By Peter H. Diamandis and Steven Kotler
Kind of a sui-generis business book which offers a how-to-guide on exponential thinking and entrepreneurship. The book is divided in three parts: part one covers exponential technology. Part two offers insight into the mindset of entrepreneurs such as Elon Musk and Jeff Bezos. And Part three covers crowdsourcing.
As you can see, nothing new if you are already familiar with all-things start-ups. But a great kick-start if you are new or plan to launch something in the future.
My Rating: 8/10
Click Here to Read My Notes
Kind of a sui-generis business book which offers a how-to-guide on exponential thinking and entrepreneurship. The book is divided in three parts: part one covers exponential technology. Part two offers insight into the mindset of entrepreneurs such as Elon Musk and Jeff Bezos. And Part three covers crowdsourcing.
As you can see, nothing new if you are already familiar with all-things start-ups. But a great kick-start if you are new or plan to launch something in the future.
My Rating: 8/10
Click Here to Read My Notes
Democratization is what happens when those hard costs drop so low they becomes available and affordable to just about everyone.
Welcome to the New Kodak Moment—the moment when an exponential force puts a linear company out of business.
As we shall see over and over again, these New Kodak Moments are not aberrations. Rather, they are the inevitable result of the six Ds of exponential growth.
Today linear organizations are at dire risk from the Six Ds, but exponential entrepreneurs have never had it so good. Today the shift from “I’ve got a neat idea” to “I run a billion-dollar company” is occurring faster than ever.
But being small and nimble requires a whole lot more than just understanding the Six Ds of exponentials and their expanding scale of impact. You’ll also need to understand the technologies and tools driving this change.
While a number of variables contributed to their success, Locke found one key trait they all shared: vision.
“It’s the ability to see ahead that truly set each of these men apart,” says Locke.2 “The data shows that companies consistently fail when they rest on their laurels and think that what worked yesterday will work today or tomorrow.
Great leaders all have the ability to see farther and the confidence to drag their organizations toward that vision.
Recognizing when a technology is exiting the trough of disillusionment and beginning to rise up the slope of enlightenment is critical for entrepreneurs.
Biotechnology isn’t just accelerating at the speed of Moore’s law, it’s accelerating at five times the speed of Moore’s law—doubling in power and halving in price every four months!
At Singularity University, one of our core tenets is that the world’s grandest challenges contain the world’s biggest business opportunities. And because of exponential technology, for the first time in history, entrepreneurs can actually get in on this game.
But there’s a rub: Exponentials alone won’t get this job done.
Every innovator interviewed for this book emphasized the importance of the mental game, arguing that without the right mindset, entrepreneurs have absolutely no chance of success.
In the late 1960s, University of Toronto psychologist Gary Latham and University of Maryland psychologist Edwin Locke discovered that goal setting is one of the easiest ways to increase motivation and enhance performance.
But not every goal is the same. “We found that if you want the largest increase in motivation and productivity,” says Latham, “then big goals lead to the best outcomes. Big goals significantly outperform small goals, medium-sized goals, and vague goals. It comes down to attention and persistence—which are two of the most important factors in determining performance. Big goals help focus attention, and they make us more persistent. The result is we’re much more effective when we work, and much more willing to get up and try again when we fail.” This is a critical piece of information for the exponential entrepreneur.
When Kelly Johnson created the original skunk works, the goal wasn’t to build a new plane in record time—that was just one of many things that happened on the way to the main big goal: saving the world from Nazi peril.
At the Lockheed skunk works, Kelly Johnson ran a tight ship. He loved efficiency. He had a motto—“be quick, be quiet, and be on time”—and a set of rules.
“The day before something is truly a breakthrough, it’s a crazy idea.
That’s why LinkedIn founder Reid Hoffman famously said, ‘If you’re not embarrassed by the first version of your product, you’ve launched too late.
The science shows that the secret to high performance isn’t our biological drive (our survival needs) or our reward-and-punishment drive, but our third drive—our deep-seated desire to direct our own lives, to extend and expand our abilities, and to fill our life with purpose.
To take on the bold, we need this third drive.
And this is another secret to skunk—it provides the full upgrade. Combine the rules for isolation and rapid iteration discussed in this section with the value-aligned big goals from the last and you end up with a great recipe for autonomy, mastery, and purpose.
Walling off the innovation team creates an environment where people are free to follow their own curiosity—it amplifies autonomy. Rapid iteration means accelerated learning cycles, which means putting people on the path to mastery. And aligning big goals with individual values creates true purpose.
“In any organization,” says Teller, “the bulk of your people will be climbing the hill they’re standing on. That’s what you want them to do. That’s their job. A skunk works does a totally different job. It’s a group of people looking for a better hill to climb. This is threatening to the rest of the organization. It just makes good sense to separate these two groups.
Moonshots, by their definition, live in that gray area between audacious projects and pure science fiction. Instead of mere 10 percent gains, they aim for 10x (meaning ten times) improvements—that’s a 1000 percent increase in performance.
While a 10x improvement is gargantuan, Teller has very specific reasons for aiming exactly that high. “You assume that going 10x bigger is going to be ten times harder,” he continues, “but often it’s literally easier to go bigger. Why should that be? It doesn’t feel intuitively right. But if you choose to make something 10 percent better, you are almost by definition signing up for the status quo—and trying to make it a little bit better. That means you start from the status quo, with all its existing assumptions, locked into the tools, technologies, and processes that you’re going to try to slightly improve. It means you’re putting yourself and your people into a smartness contest with everyone else in the world.
Statistically, no matter the resources available, you’re not going to win. But if you sign up for moonshot thinking, if you sign up to make something 10x better, there is no chance of doing that with existing assumptions. You’re going to have to throw out the rule book. You’re going to have to perspective-shift and supplant all that smartness and resources with bravery and creativity.
If you shoot for 10x, you might only be at 2x by the time you’re done. But 2x is still amazing. On the other hand, if you only shoot for 2x [i.e., 200 percent], you’re only going to get 5 percent and it’s going to cost you the perspective shift that comes from aiming bigger.
“A start-up is simply a skunk works without the big company around it,” says Teller.
“People think that bold projects don’t get funding because of their audacity. That’s not the case. They don’t get funded because of a lack of measurability. Nobody wants to make a large up-front investment and wait ten years for any sign of life. But more often than not, if you can show progress along the way, smart investors will come on some pretty crazy rides.
Google has eight innovation principles that govern their strategy, famously summarized in a 2011 article by Google senior vice president of advertising Susan Wojcicki.
1. Focus on the User.
2. Share Everything.
3. Look for Ideas Everywhere.
4. Think Big but Start Small.
5. Never Fail to Fail.
6. Spark with Imagination, Fuel with Data.
7. Be a Platform.
8. Have a Mission That Matters.
“To reach flow,” explains psychiatrist Ned Hallowell,22 “one must be willing to take risks. The lover must be willing to risk rejection to enter this state. The athlete must be willing to risk physical harm, even loss of life, to enter this state. The artist must be willing to be scorned and despised by critics and the public and still push on. And the average person—you and me—must be willing to fail, look foolish, and fall flat on our faces should we wish to enter this state.
These facts also tell us that those exponential entrepreneurs with “fail forward” as their de facto motto have an incredible advantage.
Rich environment, the next environmental trigger, is a combination platter of novelty, unpredictability, and complexity—three elements that catch and hold our attention much like risk.
How to employ this trigger on the job? Simply increase the amount of novelty, complexity, and unpredictability in the environment.
Deep embodiment is a kind of total physical awareness. It means paying attention with multiple sensory streams at once.
Don’t just read about that lighthouse, go out and build one.
Back in the 1970s, pioneering flow researcher Mihaly Csikszentmihalyi identified clear goals, immediate feedback, and the challenge/skills ratio as the three most critical.
Investors love ideas, but they fund execution.
The moment one gets into the ‘expert’ state of mind a great number of things become impossible.
each of these entrepreneurs mastered a rarely discussed skill fundamental to bold pursuits and exponential entrepreneurship: the ability to think at scale.
So what’s his secret? Musk has a few, but none are more important to him than passion and purpose. “I didn’t go into the rocket business, the car business, or the solar business thinking this is a great opportunity. I just thought, in order to make a difference, something needed to be done. I wanted to have an impact. I wanted to create something substantially better than what came before.
Passion and purpose scale—always have, always will.
You’re not going to push ahead when it’s someone else’s mission. It needs to be yours.
But having passion and purpose is merely the first step. “The usual life cycle of starting a company begins with a lot of optimism and enthusiasm,” says Musk. “This lasts for about six months, and then reality sets in. That’s when you learn a lot of your assumptions were false, and that the finish line is much farther away than you thought. It’s during this period that most companies die rather than scale up.
“It’s not going to be easy, but it’s really important to solicit negative feedback from friends. In particular, feedback that helps you recognize as fast as possible what you’re doing wrong and adjust course. That’s usually what people don’t do. They don’t adjust course fast enough and adapt to the reality of the situation.
This is the key point. Branson’s balloon hasn’t burst because his fiery devotion to fun translates directly to his dedicated clientele and fervent fans. It’s become a business strategy based on experimental customer-centrism.
Bezos isn’t interested in small shifts or polite progress. He wants to effect change on a massive scale, with customer-centric thinking and long-term thinking being the primary drivers behind this revolution.
Bezos’s success sits atop two critical strategies: long-term thinking and customer-centric thinking. We’ll take them one at a time.
In his now-famous 1997 letter to his shareholders,26 Bezos put it this way: “We believe that a fundamental measure of our success will be the shareholder value we create over the long term. . . . Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies.
“What’s going to change in the next ten years?” And that is a very interesting question; it’s a very common one. I almost never get the question: “What’s not going to change in the next ten years?
It’s also in the above passage that Bezos raises the second secret to his success: radical customer-centrism.
“The way I think about it, if you want to invent, if you want to do any innovation, anything new, you’re going to have failures because you need to experiment. I think the amount of useful invention you do is directly proportional to the number of experiments you can run per week per month per year.
I tell people that when we acquire companies, I’m always trying to figure out: Is this person who leads this company a missionary or a mercenary? The missionary is building the product and building the service because they love the customer, because they love the product, because they love the service. The mercenary is building the product or service so that they can flip the company and make money.
One of the great paradoxes is that the missionaries end up making more money than the mercenaries anyway.
In an impromptu speech given at the Singularity University founding conference, Larry stood up in front of an audience of some 150 attendees and said: “I have a very simple metric I use: Are you working on something that can change the world? Yes or no? The answer for 99.99999 percent of people is no. I think we need to be training people on how to change the world.
Or as Larry Page famously said in his I/O 2013 keynote: “Being negative is not how we make progress.
In his widely circulated essay “Google Wins Everything,” Internet entrepreneur and blogger Jason Calacanis puts it this way: “If you work for Larry and are not thinking 10x, don’t expect to keep your job for very long. That insanity-by-design is creating a one-upmanship that hasn’t been seen in the history of mankind. Larry’s campaign, if successful, will make Caesar, Napoleon, Columbus, the Wright Brothers, the Apollo 11 Mission, the Manhattan Project, and our Founding Fathers look limited in scope.
The first thing to remember is that crowdfunding is not where you make a profit on your project. It’s where you offset some of your expenses.
the research shows that campaigns that reach 30 percent of their goal have 90 percent chance of success (that is, raising the desired amount). In the case of Pebble Watch, Eric Migicovsky needed $200,000 to move forward, but he set a goal of $100,000. In the case of the ARKYD Space Telescope campaign, the cost of building and launching the space telescope was roughly $3 million, but Planetary Resources set a goal of $1 million, with the expectation that these funds would at least help offset launch costs.
The objective here is to figure out the absolute minimum amount that, if funded, would represent enough for you to move forward.
Typical campaigns run from 30 to 120 days, though data from Indiegogo indicates that shorter campaigns (an average length of 33 to 40 days) perform better than longer campaigns.
In other words, our online reputations have real-world consequences.
“The ability for entrepreneurs to nimbly find and serve niche interests—and to produce platforms that allow those groups to address their needs en masse—is better than ever before,” explains Joshua Klein.
The point is this: If your community can provide a legitimate release valve for people’s incredibly frustrated passion, you are unleashing one of the most potent forces in the history of the world.
Look, if you can leverage an existing community to fulfill your dreams, go that route. But if you’re passionate about something and no one else is sating that desire, then you have first-mover advantage. Don’t underestimate this power.
There’s a corollary here: If you don’t have first-mover advantage, then ask yourself what new and exciting twist you are bringing to the table.
It’s also important to remember that people join communities because it reinforces their sense of identity (see below), but they stay for the conversation.
This is also why the very best communities actually force their members to interact with one another—they actually drive that conversation.
“Historically, for both royalty and industrialists, incentive prizes have long been a tool for fostering innovation,” says Deloitte Consulting Principal Marcus Shingles.
Welcome to the New Kodak Moment—the moment when an exponential force puts a linear company out of business.
As we shall see over and over again, these New Kodak Moments are not aberrations. Rather, they are the inevitable result of the six Ds of exponential growth.
Today linear organizations are at dire risk from the Six Ds, but exponential entrepreneurs have never had it so good. Today the shift from “I’ve got a neat idea” to “I run a billion-dollar company” is occurring faster than ever.
But being small and nimble requires a whole lot more than just understanding the Six Ds of exponentials and their expanding scale of impact. You’ll also need to understand the technologies and tools driving this change.
While a number of variables contributed to their success, Locke found one key trait they all shared: vision.
“It’s the ability to see ahead that truly set each of these men apart,” says Locke.2 “The data shows that companies consistently fail when they rest on their laurels and think that what worked yesterday will work today or tomorrow.
Great leaders all have the ability to see farther and the confidence to drag their organizations toward that vision.
Recognizing when a technology is exiting the trough of disillusionment and beginning to rise up the slope of enlightenment is critical for entrepreneurs.
Biotechnology isn’t just accelerating at the speed of Moore’s law, it’s accelerating at five times the speed of Moore’s law—doubling in power and halving in price every four months!
At Singularity University, one of our core tenets is that the world’s grandest challenges contain the world’s biggest business opportunities. And because of exponential technology, for the first time in history, entrepreneurs can actually get in on this game.
But there’s a rub: Exponentials alone won’t get this job done.
Every innovator interviewed for this book emphasized the importance of the mental game, arguing that without the right mindset, entrepreneurs have absolutely no chance of success.
In the late 1960s, University of Toronto psychologist Gary Latham and University of Maryland psychologist Edwin Locke discovered that goal setting is one of the easiest ways to increase motivation and enhance performance.
But not every goal is the same. “We found that if you want the largest increase in motivation and productivity,” says Latham, “then big goals lead to the best outcomes. Big goals significantly outperform small goals, medium-sized goals, and vague goals. It comes down to attention and persistence—which are two of the most important factors in determining performance. Big goals help focus attention, and they make us more persistent. The result is we’re much more effective when we work, and much more willing to get up and try again when we fail.” This is a critical piece of information for the exponential entrepreneur.
When Kelly Johnson created the original skunk works, the goal wasn’t to build a new plane in record time—that was just one of many things that happened on the way to the main big goal: saving the world from Nazi peril.
At the Lockheed skunk works, Kelly Johnson ran a tight ship. He loved efficiency. He had a motto—“be quick, be quiet, and be on time”—and a set of rules.
“The day before something is truly a breakthrough, it’s a crazy idea.
That’s why LinkedIn founder Reid Hoffman famously said, ‘If you’re not embarrassed by the first version of your product, you’ve launched too late.
The science shows that the secret to high performance isn’t our biological drive (our survival needs) or our reward-and-punishment drive, but our third drive—our deep-seated desire to direct our own lives, to extend and expand our abilities, and to fill our life with purpose.
To take on the bold, we need this third drive.
And this is another secret to skunk—it provides the full upgrade. Combine the rules for isolation and rapid iteration discussed in this section with the value-aligned big goals from the last and you end up with a great recipe for autonomy, mastery, and purpose.
Walling off the innovation team creates an environment where people are free to follow their own curiosity—it amplifies autonomy. Rapid iteration means accelerated learning cycles, which means putting people on the path to mastery. And aligning big goals with individual values creates true purpose.
“In any organization,” says Teller, “the bulk of your people will be climbing the hill they’re standing on. That’s what you want them to do. That’s their job. A skunk works does a totally different job. It’s a group of people looking for a better hill to climb. This is threatening to the rest of the organization. It just makes good sense to separate these two groups.
Moonshots, by their definition, live in that gray area between audacious projects and pure science fiction. Instead of mere 10 percent gains, they aim for 10x (meaning ten times) improvements—that’s a 1000 percent increase in performance.
While a 10x improvement is gargantuan, Teller has very specific reasons for aiming exactly that high. “You assume that going 10x bigger is going to be ten times harder,” he continues, “but often it’s literally easier to go bigger. Why should that be? It doesn’t feel intuitively right. But if you choose to make something 10 percent better, you are almost by definition signing up for the status quo—and trying to make it a little bit better. That means you start from the status quo, with all its existing assumptions, locked into the tools, technologies, and processes that you’re going to try to slightly improve. It means you’re putting yourself and your people into a smartness contest with everyone else in the world.
Statistically, no matter the resources available, you’re not going to win. But if you sign up for moonshot thinking, if you sign up to make something 10x better, there is no chance of doing that with existing assumptions. You’re going to have to throw out the rule book. You’re going to have to perspective-shift and supplant all that smartness and resources with bravery and creativity.
If you shoot for 10x, you might only be at 2x by the time you’re done. But 2x is still amazing. On the other hand, if you only shoot for 2x [i.e., 200 percent], you’re only going to get 5 percent and it’s going to cost you the perspective shift that comes from aiming bigger.
“A start-up is simply a skunk works without the big company around it,” says Teller.
“People think that bold projects don’t get funding because of their audacity. That’s not the case. They don’t get funded because of a lack of measurability. Nobody wants to make a large up-front investment and wait ten years for any sign of life. But more often than not, if you can show progress along the way, smart investors will come on some pretty crazy rides.
Google has eight innovation principles that govern their strategy, famously summarized in a 2011 article by Google senior vice president of advertising Susan Wojcicki.
1. Focus on the User.
2. Share Everything.
3. Look for Ideas Everywhere.
4. Think Big but Start Small.
5. Never Fail to Fail.
6. Spark with Imagination, Fuel with Data.
7. Be a Platform.
8. Have a Mission That Matters.
“To reach flow,” explains psychiatrist Ned Hallowell,22 “one must be willing to take risks. The lover must be willing to risk rejection to enter this state. The athlete must be willing to risk physical harm, even loss of life, to enter this state. The artist must be willing to be scorned and despised by critics and the public and still push on. And the average person—you and me—must be willing to fail, look foolish, and fall flat on our faces should we wish to enter this state.
These facts also tell us that those exponential entrepreneurs with “fail forward” as their de facto motto have an incredible advantage.
Rich environment, the next environmental trigger, is a combination platter of novelty, unpredictability, and complexity—three elements that catch and hold our attention much like risk.
How to employ this trigger on the job? Simply increase the amount of novelty, complexity, and unpredictability in the environment.
Deep embodiment is a kind of total physical awareness. It means paying attention with multiple sensory streams at once.
Don’t just read about that lighthouse, go out and build one.
Back in the 1970s, pioneering flow researcher Mihaly Csikszentmihalyi identified clear goals, immediate feedback, and the challenge/skills ratio as the three most critical.
Investors love ideas, but they fund execution.
The moment one gets into the ‘expert’ state of mind a great number of things become impossible.
each of these entrepreneurs mastered a rarely discussed skill fundamental to bold pursuits and exponential entrepreneurship: the ability to think at scale.
So what’s his secret? Musk has a few, but none are more important to him than passion and purpose. “I didn’t go into the rocket business, the car business, or the solar business thinking this is a great opportunity. I just thought, in order to make a difference, something needed to be done. I wanted to have an impact. I wanted to create something substantially better than what came before.
Passion and purpose scale—always have, always will.
You’re not going to push ahead when it’s someone else’s mission. It needs to be yours.
But having passion and purpose is merely the first step. “The usual life cycle of starting a company begins with a lot of optimism and enthusiasm,” says Musk. “This lasts for about six months, and then reality sets in. That’s when you learn a lot of your assumptions were false, and that the finish line is much farther away than you thought. It’s during this period that most companies die rather than scale up.
“It’s not going to be easy, but it’s really important to solicit negative feedback from friends. In particular, feedback that helps you recognize as fast as possible what you’re doing wrong and adjust course. That’s usually what people don’t do. They don’t adjust course fast enough and adapt to the reality of the situation.
This is the key point. Branson’s balloon hasn’t burst because his fiery devotion to fun translates directly to his dedicated clientele and fervent fans. It’s become a business strategy based on experimental customer-centrism.
Bezos isn’t interested in small shifts or polite progress. He wants to effect change on a massive scale, with customer-centric thinking and long-term thinking being the primary drivers behind this revolution.
Bezos’s success sits atop two critical strategies: long-term thinking and customer-centric thinking. We’ll take them one at a time.
In his now-famous 1997 letter to his shareholders,26 Bezos put it this way: “We believe that a fundamental measure of our success will be the shareholder value we create over the long term. . . . Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies.
“What’s going to change in the next ten years?” And that is a very interesting question; it’s a very common one. I almost never get the question: “What’s not going to change in the next ten years?
It’s also in the above passage that Bezos raises the second secret to his success: radical customer-centrism.
“The way I think about it, if you want to invent, if you want to do any innovation, anything new, you’re going to have failures because you need to experiment. I think the amount of useful invention you do is directly proportional to the number of experiments you can run per week per month per year.
I tell people that when we acquire companies, I’m always trying to figure out: Is this person who leads this company a missionary or a mercenary? The missionary is building the product and building the service because they love the customer, because they love the product, because they love the service. The mercenary is building the product or service so that they can flip the company and make money.
One of the great paradoxes is that the missionaries end up making more money than the mercenaries anyway.
In an impromptu speech given at the Singularity University founding conference, Larry stood up in front of an audience of some 150 attendees and said: “I have a very simple metric I use: Are you working on something that can change the world? Yes or no? The answer for 99.99999 percent of people is no. I think we need to be training people on how to change the world.
Or as Larry Page famously said in his I/O 2013 keynote: “Being negative is not how we make progress.
In his widely circulated essay “Google Wins Everything,” Internet entrepreneur and blogger Jason Calacanis puts it this way: “If you work for Larry and are not thinking 10x, don’t expect to keep your job for very long. That insanity-by-design is creating a one-upmanship that hasn’t been seen in the history of mankind. Larry’s campaign, if successful, will make Caesar, Napoleon, Columbus, the Wright Brothers, the Apollo 11 Mission, the Manhattan Project, and our Founding Fathers look limited in scope.
The first thing to remember is that crowdfunding is not where you make a profit on your project. It’s where you offset some of your expenses.
the research shows that campaigns that reach 30 percent of their goal have 90 percent chance of success (that is, raising the desired amount). In the case of Pebble Watch, Eric Migicovsky needed $200,000 to move forward, but he set a goal of $100,000. In the case of the ARKYD Space Telescope campaign, the cost of building and launching the space telescope was roughly $3 million, but Planetary Resources set a goal of $1 million, with the expectation that these funds would at least help offset launch costs.
The objective here is to figure out the absolute minimum amount that, if funded, would represent enough for you to move forward.
Typical campaigns run from 30 to 120 days, though data from Indiegogo indicates that shorter campaigns (an average length of 33 to 40 days) perform better than longer campaigns.
In other words, our online reputations have real-world consequences.
“The ability for entrepreneurs to nimbly find and serve niche interests—and to produce platforms that allow those groups to address their needs en masse—is better than ever before,” explains Joshua Klein.
The point is this: If your community can provide a legitimate release valve for people’s incredibly frustrated passion, you are unleashing one of the most potent forces in the history of the world.
Look, if you can leverage an existing community to fulfill your dreams, go that route. But if you’re passionate about something and no one else is sating that desire, then you have first-mover advantage. Don’t underestimate this power.
There’s a corollary here: If you don’t have first-mover advantage, then ask yourself what new and exciting twist you are bringing to the table.
It’s also important to remember that people join communities because it reinforces their sense of identity (see below), but they stay for the conversation.
This is also why the very best communities actually force their members to interact with one another—they actually drive that conversation.
“Historically, for both royalty and industrialists, incentive prizes have long been a tool for fostering innovation,” says Deloitte Consulting Principal Marcus Shingles.