shy? [how does that make me a better person if I am shy?] There is nothing significant that I could possibly lose if I try. But I didn’t in the beginning, and a lot of people don’t at all.

Those of you that have read any of my previous posts know that I preach that ‘the only person you should be working is yourself’, so here it comes:

I said last time how luck and risk are almost irrelevant, but Ilian and I calculated chance of not succeeding in any of the ten startups you began under the assumption that on average 1/10 startups succeed: (1-1/10)^10 = 34.9% That pretty much means that from pure statistical calculations in 2/3’s of the scenarios you will make at least 1 startup successful, and as Marc Cuban wrote long time ago – “you only need to be right once”. It is very important to note that this simple statistical measure does not include any of the most important characteristics of startups which include but are not limited to: 1) you gain a lot of experience after each failure, which considerably increases your chances of success 2) you make connections on the way 3) you learn to be critical and firm minded, able to analyze and process information very efficiently [these are things about UNSUCCESSFUL startups, imagine about even half-successful ones] After considering all of those qualities of entrepreneurial thinking, I think chances of not getting where you are going are almost invisible. Assuming that, and the high rewards of success, I wonder again, why would people not start startups? No risk, huge rewards. Nobody wants it!?

Ilian tried to explain it through an interesting psychological observation of fear and happiness. People seem to be happy when they win something, but if they lose this same object, their happiness decreases twice as much. Naturally, a fear evolves from this, that drives our lives and makes us extremely risk averse. So risk averse that we probably won’t take a free ticket to the lottery simply because chances of winning are too small, in which risk of losing is practically zero, therefore the fear is completely irrational!

Same goes on for funding. Paul Graham says its a good idea to calculate your pluses and minuses before you do a major move. Why would you not ask your connections to invest in you if all you lose is a rejection, which is equivalent to not asking at all anyway, and what you win (in our case) is to keep the project on track? Just 2 days ago we managed to overcome the fear of asking people to invest in us. The result? Noah pitched to one person and he agreed to spit 5, 10g on the basis of friendship with no official paperwork. A whole new discussion follows on now: ‘should we take that offer and how should we present the official request’

Fear is powerful…

What Luck Really Is…

I recently read an article about a study that some professor did, but unfortunately I don’t remember his name. The basic idea is the following:

About 1500 people are split in 2 groups, group A (we will call it so) has very simple task – listen to a bunch of indie songs and rate them accordingly. The more curious and exciting group we will call B, which has a similarly simple task – listen to a bunch of songs and rate them, the one difference is that B has access to B’s ratings and people see the top list of best rated songs before they choose what to listen and how to rate.

The obvious result is that ratings among A of songs are not much different from each other. That means that rating of the first song is just a little bit higher than the second top rated song, which is just a little bit higher than the third rated song and etc. Group B’s rating however looked different. Song number 1 was far far better rated than song number two and song number three was significantly worse than two etc. From this we can conclude that the exponential results are due to what Alek calls “herd behavior”.

So far, so good.

Now comes the real deal. Group B was divided in 8 sections. All of them listened to the same songs, but each group had their own individual rating lists. The result was very very curious – each had a different top 15 list. In each section, different songs became the most listened. The article reasoned that small differences of luck, or unaccounted factors in the beginning can mean a lot for the success of a song. This way a song that got lucky to be played in the beginning becomes big hit for example, although there are plenty of other songs that technically are not worse in musical terms. If you try to give an analogue of real life, the star Madonna is now, could have been someone completely else due to random small occurrences of luck.

Now that sounds horrible, unfair, and nasty for the people that do believe they have qualities but didn’t make it only because of this luck part of the deal.

I think we can put a different spin on failure however. If there is about 10 songs, and you think you have the skills to make in in top 3, but you were unlucky up to know, I can tell you one thing: doing it over and over again will statistically force the bad luck to ‘run out’ and you will marry success. Same for startups.

I have never thought of it like that, but this is a big part of what people call perseverance.

UPDATE: [ Here is what Marc Andreessen wrote about luck ]

Google is buying us…

Few days ago I was discussing with my partner Noah how the website is coming. I mentioned in a previous post that he is not what you can call a hacker or a very computer savvy person. So while talking about our idea again, he surprised me with a very good question: “So what prevents other people from doing what we are doing, and why should WE be the ones to succeed?” I totally did not expect such a good question from him so it took me a few seconds to run scenarios through my head. Eventually I mumbled something very reasonable that sounded like that: “Well, to our knowledge, we are the first to be doing such a weird and useful idea, so we have the advantage of time. The other thing that plays only after we launch this product is that sometimes some site become very popular and its difficult to take them over because they have solid amount of dedicated users (or maybe not). It’s a little bit like being youtube – nothing technologically very challenging that can’t be done, and also they weren’t the first ones to come up with this either. But they had a lot of users, and even Google couldn’t compete, so they bought them”Once I said that, something very interesting formed in my mind. I saw the online business from a totally different perspective. There are two reasons for acquisitions usually: great technology that takes time to be developed and a great user base. What I never realized is that they bought have the same purpose and it is to own people, pieces of their attention. Internet is like a second world, that has no rules yet and is free for grabs. This is the beauty of it. NO RULES. So the game is the following – you hook up people on your service and you are their owner. You can now be considered landlord. What you can do is use those people (their attention) to make money or capture more free users that have no roots to anything yet. Who is really damn good at this game? Yes, the googles. They hooked up people on their search, made billions, hooked up people on the maps, will make more billions, and what do they do with this money? They buy people that they use to make more money and buy more people… I am saying this because most of the websites can be replicated by Google for a maximum of few weeks. So essentially what happens when there is an acquisition is that G doesn’t really buy a company or technology, they buy YOU, they buy ME and my mom (well, my mom got bought by Ebay when they acquired Skype). But who gets the money? It’s not the end users.

The bright side: there’s still plenty for everyone. There are plenty of freely roaming browsing users that either don’t know about G or are interested in things that G doesn’t provide yet. So do go and capture land. After all its free – all you have to do is go and claim it.

Seed Money Or No Seed Money

It’s been a constant discussion between me and my partner whether we should look for funding have a beta version first for a pitch. At times we decided that we need but didn’t really do anything about it. Maybe we didn’t know what to do. Emailing random investors doesn’t work. It is pointless, I’ve tried it. At other times, we decided that I need to make version 1.0 first, befoe we ask anyone for $1.

So I am sure that everybody in the startup universe had those thoughts, “Should I get money, what should I do, do I really need them? Maybe I can work for a little bit and use that money…But where am I going to find it…I will read online and see if I can get some insights from news.yc….” in the end, nothing done. You go and read forever blogs and opinions and they are all the same. And they don’t help. How your project’s problem will get solved will probably have nothing to do with any of those advices, they are often too generic.

I settled on the solution – I will do v1.0, because I can make it by the end of the summer and then we’ll go and search for money. Nice plan. Worked hard for a month, made 1/2 of what I had planned. Now however, I had emergency and I had to fly home. That means money spent and now I can’t pay my school. What does it mean in regards to our project? Halt. I have to make money to survive. I hate that feeling. So little money – 6 grand per semester. Last 2 semesters, I am so close to completing this project and I have to deal with this crap. 12 thousand dollars not much but enough to make your life miserable, when everything was going well.

I am currently in Bulgaria, working on it coding when I have time. But once I get back, I have to work for school. I have always believed that I can fool investors and get some money to work on a project that would be fun. Maybe not ‘fool’ but rather convince them that my idea is good (I obviously like it myself). Somewhat I feel that funding was the end goal. This has changed. It’s about me and the project now. If I get money I get to work on it, else I have to stop. That simple but profoundly different from what ‘funding’ has been previously.