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The Virtue of Doing Nothing - Kathleen Eisenhardt (Stanford)

Name: The Virtue of Doing Nothing - Kathleen Eisenhardt (Stanford)
Uploaded: 2023-11-01T16:53:43+00:00
Duration: 2 min 10 s
Channel: GHION.AI
Description: In this talk, Kathleen Eisenhardt challenges the common entrepreneurial mantra of relentless acceleration. She presents two empirical studies that…

1 Nov 2023 · 2 min

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2:10

In this talk, Kathleen Eisenhardt challenges the common entrepreneurial mantra of relentless acceleration. She presents two empirical studies that illustrate the power of intentional inactivity. The first study examined a nascent marketplace that connected investors with followers; the founders launched the platform without knowing its target users and simply observed who adopted it. Unexpectedly, professional investors from small towns became the primary users, leading to the evolution of robo‑investing. The second study investigated three online fashion business models (retail, rental, used‑clothing marketplace) and found that deliberately halting growth—by closing the website to new customers and pausing advertising—allowed the teams to better understand unit economics and achieve product‑market fit. Eisenhardt argues that timing, like tempo in sports, should be managed strategically: sometimes you accelerate, other times you slow down to learn from the environment and opponents.

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Sometimes you just want to do nothing. I think we get an idea in entrepreneurship that it's go, go, go, you got to keep rolling. In contrast, what this study showed, this turned out to be— it turned out to be the better models were marketplaces. But they put the marketplace out there and they didn't actually know who was going to use the market. And it was a market that was connecting investors and people who wanted to follow investors. So, let's say Robbie is an investor and I want to follow him and I realize, oh, I like Robbie's performance, I'm going to follow Robbie. So they just put the— they had the website out there in the marketplace and then they just watched it for a while and tried to figure out who was going to use it because they didn't really know who was going to use it. And it turned out that actually who used it was not amateur investors but in fact investors who were professional investors from small towns like Bend, Oregon, who didn't really have the distribution. And this was really great for them. And then they went on and did some more things. And they ended up with robo-investing. But the idea was they simply didn't do anything for a while. They just watched to see what would happen. Another idea is this idea— I was talking to you about unit economics before. This study that we did in the online fashion, we looked at retail, we looked at 3 business models, retail, rental, and used clothing marketplaces. And what we saw was that it was actually a good idea to stop your growth, to hold back your growth, to pause your growth so you could learn because it was too hard to learn while you were growing. So as you're perfecting your unit economics and your product-market fit, you needed to actually gate your website close your customers, not advertise and so on, so you could actually learn enough. So the point is again, you don't necessarily always want to go as fast as you can, but you want to go, you want to understand that the timing can vary. So much like in sports, you don't always, if you're playing basketball, you don't always play up-tempo. Sometimes you cut the tempo back. It depends on who your opponent is, it depends on what's going on. So like in sports, you manage the timing.