What CAUSES successful startups to work? (Because / Despite / Irrelevant)

Hey Rob, good to see you, man.

You too. We're, we're, so we're recording 3 podcast episodes for 3 weeks in a 2-day span. And so this is the last of the 3, 'cause I'm, I'm actually going to try to go on vacation. This is the last of the 3. And honestly, you haven't even asked me about my deadlift yet. So I have gone 2 podcasts without being able to say, 430 pounds. That's where we are now. We're, we are in big boy territory.

Yeah. You are a monster, Rob.

That is, that is awesome. Almost 200 kilograms, which doesn't matter 'cause kilograms aren't real. So we are, we are on the path to 500. You sent me a picture of your bench, so I am, we're, we're, we're getting there.

The, the listener can imagine like this SpongeBob SquarePants one where it has like the, he's, he's trying to bench press and it's got like 2 stuffed animals on the end of it. Like that's the, that's my point of departure for that. Yeah.

You were For some reason in the picture too.

Do you not cry when you go to the gym? I'm just bawling most of the time. It's an emotionally liberating experience. But Rob, today we're talking about because and despite. I think this is a really cool, very powerful concept that gets at the root of— you talk a lot about causality and how there's, you know, business knowledge or whatever, like a lot of the things that exist out there, the advice, they don't actually get at the important question of what causes things. And I, that when I was reading through this one, I was like, okay, we're really getting at the heart of like addressing directly causality. Maybe before we jump in a little bit farther, if folks are listening, this is coming out, I think toward the end of August. There is a go-to-market accelerator, just put a quick plug in. It's August And so assuming we still have spots—

September 14th.

Oh, I'm sorry. September 14th. There we go. And yeah, you can find info if you're interested in joining it. Rob, why don't we jump into like, why is because and despite on your mind and what are you getting at here?

So this comes back to like the physics of things, the physics of startups, the physics of business. My, so whenever I see things of people, like whenever I find LinkedIn and X insufferable, you just see it and I just kind of like hold myself back from writing and just, you know, from commenting on it because there's so many best practices that are thrown out, so many tactics and all of these. tactics are just vibes. They like might work in some cases, might not work in other cases. And to be honest, this is what a lot of business school felt like too. It's like, we're getting a bunch of business cases without any sort of underlying theory of causality of what causes a business to work, what causes a startup to work. And so, uh, if I could, if anyone asked me, I would really, uh, nobody will, uh, I would, I really want to create the, the like class on business causality, like on zero, which nobody would ever take, but I think it would be useful. And so what you tend to find is that we all operate as if we have a theory of causality. We operate as— because we have to do things, we have to choose which things to do in any given moment. And our theories of causality, they're implicit. We don't write them down usually because we're busy trying to do things. But our theories that are informed by kind of everything we're taught, everything we see online, these implicit theories get punched in the jaw very quickly. And what replaces it is general, is again, another implicit theory. And I'm trying to make that explicit of what, why do people buy things? What causes people to buy and why do they, and what do they buy Despite. And so, and what causes a startup to take off? And, you know, why do, what's the cause and what's the thing that prevents a startup from taking off? And we need to have this kind of, here's what causes, here's what prevents, here's what's most important. Here's how it all kind of works together. Because otherwise we're just throwing stuff at the wall. And yeah, you can throw stuff at the wall long enough. It's fine. As you do that, you You learn things, but you learn things generally by hurting yourself. And just, it's fine. That's great. At least they're like, my hope is to give something that is not going to cause you to hurt yourself more. And in fact might cause you to hurt yourself less. And so that's my frustration with everything I see online. It's my frustration with all like, a ton of the business books. I just think we're missing a theory of like the underlying causality of how all of this stuff works. Hence, Because Despite.

And, and you know, it, it's almost like there's some disciplines within business where there, there is like finance, for example, or accounting. Like there's, there's some areas that I think there is more of a theory of causality that sort of like approximates something like a mathematical or an engineering or physics. Rule. But then other areas like sales, it's just like, you know, hand wavy. You said vibes, you know, personality-driven.

Zero to one especially. It's just like magic, you know?

Yeah. Almost literally. Like if you look at the way that successful entrepreneurs are talked about and something you hint about that you write about later in this blog is this is made, you know, the things that cause us to hurt ourselves, which I want you to to explain that a little bit more, but one of them is it's hard to look at a startup that has taken off and figure out what the heck was going on. And I think almost always there's a narrative that's developed around it that is not actually related to the thing that caused it to take off. And that's the sort of like the popularly ingested reason. You spend so much time, you've talked about Henry Ford, you've talked about Bill Gates, you've You know, talked about a lot of these businesses where you're like, this is what you think is going on, but there's actually this other thing that's way more important that was the cause for that and not just either irrelevant or happening alongside it. But what do you mean, Rob, when you say like it causes us to hurt ourselves when we like don't understand and we make these bad decisions?

Yeah, so we're always operating with this theory and our implicit theory, and it's hard when our implicit theory is proven dramatically wrong. And so like, you know, what you learn, for example, is that despite doing a bunch of market research and finding a 10 out of 10 pain point for a bunch of people, despite signing up design partners who use your product every day, despite raising money, building a great team, none of that is relevant to what causes your startup to succeed. So you wind up spending all of this time Doing a bunch of things that in your mind are on the path to success when they are off in fairyland. And so the way that we hurt ourselves is, right, like while doing all those things, if we were like, oh yeah, I'm building a startup, I'm doing the thing. But there's a moment when we realize that again, we've been LARPing this whole time. Doing a bunch of things that sounded right, that felt right, but were totally out of, like, they just weren't relevant. They were totally irrelevant. That's what hurts because then you look back and say, wait a second, I raised money. I hired people. I've been building this for a year. I've spent a year, 2 years of my life. On this. That hurts.

Yeah. And the, um, it's almost like the, uh, there's a type of mentality going into founding or starting a business that's like, if I follow these steps, then I will be successful. And you, you know, you listed some of 'em. It has to do with, you know, getting, for some people it's getting the right VCs, for some people it's getting the right design partners, whatever. Understanding the pain points, really listening to customers, and like you feel like those things sequentially lead to success. And then what, you know, you, Rob, have laid bare is like, no, like those are the wrong things. You lay this out. I'm going to share my screen, and for anybody that is just listening, they can pull up the blog.

Yeah.

You listed some of these, but what you do in this blog, Rob, is you talk through They do not buy despite things and they do not buy because of things. And then you flip it and you say, when they do buy, it is often despite things and it is because of things. How about, let's pause here on the, when they do not buy, like the despite here, anything that you would add on the despite side?

Yeah, I mean, this one is brutal. This is absolutely brutal. Because you, like, what you will learn is that despite all of the work you have done, you've found, you've done a ton of research, you're from the industry, you've done it, like, come out with a list of things. They're not going to buy despite all of that.

Yeah.

They're only going to buy if they have a priority they're trying to get done and that, that isn't They, their existing options, their existing tools, whatever, are not good enough for getting that priority done. So we covered in the Demand Lens 7 weeks, 3 weeks ago, whatever. Yeah, we recorded that yesterday. I don't know. But, but like, so you can basically do all of this work, which my frustration is that basically everything on the left side is what you're told to do.

Yeah.

And you only realize it doesn't work when you try to sell, which you've been delayed from doing because you were told not to sell, that selling isn't learning. And so, yeah, we just, we go out as a result of this, as a result of not understanding this, we go out doing a bunch of research, looking for the wrong things, finding it, building based off of it, and then getting punched in the teeth when we transition towards actually trying to figure out what people will buy.

Yeah. I mean, when I've done the left-hand side and then met indifference basically from the market, I like, there's a deep resentment that I end up feeling toward it. And honestly, like on this, like sort of like cult of demand pull transformation, like I'm, I am so deep in the Kool-Aid, it's, I'm drowning in it. But Like now I don't feel that anymore in a weird way. If I look at it, it's like, okay, this person doesn't have demand. Like I don't understand their priorities. And there's so much less emotional charge in rejection or in things that I'm struggling with. It's like, okay, this is a knowable, solvable thing. This person is communicating with me that it's not a priority or that what they have is good enough. And that's not something that I take offensively. Whereas previously it was like, God, don't you see all the work that I've done on this? Like, I, you know, I took the time, I understood it. I know your problem better than you know your problem. Like it's, you know, it was just—

How do I drive urgency? How do I, right? Like all those kinds of, and the challenge, like this, this graphic is where startups die, where the majority of startups die. Not understanding this, having done everything on the left side of the graphic and not figuring out the right side.

Yeah. And often spending years on the left-hand side, which is really, really sad. Also something that I've done. So no judgment if that hits home. Why don't we talk about the next part, which is probably the happier graphic, the when they do buy, you've also laid that out on the despite and because. Um, and on this one, the despite is like, honestly, it's things that sort of liberating in the sense that you don't have to do them perfectly. Um, in fact, most of them are not perfect as long as you get the because right. And the, you know, that leads to the buying. But what would you add on, on this piece, Rob?

If you understand what causes people to buy, like this is, this is the thing that shocked me when, when our startup, my first startup didn't take off. Everything was, was like At good quality, the product was good quality. The marketing was at good quality. The team, the the the the process—we had process docs written up. We had all the stuff written out at good quality. When it took off, we had nothing. We didn't have a product. The product was me in a spreadsheet. We didn't have a website. Our slide deck, our sales deck was like three slides and basically Comic Sans. So it was like it was so disorienting. But this is the same thing that basically everyone I find. Like who actually finds pull, actually finds demand, realizes is, wait a second, I actually don't need all, like, it turns out all I needed was find somebody who is trying to do something and stuck. And if they're sufficiently trying to do something and stuck, they will buy pretty much despite everything else. If, as long as we can, as long as they believe we can get them unstuck, we can figure out how to get them unstuck, even they're going to buy. Even if it's a service, even if it's like not a product yet, even if it's not put together, even if we don't have a website, even if, right, like all of these other, other things. And so like the good news about this, and this is the thing, everybody, what I tend to see is startups will spend a bunch of time going down the first path, doing a bunch of research and just hitting their head against the wall. And then one customer, one potential customer, this is what happened to me and since like a bunch of times. Um, potential customer says, yeah, I don't want that, uh, at all. And it's like, okay, great. Um, and then they're like, um, but I would pay you to do this totally, this, uh, this totally different thing. It's like, oh, okay, cool. And so, and then you just kind of like, you, you vibe sell it. Uh, you're just like, uh, okay, so it'd work like this. Yeah, that sounds good to me. How do I pay? Right. And it's, and it's like, you, you didn't need anything else. It just, you just found out that thing you used. You sold it in 3 sentences and then you kind of figure out repeatability from there.

Yeah. You know, one thing I've been reflecting on recently is like, okay, if I have an asset that doesn't have extreme pull, maybe I can use it for something else, which is like to help me generate the right to have the conversation with somebody that then reveals what their pull actually is. And so I've been like, you know, as soon as it becomes clear that, you know, Cumbre, like our existing there's not pull for what we're doing. I'm quickly moving in that other direction, which is like, okay, cool. This doesn't sound like it's quite right. What would you pay me to do? Or is there something that you were like, wow, Rob, like if you could, or RC or Robert, whatever they call me, um, you know, if you could do this, like that would solve like my biggest, you know, the biggest thing possible. And I, you know, I try to open it up, um, just to understand like, what's the, what's the because thing that they would rip outta my hands? Um, you know, if it, if the thing I have is not that, uh, not solving that, uh, that project for them. Um, yeah. Anything else you would add here?

So this is the, like, if you take away something from, like, these 2 graphics are the most important graphics here. These are very hard to understand because of what we're going to talk about next. It's hard to see out there in the world because of what we're going to talk about next. Which is, you want me to do it?

You want to do it? The example of successful startups or which the irrelevant successes? Okay.

Yeah, the successful, because, because what happens is, so this, this is like a very, it's a very simple truth, right? Which is, this is another way to say, if you don't find pull, nothing else matters. If you do find pull, everything, like nothing else has to be at the greatest quality because people will buy kind of despite everything you do. But that said, when you find pull, when a startup finds pull, they start growing. And when they start growing, they're able to attract people. They're able to attract investment. They're able to attract all of this kind of stuff, which means they're no longer like— they hire good people who do things. And maybe they make their sales process better. Maybe they make their website fancier. Maybe they do all of these different things.

Mm-hmm.

And so if you are looking from the outside, or if you're somebody who's joined, Right? You're employee number 50 or whatever, and you're looking from the inside. You're asking yourself, okay, what actually is causing us to succeed? We're gonna look and see that they're doing a bunch of different things.

Mm-hmm.

And it's going to be hard to tell which of these things are actually causing this startup success. Maybe all of them are contributing to the startup success. But maybe some of them aren't. And it's really, really hard to tell after that 0 to 1, that initial traction, because so much changes afterwards.

Yeah. What you just articulated, Rob, it's like one of the reasons we're hearing from more founders that are onboarding teams, you know, new hires, they're launching new products, and eventually it becomes that piece is like the business. I hadn't thought about this before. You're probably like miles ahead of me, but the business does become more confusing because it gets cleaner.

Yes.

And when it's dirty, it's like, it's just easier to know the thing that has to work. And then as everything starts moving together, you know, more well-oiled, then it's like, okay, what do I— yeah, they, you can start to focus on the wrong things that are working, but not are not actually driving the business. What do you see? You're working, you know, some bunch of the startups that you've worked with have, you know, well exceeded a million. A lot of them are hiring now, a million ARR, and they're adding teams, they're starting to add products. How do you think about working with founders that are in that situation that are like trying to not lose the sense of causality in their business?

Yeah, so it's very hard because everybody who joins tends to have their own theory of causality. And, and right, like I've seen, you know, I've been an operator at a bunch of different startups. So I know, right? Like I know how things work. I know what works. I know, like, I know, I know customer success. I know sales. I know all these different things. And so it's a, it's a very big, what I find is that a lot of founders come to me even as they're growing really fast and saying like, I can't figure out, like I keep sending your blog posts across and I'm trying to demand pill my team and they're like nodding, but they don't quite get it. And I can tell they don't get it and I don't know. And so the answer is, I don't know what to do about that. Aside from like doing a full day kind of like demand pilling workshop for your team, which is actually like, that's actually not a bad idea. But, but like zooming out, so like zooming out from that, I think the challenge here. Is that in the 0 to 1 phase, you figure out what is actually causal and in what order and in what hierarchy. After that phase, things just kind of work. And so you can't, you don't see the things get pieced together in sequence. And if you don't see the things get pieced together in sequence, you don't really understand the, the like actual cause.

Fair.

And so it's very easy to look at something After it is assembled and kind of like develop your own theory for how it works, why it works. Um, that's why I, I've kind of thought for a while, if you don't really understand 0 to 1 and how that works, it's not clear to me how you can actually understand, like deeply understand 1 to 100. Um, and so that's, uh, I don't know. That's just a random thought that is not in this post, but just occurred to me.

Yeah. Yeah. I think we've, hit that, I don't know, like 6 months ago or something like that about like pausing to do a diagnostic to understand like, okay, a lot of, especially before being introduced to the concept of demand, if you hit pull, if you find pull and your company takes off, you might not actually understand what the thing is, even as the founder that you had to get right and that nothing else mattered, which is kind of a nice bridge into what you introduce next, which is you've got, okay, despite and because, which we've hit. And there's also this kind of irrelevant, there's an irrelevant bucket. What do I do? Like, it's, what do I do with irrelevant that, you know, it's not despite, it's not because, or like, where does it show up? What are some examples? Like, what should we do with this?

Yeah. So there's like a lot, what I'll say, a lot of things in a, like on a startup's website, for example, or like totally irrelevant, you know, and it's just, just there or like features in the product that like people don't use. They're just, they're just there. They're, they're just there. They're interesting. They're whatever. They don't really do anything. They're, they're just out there. And there's, uh, so, so we could think of though is like, okay, so a startup. So if we look at a successful startup without an underlying theory of what causes a startup to succeed, we're going to look at a bunch of the things they do and we might, we might attribute some of those as the causes of the startup success. When in reality, the graph might, the graphic might look more like this, which is, it almost certainly looks more like this, where some things the startup is doing is causing its success, but other things are preventing its further success. They're, they're succeeding despite a bunch of the things they're doing. And then there's a bunch of irrelevant things, right? Like, for example, if you look at Google, like there's a huge talk about OKRs. Objectives and Key Results that came out of Google. It is unclear to me whether OKRs caused Google's success, prevented Google from being more successful than it would have otherwise been, or were just a kind of like totally irrelevant thing that just happened to happen. Like, I don't know. I don't know. You don't know. We don't like, you know, maybe somebody knows. I don't know. But But the challenge is if you, if you look at these things and if we go to the next graphic, if you look at a successful startup and just kind of create your own assumption of what causes them to succeed, you look at Google and say, it's definitely the OKRs. Well, it's possibly the case that OKRs actually were preventing Google from succeeding. And so you're going to have a causal model in your head that is actually focused on the things they are succeeding despite. Which doesn't bode well.

Yeah, yeah, yeah. Or maybe it eventually caused their ability to scale profitably and it was not the thing that, you know, it's a good point about just how difficult it is to look on the outside, even at very popular business ideas that are broadly accepted and understand where they fall between the 3. One question I had while reading this, Rob, is it the case that every customer falls into the same, like, how should we think about, there's probably some things that cause a customer to buy that fall into the because that actually fall into the irrelevant for another customer. Like, what do we do with kind of the messiness of different customers?

Yeah. So, This all has to fit into a kind of like theory, a model of a startup. So did Airtable succeed because they were very horizontal or did they just succeed despite the fact that they were very horizontal and didn't have clear use cases and da da da, right? Like, again, like, uh, it all points to the need for, I think, the, the, um, demand model pull and the case study factory. Kind of theory of how things work. Uh, and once you have that theory, you can kind of, you can start to answer those questions like, um, well, if you're selling to some people where they're going to buy because of this and other people where this is irrelevant, it doesn't seem to me like you're repeating one case study. Seems to me like you have different case studies, which seems to me like that could prevent you from succeeding, especially at the early stage, because it's really hard to make one case study factory work. It's way more than twice as hard to make 2 work simultaneously. And so like, but, but that my answer might be different at a different stage of company. And so it's, it's, um, but it's like, these are, these are the kind of, again, these are like the hopefully, and, uh, you know, someone smarter can make better ones, but this is what we got for now. These are hopefully the, some like foundational models for thinking about the causality in startups, the structure, the models of startups. That can help you answer these questions without vibes.

Yeah. Yeah. Rob, anything else we want to add on this? You get into something that I think we're back into philosophical Rob here to close this one. I'm going to go out on vacation on a high note, just pontificating about random nonsense. And anything you would maybe before we get into philosophy, Rob, which we just dropped from 1 listener to 0 listeners, unfortunately. But anything you would add that's like on the, before we close the lockout?

Why do we do this again? I don't know. When do we do this again? This is, no, no, no. Like the, I don't know that there was like a, there's not really a purpose to this newsletter. Like I think a lot of people are looking and I think a lot of times you ask me like, why did you write this one? And, and this kind of links to the last point here is because it, because it's interesting. And so this, this is an interesting topic. This is an interesting way of thinking. Maybe it covers stuff we've covered before. I don't know. It's, but I, I think it's interesting to me and therefore I hope it is interesting to you. And I hope this kind of thinking is something that you can kind of like, I don't know, you can start applying in places. And if it, if it is useful, great. If it is not useful and it's just fun, Cool. That works too.

For me, the way I immediately applied it after reading it was thinking through like my pitch deck that I'm using when I talk with customers and it's like, okay, what am I implying is like the because? Am I clearly differentiating between the because and the irrelevant? Like those are, that's the two, like the despite is like, get outta your way. Like that one seems more like we've We've talked more about that, but getting a much crisper sense of what's the because and what's the irrelevant was what this one left me with. Okay, let's get into what everybody's waiting for on this, the project on our soul. I'm going to read something here and would love for you to just react or opine on it. You write, we all want to build something that takes off and makes a ton of money, But we all want to do something more than that. We want to build. We want building to be an end, not just a means to build something wonderful for the sake of building something wonderful with customers who also believe that it is wonderful. That makes us feel alive. And then you, you continue a little bit, actually. Then we get into the diagram, which I might pull up. But before I pull that up, Rob, why don't you give like context on, you know, what's What's the aspiration there, um, for like that you feel in building?

Yeah. Oh, so I, I think this is, so, um, there, there are motive, different motivations for building startups. Like, so, and you go through different motivations at different times. There, there's like, I want to make a lot of money. I want to become famous. I want to do like all these kinds of, I want to be a tech billionaire. Um, the one that, uh, and, and so like a lot of those are instrumental. By which I mean, it's like, I want to build a startup so that, like, so that it's instrumental. I want X for Y. What I found is that at some point, everyone just eventually converges to like, building is the means. The building is the end in itself. And so as you, which is like a weird, I'm building to build. There's, there's no instrument, like there's no instrument, like those other things that happen. Those are, those are kind of fine results of this, but they're kind of irrelevant to the act of building, which makes me feel alive, which makes me, I want to bring something great into the world.

Hmm.

Now, there's a lot of ways you can take that kind of motivation and build something that is totally irrelevant that the world doesn't care about. And so, and also just saying like, I want to build something wonderful. It was like vague, abstract. Like that's the kind of thing that we would, you know, hear in like a, you know, our touchy-feely classes at HBS that I just hated. And so, and so anyway, I just, like, I was just thinking, okay, cool. If there's this because and despite, what does it mean to build something that is a wonderful product? What does it mean to make building an end? Well, it means That I'm trying to put everything into the because column for my customers.

Yeah.

I'm trying to move everything into there and that requires me to have, just to understand there's a hierarchy here. The most upstream thing is what they're trying to do and how they're blocked. And then everything else takes shape underneath that. And I want it to be something they buy because of, not despite of. They use because of, not despite. And what happens when you start thinking this way, it's like, it's very easy to, and this is where a lot of the best practices stuff will lead you astray. Because the, if you're trying to build something that is actually wonderful, that I think of as, you know, capitalism is generally positive sum. This is an infinite sum product, a product that like leaves that like, you know, leaves people feeling something, leaves you feel something, feeling something, having made it. You can't optimize your price. You're not going to have the perfectly optimized price because people, you're perfectly optimizing price. People will buy despite your price, not because of your price. And so everything like all these individual best practices, our tendency as MBAs to optimize the crap out of every single element of our business individually will lead to a sub-optimized whole. And so, yeah. And then, and so In my mind, this is the goal of building when building is the end in itself.

Yeah, I don't have a comment. I think that's awesome. And I think it's fun to be around somebody who has that mentality about it. I think about my business in the same way, you know, I think by a lot of founders, you know, it's, you feel passionate about growing a business and about the success, but also there's It's like, I wouldn't do this if that was the only thing that I was working for. Like, it's too hard. And then eventually it feels like you get kind of to an inertia where it's like, I build because I have to build. Like, when I think about getting a, you know, going back to consulting or going back into corporate America, it's like, ah, but I would lose the thing that like gets me out of bed every morning that I'm so excited to do.

Yeah. And like every, like it's, There, there's a lot of meaning in finding, in not treating everything as instrumental. There's a book that I'm, that I've like obsessed with, which is Beauty. It's about beauty by, by, uh, Roger Scruton, knighted guy, passed away, but a philosopher in the UK. And, and so he talks about like a lot of our modern thinking is instrumental. I want X for Y. And, um, this Plenty of, if what your goal is, is money, there's plenty of ways to make money, but money is just an instrument to other things. And those other, and, and, and so, um, yeah, I find if you, that like pursuing instrumental things can get you those things and it won't matter.

Well, why don't we, why don't we leave it on that? And for anybody that, that, uh, is interested in the go-to-market accelerator, just go to market accelerator.

Speaking of totally, yeah.

Yeah. Awesome. Well, Rob, we hope you have a great vacation with, with your family, and we'll catch everybody on the other side. See y'all.