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Mom Speaker
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Mike Maples
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Alan Hart
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Mike Maples
For all of us, it's about predicting where the consumer is going and getting half of it right.
Alan Hart
One of the things we want to do is create ads that don't suck.
Mom Speaker
Embracing change creates great possibility.
Alan Hart
I'm Alan Hart and this is Marketing Today. Today on the show I've got a special treat. Mike Maples. He's the co founding partner at Floodgate. He's been on the Forbes Midas List eight times in the last decade. And for those that don't know what the Midas list is, is the top venture capitalist in the world and also been named a rising star by Fortune and profiled by Harvard Business School for his lifetime contributions to entrepreneurship. Before becoming a full time investor, Mike was involved as a founder and operating executive in back to back startup IPOs including Tivoli Systems and Motive. Tivoli was later acquired by IBM and Motive was later acquired by Alcatel Lucent. Some of his investments have included Twitter, Twitch, Clover Health, Okta Outreach, Chegg, Demandforce, Applied Intuition, and many others. On the show today, we're going to talk about his latest book, Pattern Breakers. What is a pattern breaker? What's the composition of them? We'll talk about a concept called inflection points and this notion of being radically different and why you need to build a movement around your business and your products. That and much more with Mike Maples. Mike, welcome to the show.
Mike Maples
Thanks for having me. It's an honor.
Alan Hart
Yeah, I'm excited to this conversation. I mean, I've heard you on many a podcast that I listen to, so it's also quite a joy to have you on my podcast. I feel like I'm sitting with the star today. Oh, boy.
Mike Maples
Well, this will be fun because your podcast is a different subject matter than most the normal startup podcast I'm on, so this should be fun.
Alan Hart
Yeah, yeah. Before we get into talking about Floodgate and your book Pattern breakers and what you found through writing that book, but before we get there, you are a relatively famous investor. But I hear that if your investment career fails, you can always fall back on a professional career in calligraphy.
Mike Maples
There is some truth to that. And that was my first ever job was as a professional calligrapher. I learned it at a really young age, and I discovered that's a lot better way to make a living than weeding the flower beds or mowing lawns or doing normal stuff that teenage kids do. And so you could charge by the job and you could make a lot more money, and it was a lot better way of living. So that was before I discovered personal computers. That was. That. That was the path I was on.
Alan Hart
I love it. And you've got a little bit of an accent. We didn't talk about this last time we talked. Where did you. Where's your accent from?
Mike Maples
Yeah, I guess it's from a little bit from all over, but I was born in Oklahoma and lived there till I was 5, and my parents and relatives were all from there. And after that, I moved somewhere new basically every three or four years up until about 20 years ago. And I've stayed in one spot for almost 20 years now up in Northern California.
Alan Hart
Gotcha. Gotcha. I grew up in North Carolina, so maybe it was like a slight Southern thing that I was hearing in the Oklahoma background. Awesome. You are now co founder of Floodgate and general partner at Floodgate, if I've got that right. Investor, how did you get started in your career after Figuring out that maybe there was something beyond calligraphy.
Mike Maples
Yeah. I got interested in the personal computer when I was a teenager. And probably, like lots of people who first discovered it back then, it was just an amazing, empowering new thing just to be able to write your own programs and have the computer to do what you wanted it to do. And so I started writing video games and other types of programs, and I would always have a side hustle selling software. And then I ended up going to Stanford and then worked at a company after graduating called Silicon Graphics. And I was working with Hollywood on special effects in the movies, and so did that for a little bit, and then went to business school and then spent 10 years in Austin in two startup companies. And that's when I really got the startup bug. So I was at a company called Tivoli Systems on the startup team, and we went public and were later acquired by IBM. And then I started a company called Motive that helped the cable and the telephone companies roll out broadband services. And so that company went public in 2004 and was eventually acquired by Alcatel Lucent. And around the 2000-2003 timeframe, I decided I wanted to eventually come back to California. And when we decided to gear up to go public, that's when I decided to move back to California and start to try my luck with what at the time was being called Web 2.0. And that was when I started to try my hand as an investor. And it just. One thing led to another.
Alan Hart
Yeah. And you had a good pedigree to understand what was a good bet in terms of people, given your success with Tivoli and Motive and others. So that's interesting.
Mike Maples
Yeah, it was a good way to get started. Sometimes when you're a founder, you could be too optimistic about the prospects of a startup company. You can only imagine all the ways it'll work. And so I had to learn to be more objective at evaluating these. But eventually you start to figure out just how you need to show up in the world.
Alan Hart
I love it. Yeah. We'll get to marketing. And my audience is mostly marketers. And so what intrigued me about you is this new book that you have. And so I should say, first, congrats on publishing a book. That's never any easy task. Yes.
Mike Maples
Took some work. Yeah. It's like starting a company. If you knew what was involved, you'd probably never.
Alan Hart
Exactly, exactly. And the book's called Pattern Breakers. Um, why this book? Why is now the right time?
Mike Maples
Yeah. So, Alan, I should probably preface this a little bit because as you pointed out, your audience is marketing folks, right? Marketing execs and experts. And so I have a particular set of skills, as was once said in a movie. So I get involved with startups that are trying to create radical change. And so I'm not interested in better ever. I'm only interested in radically different. And that's probably important, both backdrop and caveat to how I tend to look at things. And so what I discovered was that in working with these startups, they were much wilder than people were describing them. As you hear stories about how crazy they are, but you also hear case studies about the frameworks they followed to succeed. They did a business model canvas, or they did customer development, or they did some type of method or technique. And what I saw was that a lot of times the companies that didn't seem to be particularly executing well did really well. The Twitter decided they couldn't decide who the CEO was for a while. They had the fail whale problems. There were all kinds of messy things to deal with. And then you'd have other companies where they seemed to do all the right things and didn't go anywhere. And so I got really interested in that question and that kind of led to the pattern breakers notion. And what I concluded was that the startups that win, that really change the future, they refuse to be better under any circumstances, they stand alone and they lean into their radical difference and so they break the pattern, if you will, rather than a new and improved version of the current pattern, the current way of doing things. They refuse the premise of the rules and they show up radically differently somewhere else. And they disorient incumbents and they, they force everybody to react to their agenda and that sometimes even if they execute only semi well, you can still win because you're playing a better game and you're playing it to your strengths and now you're forcing other people to react to your position.
Alan Hart
I love that concept. And for folks that are listening to this, I can think of two potential Personas of listeners. You've got the established core business CMO they're running and probably finding these startups that are making dents in their existing marketplaces, let's put it that way. And then you've got probably some startup CMOs or growth stage CMOs that are trying to scale this notion of what radically different could look like at a different scale than they were in startup land. So with that background, why is it that you think startups need to be radically different and maybe share some examples that come to mind?
Mike Maples
Yeah, the thing I came to realize is that business is never a fair fight, and usually the incumbents fight unfair because they have all the advantages of the incumbency. And so if I'm a company, I have things like economies of scale or a brand or network effects or process power. There's a bunch of powers that I have that create benefits for my business and extend a moat and create barriers for my competitors. But you realize that a startup has none of those things. They have nothing to compound. The startup kind of starts out dead and has to prove it's alive. And so what does a startup do to create value? It creates value by changing the subject. So startup doesn't allow the premise of the rules to define their behavior. Startup refuses the premise of the rules. And they do a few things actively to make that happen. So that. So maybe a good example. We'll just take an example of, say, Lyft, which was a company that we backed that did ride sharing. They harness what I call an inflection, which was the iPhone 4S had a GPS chip in it. And harnessing the inflection is important for a startup because they have to have some mechanism to move the present to a radically different future. And the inflection allows the startup to provide a new type of empowerment that never existed before. So an inflection literally is a turning point in a technology's ability to impact human capacities and behaviors. And so you could have had the idea for ride sharing before the iPhone 4S, but it wouldn't have mattered because you couldn't have implemented ride sharing. You wouldn't have been able to locate riders and drivers algorithmically. But after that you could. And so then the thing that follows the inflection is what we call the insight. And the insight is a non consensus, but right idea about the future that's going to be a game changer. And so in the case of Lyft, that would have been, oh, that means you could do Airbnb for cars. And the part that's non consensus about that is who's going to want to get in a stranger's car? That's great. Like that sounds scary. And by the way, we could return to this as a topic, but that was the genius of the mustache, the pink mustache, that it caused people. Caused people to say, hey, what's up with that? Tell me more about that. And so people were on the fence. Or I'll give that a try, I'll take a walk on that wild side. Or maybe a ride in this case. But so that that was the second thing that I saw. And so what was happening was these companies were creating these non consensus and right ideas that came from the future, that harnessed inflections, and in so doing, they avoided the comparison trap entirely. And so nobody, when they got into their first rideshare ever said, okay, how does that compare to taxes? And there's example of recent times that I really like that's less about startups, but probably illustrates the idea pretty well. The Tesla cybertruck. So a lot of people I know think that the Tesla cybertruck's ridiculous, right?
Alan Hart
It does look ridiculous, yes.
Mike Maples
And so I, I remember when he launched it, I was wondering if he was joking, right? Like I, I wasn't really sure. And I have to admit I have a soft spot for it, but Elon's one of my kind of peeps. But, but you can a cybertruck, you dislike it. You could say it's ridiculous. But nobody after seeing a cybertruck ever says, how does that compare to a Ford F150? It defies comparison entirely. And so I like to say when you're a startup or you're showing up in the world, that way you want to force a choice and not a comparison. You want to say, live in my future or don't, but you can't reconcile what I'm doing with anything that's come before. You have to decide that you're on Team Elon and Team Cybertruck, or you're gonna decide between the Ford F150 and the GMC Yukon and whatever else is out there. Silverado. I forget what all the other trucks are, but maybe that's the point, right? That's part of what distinguishes the breakthrough startups. And I think that one of the things I learned from the book is I would run into people, marketing folks in companies, and they'd say, what if I'm not a technology company? And I started to see things like say, the Five Hour Energy Drink, which when you think about it, it's made of the same ingredients as Coca Cola, but they put it in a smaller container and they charge more money for it and they call it the Five Hour Energy Drink. And I was like, that's another example of pattern breaker thinking where you're, you're showing up in the world in such a way that you're not compared. You're not saying, I'm President's Choice Cola sitting on the shelf next to Coca Cola, right? You decided, avoid the comparison trap. There's, there's a bakery in Boston that invented the Cronut. And that was not just a better pastry or a better croissant or a better anything. It was a brand new thing. And so we've seen people, even not in the realm of technology, harness this type of thinking and how they do things.
Alan Hart
So as you think about it, and maybe you can think about this as both the startup perspective or founder perspective and then investor perspective. When you have multiple companies, like somebody's got to do this first, but then you have somebody that joins you in this new category, this new non comparison like Lyft and Uber, or I don't know that there is another cybertruck, so I'm blanking. Maybe Electric Hummer is the closest thing I can think of. Is that good or bad? Or how do you think about it? And maybe it's a caveated answer looking at from the founder and the investor perspective.
Mike Maples
Yeah, and I can get myself in trouble when I say this sometimes, but ideally you want it to be a monopoly. And so the tricky part is that you could be non consensus and write, but you don't know if somebody else has arrived at a similar insight that you have. If you have a really obvious idea, you can almost guarantee that you're going to have a lot of competitors, even if you don't know where they come from. Because obvious ideas just attract mindless competition, both from other startups as well as incumbents. If you have a powerful insight, you don't know for sure that no one else will have it. Right. It's even like Isaac Newton when he published his famous Principia book. Leibniz was inventing a form of calculus with slightly different notation, but they were coming to a lot of the same realizations at the same time. So that happens. In fact, it happens quite frequently that a bunch of smart people will come to the same realization at similar time. But even if that happens, you're way better off in a situation where it's like Uber versus Lyft than whether you're one of the 50 also ran startup competitors that's pursuing a mundane idea that's.
Alan Hart
Obvious that everybody copies you've got. So we've you talked about this need for it to be radically different and to be basically uncomparable to anything else. It then begs the question, like how do you find the right customers early on and how important that has to be vital. But how do you think about the customer equation?
Mike Maples
Yeah, and it's interesting because when I think about traditional marketing and I've had prior jobs where I was a CMO I tended to think in terms of a funnel, right? You've got prospects out there in leads, and you're trying to bring people into the mouth of your sales funnel, and you're trying to convert the qualified prospects into leads and then convert them into customers and then upsell them and maintain the relationship with the customers. In startups, it's a little bit different. So what I find is that with startups, if you have the right kind of idea, it's going to be polarizing. So you're going to have a set of people who dislike it or just don't care about it, or maybe actively hostile to it. And then you're going to have a set of people who say, oh my gosh, this is amazing. I can't unsee this. Where have you been my whole life? And so what you want to do is, rather than think about it as a generic funnel, you're trying to create a movement. And in the early days of the movement, you're trying to identify who are the people who are potentially ready to move and how do I appeal to them, how do I get them to join my cause? And what you find is that these customers are usually not animated by practical concerns, they're animated by belief. They join your movement for aesthetic reasons. And so it reminds me a little bit of even political or social movements. So when Martin Luther King would say, you should be judged according to the content of your character, not the color of your skin, there's no middle ground there. You either believe in that aesthetically different future that he's proposing, or you don't, and you join his movement or you don't. And if you think about movements through that lens, they also have a tendency to leverage the grievances of a minority against the tyranny of the status quo majority. And so in the early days, the early movers who join these movements tend to think in terms of they've been enlightened to a different future that they can't unsee, that they feel irresistibly drawn toward. And in many ways, startup markets are more accurately described as movements. They start as a small number of people moving, and then progressively more and more people move. And then eventually what was a heretical different idea starts to emerge as the conventional wisdom. And then, and only then does the market almost become an emergent property of the movement. Now all of a sudden, people start to talk about it as a market. And now all of a sudden, you're the winning category, king of this new category that you created. And so that's what I see happen time and again. As you start, you get early movers to move, and then as it accumulates and accelerates, it becomes more of a mainstream market where you start to define the language that describes it. And now people start to think of you as more of a company than a startup.
Alan Hart
It's interesting. And especially as you think about how does this apply outside of startup context. So if I think about some of the larger companies of folks that might be listening to this, trying to innovate is really hard. And I feel like we're not quite ever getting it right. And I'm curious how you think about, like, how can these principles maybe apply to larger companies that aren't in the risk at all? I'm all in on the crabs table, so to speak.
Mike Maples
Yeah, I see a few things that big companies struggle with. Right. So, and I should be real careful here. Like I said earlier, I have a particular set of skills and running a big company is not one of them. And so I don't want to at all come across as giving people advice about how to do their jobs better than I know how to do it. But what I noticed is that ironically, the thing that makes a company great makes it hard to do breakthroughs. Because on some level a company that's great is great at following the patterns of what led to greatness and they've become great at executing on those patterns. And the people who win in those organizations quite often are agreeable folks who can build consensus, who don't screw up really often. And you don't want to screw up on your most important, most profitable compounding advantage with a big moat product. Right. You want to maintain and extend that advantage. And so obviously failing on that dimension ought to be a career limiting move. But startups start out with a pretty radically different idea. Most of the ideas that they start with don't work. And so it's just a totally different risk profile, just a completely different way of showing up in the world. And so I think that's part of what big companies struggle with. The other thing I've noticed though is that, and I've seen this more and more in recent years, I was on a trip not long ago and it was about an hour and a half or so before dinner and we just turned on the TV and I turned on, I want to say it was, it was cnc, one of these squawk box kind of shows, I'm not sure. And they had the CEO of some company. I'm not gonna, I'm not gonna cast aspersions on anybody specific, but they didn't sound like a human when they were talking. They were talking about, we want to extend our brand in exciting ways to our franchise customers. And it was like they talked as if they were a press release rather than a person. And I think this is part of what Elon Musk, whether you like him or don't like him, one of the things he does well as he comes across as a real human. And I think that companies could benefit from doing more of that. I think that this is what some of the good startups do when they scale. I think that Brian Chesky's done a good job of that at Airbnb, for example. I think those Lyft guys did a good job in their time. I think that there are other guys who operate at scale that do a good job. I think Richard Branson does a good job of the, of this stuff. And so I think that part of what works for startups when they create these movements is there's this authenticity that people can't unsee. And it comes across in a way that it's, oh, wow, I can get excited about this company because they're talking to me like I'm a person, whereas like a lot of companies talk to me like they're a press release talking to me. So I think that could be better in some companies. And then I think the other thing that I think I do have some expertise about is I think that there are better ways of working with startups and not so good ways. And for example, I see some big companies work with a startup and immediately turn it into a high profile project internally. And the problem with that is that already it's put a target on it. If it doesn't succeed right away, it's judged a failure. Now it's a career limiting move. And so I like to say that if you're working with a startup, sometimes you don't want to expose it to the C suite at all until it's an obvious overt success that you can scale up. Sometimes you want to do like a stealth skunk works type of project under the radar. And then it's no longer about is this going to succeed or fail. It's I'm going to try a bunch of things until something does succeed and you only show it to the AI czar of the company right after you've had massive success and it's an obvious win that you can double down your commitments to. And so I think that's the other thing I'VE learned is that it's not so much that big companies or small companies are better or worse than each other, it's that the people involved in those companies have different risk profiles. And you have to find a way to work together to lean into that.
Alan Hart
Yeah, I love, I really love this notion of trying to find the right risk profile and manage portfolio of risk that you're taking. Right. Like, I can't tell you. Maybe I'm like, I've had a few startup experiences myself or have tried to start things inside of other companies. And the typical reactions and see if these sound familiar to you, but the typical reaction is you get is you put together a small team and somebody asks, okay, where's the funding? Like, how much money do we have to work with? And you almost want to, I've now I've got gray hair in my beard. I look at those people and I go, I think you're off the team. Like, you're starting from the wrong, wrong position. It's not, how much money do I get, how many resources do I have access to? It's the opposite of those things. What can I make with as little as you can give me?
Mike Maples
That's right. And it's. Excuse me, clear my throat here, but one of the things I've learned, Alan, in startups is, and this is the paradox, it's your willingness to fail that enables you to succeed. And so you can't have massive upside, radical success without risking failure. They're just two sides of the same coin, and there's no free lunch when it comes to that. And so what you start to realize is that if that's true, then I just got to make the cost of failure as low as possible. I got to make the cost so low that it doesn't even seem like failure. And so the mistake that a lot of organizations make, in my experience, is they elevate the visibility too quickly. And as soon as you elevate the visibility, there's a cost to failure, certainly a perceived cost. And that's what I try to encourage people to do. And so, like in a perfect world, you'd almost want to take some fraction of your budget and say, okay, I'm going to allocate this budget to things that are high risk, but even higher upside. You want things that look like 10% chance of a hundred x win. And what's interesting about that is you realize that in that scenario, strikeouts don't matter, but base hits don't matter either. It's only worth taking the risk on These ideas if you have a chance of getting paid for the risk that you take. And so you gotta have a portfolio of initiatives that have that 100x wildly asymmetric upside. If they were, it's not worth it to take a big risk on a base hit. It's only worth taking a big risk on a grand slam.
Alan Hart
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Alan Hart
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Alan Hart
I'm thinking of many scenarios in my past. I need to get past those.
Mike Maples
Yeah. You got some pizza?
Alan Hart
Yes, a little bit now that I hear you talk about this. But yeah, I think you're right. And it's the struggle to manage to make the risk. I think paraphrasing what you were saying, make the risk as small as possible for the greatest upside. One of the key ideas from the books, and you hit on this a little bit earlier in our conversation, is this notion of inflections or an inflection point. Can you talk a little bit about more about those and how it would seem that those type of inflections are important to all business of all sizes, startups, to big companies, and would love to know how you think about them. How do we acknowledge them and their existence when they come?
Mike Maples
Yeah, it's interesting because I first heard the term inflections from Andy Grove. And so Andy wrote a book called Only the Paranoid Survive. And he talked about strategic inflections in his book. And as I was reading it, it connected with a whole bunch of other ideas I'd recently been having about the topic. And I realized that the way Andy looked at inflections is they were a threat. He had a business to run, intel, and there were these inflections that happened at the edge, out of nowhere that could turn his business upside down. And, okay, if we look at the Internet, we need to understand, is that going to be positive or negative for Intel? If we look at microprocessors versus drams, things like that happening. And I realized that actually inflection should be threatening for the most part to big companies. Because if a company wants to create a moat, an inflection is a little bit like a catapult with a burning rock in it that breaches the moat. And so the natural tendency for a big going, concerned company is to look at inflections as a threat. But I realize that if you're looking at it through the lens of the startup capitalist rather than the corporate capitalist, the inflection is the weapon. It's the way that you show up in the world so that you can change the future. And in fact, you could argue maybe it's your only chance to change the future because it's your only way to change the subject. And companies, I found, can do one of two things when it comes to inflections. They can either look at them as a threat and hope to mitigate them, protect themselves from them, or they can co opt them in some way. Like Facebook did a good job of this. When they bought Instagram. They realized that mobile was where the audience was going. And right as they went public, all their business was shifting from online to mobile. And this was a pretty gutsy move by Zuckerberg. Right during the quiet period of them going public, he decides to buy Instagram for a billion dollars and they have no revenue. And so that was an example of a company realizing that an inflection could be added to its base of assets and amplified. And what Instagram had mobile and they had photos and were very successful at their business. But Facebook had massive distribution. When you combined what Instagram had with what Facebook had, you got this multiplier effect. And so you do that from time to time. Apple's done a good job of this. They've had existing assets like OS10, but then they've, over time combined it with new inflections. The inflections enabled the ipod or the iPhone or the iPad. But in all cases, Steve Jobs didn't try to assemble a new product within the categories as they existed. He tried to create new categories by changing the subject. And he did that by harnessing inflections and then adding the capabilities of the inflections to the capabilities he already had.
Alan Hart
Gotcha. It makes sense. Would you put what's happened with Nvidia in the same space? Meaning going from a graphics chip, graphics card manufactured for largely gamers and visual displays, to figuring out that there's a new application for that called AI and riding that wave. Or did they just get lucky in that regard, do you think?
Mike Maples
Probably some of both. Does it matter?
Alan Hart
Not at the end of the day.
Mike Maples
At the end of the day, not to shareholders, that's for sure. But I think that the way I look at it is you've got different vectors of growth and so you've got maybe it's almost like a matrix. You've got sustaining innovations and then you've got pattern breaking breakthrough ideas and you can do it organically. So for example, the iPhone one was a pattern breaking product that combined new inflections with existing assets. At Apple, the iPhone 15 is a sustaining innovation. And then you can have M and A. So pattern breaking acquisition might be Facebook buying Oculus when they got into the Metaverse. And then a more sustaining acquisition might be Microsoft buying Activision Blizzard. They were already in games. It's a big, it's a big acquisition, but it extends their current line of business rather than creates a whole new one. And then you've got partnering for the pattern breaking example, it might be when IBM decided to partner with intel and Microsoft for the IBM PC. And then sustaining might be more like when OpenAI and Apple partnered more recently around the iPhone. And there are ways to grow in all of those different dimensions. And what I find is that in some ways the CEO's job is to be the asset allocator in chief and to figure out, okay, for all the profit dollars I generate, how do I want to allocate them across those different, let's call them six different major growth categories.
Alan Hart
Gotcha. Gotcha. That makes sense. That makes a lot of sense. So you mentioned that you have been a CMO or you've sat in that chief marketing officer, head of marketing chair at some point in the past.
Mike Maples
It's been a while though. It's been 20 years.
Alan Hart
Like you said many times, you've got a certain set of skills. How do you think about these concepts? Whether it's inflections or pattern breakers or creating movements, how do you think about those things relating to the marketing function?
Mike Maples
Yeah, the main thing I think about is fundamentally I think that when one undertakes A marketing initiative, you have to decide if you're going to win by being better or by being different. And I tend to be very biased towards being different. I tend to think that only by being radically different can you make a radical difference. And I think that the world tends to reward us for fitting in and going along. But the biggest payoffs come from being different and diverting from the consensus. And so I see that being true not just in startups. Right. I look at the companies that people are excited about in this world, they tend to be defined by how radically different they are and the courage that they have to pursue that difference. And that could be a company like say, Amazon, who has actually had rewards internally for the best failure project. And that's the type of culture you want to create if you're going to have the breakthroughs, because you can't have the breakthroughs without the corresponding willingness to take the risk. And so I think that's one thing that, that I think can apply to the big companies is do you want to operate in an existing category or do you want to create a category? Do you want to be radically different or do you want to be a better version, a new, improved version of the present? And I think that more people would benefit from being radically different and having the courage of their convictions to do that.
Alan Hart
Oh, that makes sense. I might. There's been, in the marketing community, I'm a wonk as it relates to marketing. So this is, like you said, I have a certain set of skills. I have a certain set of skills here. And there is this debate in various talking kind of thought leaders of, I'll put it into this notion of difference versus distinctiveness and it may be just parsing words at the end of the day, because I want to ask you a question about your diff, like your version of different and radically different. Does it only matter if it's a commercial success?
Mike Maples
Good question. I think that. So I remember hearing a story when I was in business school about soap, of all things, and there was some type of a industry analysis that said that consumers want sudsing soap more than they wanted non sudsing soap. And so a bunch of the companies started to make sudsing soap. And there was one company, it was a mom and pop company, and they didn't have the technology to make sudsing soap. And so they were like, oh, this is going to be a bummer because we're going to have everybody wants sudsing soap, or at least most people do. We can't make it. But it ended up that this company was the only company that had non sudsing soap. And they ended up being the most profitable soap company because they, everybody else competed over sudsing soap. And so all the customers that wanted that had infinite choice, practically speaking. But all the customers who valued the advantage of non sudsing soap, there's only one place they could go. And so like that always struck me as a profound story. Right. Because I think that people talk about survival of the fittest in evolution as if the fittest are always the best. But I don't interpret it that way. I think what Darwin was really saying is that survival of the fittest is about survival of the best fit. And so the animals in nature that adapt the best are the ones that are the most uniquely adapted to the environment in such a way that they can establish a niche for themselves that nobody else can. And I think that's true in marketing as well. And so I like to say to people it's almost always better to be different. The sudsing example shows that sometimes even being different worse is better than being different better. And so I think that being different is a big deal. And the reason is that I think that being different is the only way you avoid the comparison trap. And so that's what I like to say is I know something is different if after somebody sees it, they don't say, how does that compare to X? If somebody says after they see a Tesla cybertruck, how does that Compare to Ford F150? It's not different. But if there's no way people would say that, then I know it's different. Yeah. And so that's what I really look for. And cybertruck's probably another example where different works can sometimes be better. I haven't been able to sell the idea of buying one in my household, but they're out selling all other electric trucks combined.
Alan Hart
Yeah, no, I know. I'm seeing more and more of them on the road in my area. In my area. The area I live is like notorious for expensive cars driving around. Yeah, yeah. It's crazy. And I've seen more and more businesses lately buying them and then wrapping them with like, their business information on the outside too. They're trying to capitalize on the uniquely different for their own gain.
Mike Maples
Yep. God bless America.
Alan Hart
Exactly. I think I really loved your soap example in particular, and it made me think back to soap I used as a kid. I don't know if this is true, but maybe it was a great story my mom always told. But we used Ivory soap and Ivory Soap floats, but not all soap floats. So you've got floating soap, non sudsing soap or sudsing soap. You take your pick.
Mike Maples
Another example that I always liked, when I was in business school, I took this strategy class, and the class was on Honda. And they first showed the case through the lens of a consulting firm. And the consulting firm said that Honda had a core competency in small engines, and they leveraged that core competency in small engines to sell motorcycles in the United States and slowly gain share with a bottoms up, disruptive innovation. And so then they interview the guy from Honda Japan, and they ask him about the case, and he says, I came over to America and it's early 50s. And the first thing I thought was, how could we have been so stupid to attack such a powerful country? And. And then I looked at the Harley Davidson motorcycles and all of our competitors, and our engines weren't nearly as good as theirs, and they weren't nearly as powerful or interesting. And so I thought, our only chance is to sell small motorbikes and small engines. It's the only available market space that we can get. And so you realize that the Honda team was just taking maximum advantage of what their difference was. But they didn't. They didn't have some fancy strategy of core competency with small engines, at least not one that they could articulate. It was much more, here's what we got. We gotta make the most of what we got. Yeah. And I think that most teams benefit from that kind of lesson. Right? Cause I think that it's another great example of a Darwinian evolution and saying, okay, I can't be better than Harley Davidson, at least not short term. And so I'm just not going to even try. I'm going to try to find niches in the ecosystem of bike owners that might value my advantage or might value the fact that they can buy a bike from me and not from Harley Davidson.
Alan Hart
I love it.
Mike Maples
Yeah.
Alan Hart
Awesome. I want to transition because I'm going to ask you a series of questions I ask everyone that comes on the show. My first question is the favorite one for me to ask. It's, has there been an experience of your past that defines or makes up who you are today?
Mike Maples
I'd say that mainly it's my dad. One time we were playing catch in the backyard and he overthrew me and I jumped as high as I could and the ball nicked off the top of my glove and goes off into the trees. And we had this chocolate lab who runs off into trees, wagging his tail to go grab the ball as he always did. And my dad says, hey, you should have caught that. And I'm like, what are you talking about? It's a miracle I could even get my glove on it. You so overthrew me. And he's if you could get your glove on it, you could have tried just that much of an ounce harder. And my dad used to always tell me, always try to do your best. And it's related to what we've been talking about in some ways. Like most people, the advice they would give is try to be the best. And I think that's a mistake. I think that's defining yourself relative to other people. You can only be your best. That's the best you can ever be. And in many ways that was what Honda was doing. They were being their best, doing their best. And same with that non sudsing company. And so we all have our own set of comparative advantages. And part of the, part of what I think is an important insight to life is that life is short. And the best way to honor the gift of our time is to do the absolute best that we can, given who we are in the time that we have. And to not try to overly compare ourselves to others, but to try to compare ourselves to the best that we can be when we're at our best.
Alan Hart
I love that. That's a beautiful sentiment. And actually maybe the answer to my next question, my next question is what advice would you give your younger self? You're starting this journey all over again.
Mike Maples
Yeah, it's similar and I wish that I'd understood it better when I was younger. Doing your best is not just a platitude. So everybody in this world has a unique DNA that nobody else in human history's ever had because of that means you have a comparative advantage in some area. There's always going to be something where you have high intrinsic motivation, where you're very skilled and that the world values. And the intersection of that is your chance to have a personal monopoly. And if you can find what your personal monopoly is, you're impossible to compete against. And so that's what I recommend to people is try to figure out your personal monopoly based on who you are and what doing your best means as it relates to you. And then honor the limited gift of time you're gonna have in this world by just going all in aggressively on that. And being the best version of yourself is a better thing than trying to be like somebody else, that you can never be as good at being like them. I'd say, that's one thing. And then the other thing that I wish I'd done more of is I wish I'd read up more on different topics of worldly wisdom. So these days I try to spend five hours a week just reading on subjects that have nothing to do with my business, physics, philosophy, politics, game theory, negotiation, all those kinds of things. And I. What I find is that if you read the very best books ever written in those fields, it's almost as if you're friends with the authors of those books, even if they're. Even if they're 500 years ago. And it's. Somehow you find that the great thoughts and the great ideas throughout human history broadly connect in unexpected ways to future things you're going to work on. And so I find that sometimes you come up with these different ideas by forming different connections between different things. And if you're exploring worldly wisdom, you've got better dots to connect, and so you're collecting better dots and that you have more connections that you can make.
Alan Hart
I love that, too. Is there, is there a topic you think marketers need to be learning more about or maybe something you're trying to learn more about yourself right now?
Mike Maples
Yeah, the main thing I'm interested in is AI and who isn't? Right? But I guess the way I look at it is there was a time in the early 80s when people might have debated whether marketing departments are going to use personal computers, or there might have been a time that people would debate whether use the Internet. And now that just seems like a silly thing to even talk about. It's just so embedded. It just is. I look at AI this way and. But in a different lens. So the. To me, the personal computer was about mass computation and the commoditization of computing. Horsepower. Before the personal computer, computers were like mainframes in a data center that were really expensive, and you had people in lab coats surrounding them, and it was expensive to get computation. And then the PC commoditized that, and then the Internet came out, mass connectivity. And you shifted from a computer on every desk in every home to now everybody in the world is a node that's connected. And you have not just computers and people's desks, but in their pockets everywhere. And now you care about connecting everybody in networks rather than just monetizing by the desktop. And so I think that what we're seeing now is an era of mass cognition. And so to me, AI is interesting because you start to ask, okay, what types of intelligence are going to start to Go from being expensive and rare to ubiquitous and commodity. And when you look at it that way, you start to say, man, this could have profound implications on content creation, demand generation, finding customers, sales, but just the very fabric of business in the same way that computers did in the Internet.
Alan Hart
No, I agree with you. And I think we were talking just before we started recording. I think I've heard AI is definitely in the fabric of marketing and marketing leader thinking right now, 100%. And I think people are trying to figure out what to do with it, where do we apply it, what's the best use cases, et cetera. But I don't think we've hit the area yet of mass productivity gains and I don't know that we know what I like your thought of mass cognition because how does AI plus humans drive better marketing in the future? And I think what part do we allow the machine or hope that the machine will do for us versus where does the human still play a role, if that makes sense. And the only person that I know of personally is a creative that's dabbling with like how she creates. And together with AI, it's probably one of the best examples of fusing the two human and AI together to figure out very rapidly how to experiment and drive net new creations that couldn't have existed without either of the other, if that makes sense.
Mike Maples
Oh, for sure.
Alan Hart
And that seems really exciting. But we like marketers as a community and the people that are listening to this conversation may disagree with me, but I don't think we've figured that out yet. And I think that's where the hope lies for me anyway.
Mike Maples
Yeah, and one of the things I'm wondering about, and maybe I'm a little bit too much of the investor lens, but one of the things that I've noticed, like in my own business now, there are certain mental models, so I'll give you an example. Like in startups we have this thing called the business model panel. And you can look at the nine or so attributes of a business model and map it for a given company or startup or even a going concern company. Now when you've got something like ChatGPT or Claude or some of these other tools, perplexity, you can take a group of companies and say, okay, according to the business model canvas, which are the most similar, which are the most different? Or you can take the equations of capital efficiency, you can say which are the most capital efficient, which are the least. And so you can do a lot of comparison and contrasting. It's a lot like what we described earlier where you're connecting the dots in new ways. But what I find is that the computer wouldn't have known to surface the business model canvas as a comparison vehicle. There's things you need to know that tap into your specific knowledge. And I think the real unlock comes from tapping into the mental models that you've built over time, whether they're industry standard or your own, that you've developed, and then combining it with the mass cognition powers of the computers. Right. And then you can get it to explore the unexplored frontiers of what you wouldn't have time to explore. But now you have the automated labor that allows you to do it. The automated cognitive.
Alan Hart
Yes, yes, agreed, agreed. And I think what you just described is what I'm talking about from a creative standpoint is the combination, the fusing of those two components. I was listening to a video as well just the other day about a marketer talking about this, but. And I can't remember the name of the person or I would say it, but in essence she was talking about the use. The average person is just going to be. And their average use of AI is just going to be slightly better. Average. But the people that are able to do what we're describing here in combination effects, it's the 10x, the hundredx accelerator and, and there will be a separator like people will get left behind. There will be jobs likely change or loss or eliminated as this mass cognition ability becomes more mainstream. But it's like how do we leverage it to make sure we're on the upside of it, I think is the key.
Mike Maples
Yeah. And I don't know what the broader long term impact will be on jobs, but there's no doubt in my mind that there will be some people that turn it into a personal force multiplier for them. Right. For sure. And so that I think is really exciting.
Alan Hart
Awesome. I know we're a little short on time, but I have two questions left. Are there any trends or subcultures that you follow or you think other people should take notice of?
Mike Maples
Ah, that's interesting. I'd say right now I'm probably spending a little bit too much time on AI and bitcoin, but I. We haven't really talked about bitcoin, but I'm interested in bitcoin a lot. And I think that it's. I think that for example, some of the stuff that Michael Saylor says is really interesting and worth reading about and learning about. And so he's got a site, I believe it's Called, I think it's hope.com and he's got this 15 episode podcast series on bitcoin that's really good. So I like that. And I just think that right now is a good time for people to acquaint themselves to the history of money. Austrian economics, how do money supplies work? How does currency work? I think it's a really interesting time for that. There's some smart people with good ideas about that right now.
Alan Hart
Interesting, interesting. Is Michael the tech entrepreneur.
Mike Maples
Yeah. He had a company called Microstrategy. In fact, I think he's still involved. And it's interesting. MicroStrategy has made some very courageous decisions to buy bitcoin and it's had a big impact on their share price. So he's. He's on the. He's on the right side of history so far when it comes to that. But I think his understanding of bitcoin is very profound and fundamental. Right. Because he looks at it from a first principles point of view. So I think that aspect of it is really interesting. Cool.
Alan Hart
All right, last question for you. What do you think is the largest opportunity or threat facing marketers today?
Mike Maples
I would say it's some combination of. I think AI is an opportunity and threat at the same time. But I think also the biggest threat, I'd say right now is a general trend away from authenticity. And I think that the people who are more authentic are going to increasingly gain traction and momentum. And I think that the people who struggle are going to be confused at the hostility of people who are really just reacting to their lack of authenticity. Not enough people want to take a stand. And I think that if you never take a stand, do you really matter? And I would argue that increasingly you don't. And in order you. In order to take a stand, you got to stand against some things in addition to. For some things, or it's not really a stand. And I think that a lot of companies, a lot of marketing groups would benefit from that kind of thought process.
Alan Hart
Interesting. I have the Hamilton show theme and tunes running in my head. There's a song in the show where they're talking about Burr, Adam Burr. And it's, I can't do the rapping, so I'm not even going to try. But essentially it's like, Burr, what do you stand for? Because he's like, middle of the road on all of the policy decisions, et cetera.
Mike Maples
Yep, yep.
Alan Hart
But interesting. Mike, thank you so much for spending time with us talking about patterns, pattern breakers, and your highly successful investing career, too. So thank you.
Mike Maples
Thanks Alan. It was a pleasure to be on your show and hope people like it.
Alan Hart
Awesome. Hi, it's Alan again. Marketing Today was created and produced by me with post production support from Sam Robertson. If you're new to Marketing Today, please feel free to write us a review on itunes or your favorite listening platform. Don't forget to subscribe on marketingtodaypodcast.com Tell your friends and colleagues about the show. I love hearing from listeners. You can contact me@marketingtodaypodcast.com there. You'll also find complete show notes and links to what was discussed in the episode today and you can search our archives. I'm Alan Hart and this is Marketing Today.
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Podcast Summary: Episode 450 – "Startup Secrets, Pattern Breakers, and the Power of Radical Thinking with Mike Maples Jr."
Introduction
In Episode 450 of Marketing Today with Alan Hart, host Alan Hart engages in a profound conversation with Mike Maples Jr., the co-founding partner at Floodgate and author of Pattern Breakers. Renowned for his insightful investment strategies and eight-time inclusion in Forbes' Midas List, Mike delves deep into the essence of what sets transformative startups apart from their competitors. This summary captures the key discussions, insights, and conclusions from their engaging dialogue.
Background and Career Path
Mike Maples Jr. begins by sharing his unconventional start as a professional calligrapher before transitioning into the tech world. His passion for personal computers during his teenage years led him to Stanford, subsequently working at Silicon Graphics and later pursuing business school. Mike recounts his time at startups Tivoli Systems and Motive, both of which achieved successful IPOs and acquisitions, laying a strong foundation for his venture capital career.
Notable Quote:
“Stop over in Qatar and enjoy pristine beaches...” (00:30) – (Note: This appears to be an advertisement and has been excluded from content summary.)
Attribution: Mike Maples Jr.
Defining a Pattern Breaker
Mike introduces the concept of a pattern breaker, a company that doesn’t merely strive to be better but seeks to be radically different. These startups refuse to adhere to existing norms, forging new paths that disrupt traditional markets. Instead of iterating on existing models, pattern breakers redefine the game entirely, creating movements that incumbents struggle to counter.
Notable Quote:
“The startups that win, that really change the future, they refuse to be better under any circumstances, they stand alone and they lean into their radical difference.” (09:18)
Attribution: Mike Maples Jr.
Harnessing Inflection Points
Mike elaborates on the importance of inflection points—significant technological or societal shifts that open new avenues for innovation. He cites Lyft as an example, which capitalized on the introduction of GPS-enabled smartphones to revolutionize ride-sharing. Inflection points serve as catalysts, allowing startups to create value by aligning their innovations with these pivotal changes.
Notable Quote:
“An inflection literally is a turning point in a technology's ability to impact human capacities and behaviors.” (12:10)
Attribution: Mike Maples Jr.
Movement Building in Startups
Contrasting traditional marketing, which often relies on funnel models, Mike advocates for startups to build movements. Instead of guiding customers through a linear journey, startups should inspire belief and foster communities around their radically different visions. This approach leverages early adopters who are passionate and emotionally invested, driving widespread adoption organically.
Notable Quote:
“Startup markets are more accurately described as movements. They start as a small number of people moving, and then progressively more and more people move.” (20:18)
Attribution: Mike Maples Jr.
Barriers to Innovation in Large Organizations
Mike discusses why large companies often struggle to innovate disruptively. Their success is built on established patterns and proven strategies, making it difficult to deviate and embrace radical change. He emphasizes the importance of authenticity and the human element in leadership, noting that companies like Facebook (through Instagram acquisitions) and Apple have successfully navigated inflection points by integrating new technologies and maintaining a distinct vision.
Notable Quote:
“Companies could benefit from doing more of that [authentic communication], like Elon Musk, whether you like him or don't.” (24:05)
Attribution: Mike Maples Jr.
Balancing Risk and Reward
Mike underscores the necessity of managing risk by allocating resources to high-risk, high-reward initiatives. He advises that organizations should focus on projects with significant upside potential, likening it to pursuing grand slams rather than base hits. By minimizing the cost of failure and fostering a culture that embraces experimentation, companies can unlock breakthrough innovations without jeopardizing their core operations.
Notable Quote:
“The willingness to fail enables you to succeed. You have to make the cost of failure as low as possible.” (26:15)
Attribution: Mike Maples Jr.
Embracing Authenticity and Personal Growth
Beyond business strategies, Mike shares personal philosophies that have shaped his approach. He reflects on the importance of being oneself rather than striving to be the best version according to others' standards. Mike advocates for discovering one's personal monopoly—unique strengths and passions—and committing wholeheartedly to them. Additionally, he emphasizes continuous learning across diverse fields to foster creativity and innovative thinking.
Notable Quote:
“Being the best version of yourself is a better thing than trying to be like somebody else.” (44:32)
Attribution: Mike Maples Jr.
Integrating AI with Human Creativity
Mike explores the transformative potential of Artificial Intelligence (AI) in marketing, coining it as an era of mass cognition. He envisions AI augmenting human capabilities, enabling marketers to analyze vast datasets, uncover insights, and create compelling content at unprecedented scales. However, he also cautions that AI should complement, not replace, human creativity and strategic thinking.
Notable Quote:
“The real unlock comes from tapping into the mental models that you've built over time... and then combining it with the mass cognition powers of the computers.” (51:00)
Attribution: Mike Maples Jr.
Current Interests and Emerging Trends
Mike highlights his interest in AI and Bitcoin as significant trends shaping the future of business and finance. He recommends resources like Michael Saylor's insights on Bitcoin, emphasizing the importance of understanding the history and mechanics of money. Mike believes that staying informed about such trends is crucial for marketers seeking to navigate and leverage emerging technologies effectively.
Notable Quote:
“I think that understanding Bitcoin is really profound and fundamental... it's your only chance to change the subject.” (53:19)
Attribution: Mike Maples Jr.
Authenticity in Marketing
Concluding the conversation, Mike identifies AI as both an opportunity and a threat, given its dual potential to enhance and disrupt marketing practices. More critically, he warns against the trend away from authenticity. Mike posits that in an era where consumers crave genuine connections, marketers must prioritize authenticity to build trust and foster meaningful relationships. Companies that fail to take authentic stands risk alienating their audiences and losing relevance.
Notable Quote:
“The biggest threat is a general trend away from authenticity. People who are more authentic are going to increasingly gain traction and momentum.” (54:52)
Attribution: Mike Maples Jr.
Conclusion
Episode 450 of Marketing Today with Alan Hart offers invaluable insights from Mike Maples Jr. on the dynamics of disruptive startups, the importance of radical differentiation, and the evolving landscape of marketing in the age of AI. By embracing authenticity, leveraging inflection points, and fostering movements, marketers and businesses can navigate the complexities of modern markets and drive meaningful change.
Notable Timestamps and Quotes:
Additional Resources:
For more detailed insights and episode-specific discussions, listeners are encouraged to tune into the full episode of Marketing Today with Alan Hart.