“Dynamists . . . have fear on their side: fear of stagnation, of poverty, of pain. Stasist prescriptions, we can say with conviction, stifle the very processes through which people improve their lives—from the invention of new medical treatments to the creation of art. In their quest for stability, stasists make society brittle, vulnerable to all sorts of disasters.” –Virginia Postrel, The Future and Its Enemies
INSIGHTS
The philosophy of failure
Don Watkins
Peter Thiel has argued that failure is overrated: “Most businesses fail for more than one reason. So when a business fails, you often don’t learn anything at all.”
But this misses the point. It’s not that failure is desirable—it’s that, if you pursue goals worth pursuing, failure is inevitable. Not necessarily at the organizational level—Bill Gates’s first company did okay. But even successful organizations will fail at the project level.
Jeff Bezos, for example, has celebrated Amazon’s long list of failures.
When you are focused on moving things forward, you run into problems, failures, things that don't work. Each one of those times you have a setback, you get back up and try again. You're trying to invent your way out of a box. We have so many examples at Amazon where we've had to do this. We've failed so many times—I think of this as a great place to fail. We're good at it. We've had so much practice.
Many years ago we decided to develop a third-party selling business to add selection to the store. We started Amazon Auctions. Nobody came. Then we opened zShops, which was fixed-price auctions. Again nobody came. Each one of these failures was like a year or a year and a half long. We finally came across this idea of putting the third-party selection on the same product-detail pages as our own retail inventory. We called this Marketplace, and it started working right away. That resourcefulness of trying new things to figure out what customers really want? It pays off and it is core to everything we do.
At the individual and organizational level, ingenuity requires risking failure. Or, put positively, it requires continual experimentation: trying things that probably won’t work.
Thiel’s right that extracting the right lessons from failure can be challenging. And while obviously you should learn what you can from failure, the more salient point is that the innovation process is incompatible with failure avoidance.
In place of failure avoidance, what we want is a process where trial and error can flourish.
Trial and error works best when (1) errors don’t take you out of the game—and when (2) the (rare) successful trials are so rewarding they more than make up for the failures.
As Robert discussed in his post on failure, many societies make failure catastrophic. If you start a business and fail, no one will hire you, and the legal system will keep you saddled with debts that prevent you from trying again.
And on the success side, the reason venture capitalists are willing to pour millions into companies they know are likely to go bankrupt is because of the asymmetrical upside of rare successes. When taxes, for instance, limit upside, the result isn’t simply to make wealthy people less wealthy—it’s to make trial and error experimentation less attractive.
High downside/low upside encourages failure avoidance. Low downside/high upside encourages creative experimentation.
Failure isn’t something to pursue. But it is something to embrace.
QUICK TAKES
21st century progress really is different
Y Combinator co-founder Paul Graham examines how people get rich today, and in the process bolsters our hypothesis that there is something unique about 21st century progress.
According to Graham, the main way people get rich today is not through inheritance, but by starting (and investing in) companies. And not just any companies: companies that innovate. “The oil and real estate magnates of the 1982 Forbes 400 didn’t win by making better technology. They won by being really driven and good at making deals.”
That isn’t what’s new, however. As Graham points out, “If you only look back as far as the mid 20th century, it seems like people getting rich by starting their own companies is a recent phenomenon. But if you look back further, you realize it’s actually the default.”
Okay, so what is different about the 21st century? It’s getting easier to start a startup. “[T]he main reason it’s easier to start a startup now is that it’s cheaper. Technology has driven down the cost of both building products and acquiring customers.” And not only has technology made it cheaper to build a startup—it’s also made companies more valuable because they can grow faster.
This trend has been running for a long time. IBM, founded in 1896, took 45 years to reach a billion 2020 dollars in revenue. Hewlett-Packard, founded in 1939, took 25 years. Microsoft, founded in 1975, took 13 years. Now the norm for fast-growing companies is 7 or 8 years.
Some of the Great Stagnationists warn that we shouldn’t expect as much progress in the future as we’ve enjoyed in the past, because there’s no more “low-hanging fruit” left to pluck.
But you don’t need low-hanging fruit when you can build a ladder.
Tony Stark’s got nothing on this guy
You have to watch this video. A Swedish engineer’s Mollii suit helps a man suffering from Parkinson’s-related tremors move normally. Nature makes mistakes. Human beings fix them.
The race for self-driving cars
Innovation depends on a nurturing environment. That includes a political and legal infrastructure that protects ingenuity—but it also includes a culture that welcomes change.
A new survey finds that the American south is significantly less open to self-driving cars than the rest of the country. Though, to be honest, the thing I find more striking—and worrisome—is that nowhere in the country do more than 54% of Americans say they would ride in a self-driving car if the option were available.
Now, that will almost certainly change as self-driving cars evolve and become more popular. But the question is: will we allow that to happen?
There was a firestorm in 2018 when an Uber autonomous vehicle killed a pedestrian. And just last month, a Tesla without anyone in the driver’s seat crashed, reigniting debate over self-driving cars (though it appears this particular Tesla didn’t even have “autopilot” capability).
Human beings don’t have a great track record of thinking productively about risk—particularly the risks of new technologies. We tend to look at those risks out of context. We see the driverless car that kills a pedestrian—we don’t see how many lives will be saved by reducing human error. And we ignore the learning process that allows us to make new technologies dramatically safer over time. As a result, we’re quick to impose rules and regulations that slow down technological advance—or that stop it entirely.
Driverless cars could be the key to a safer, more convenient, and more efficient future for transportation—if we let them.
Plagues? Yeah, there’s an app for that
Africa is being hit hard by locust plagues. But a new app is helping to save millions of lives in the country.
[A]nyone with a smartphone can use eLocust3m. The app presents photos of locusts at different stages of their life cycles, which helps users diagnose what they see in the field. GPS coordinates are automatically recorded, and algorithms double check photos submitted with each entry. Garmin International also helped with another program that worked on satellite-transmitting devices.
The app takes information from thousands of users across Africa and uses AI and machine learning to help direct the continent’s limited pest control resources to where they can have the biggest impact.
Since February 2020, the F.A.O. estimates that this effort in East Africa has averted the loss of agricultural products with a commercial value of $1.5 billion — saving the livelihoods of 34 million people.
Connection accelerates technological advance. And technology multiples the power of connection.
INCREASE YOUR INGENUITY
There’s a famous quote attributed to Henry Ford: “If I had asked my customers what they wanted they would have said a faster horse.” Whether or not Ford said it (he probably didn’t), it names a profound truth: the value of the biggest innovations is only obvious in hindsight—and they become big only when people discover how much they value them. You cannot innovate by asking people what they want.
But that doesn’t mean the innovator ignores the customer as he’s innovating. On the contrary: innovation usually comes from thinking deeply about the needs and desires of the customer and figuring out new and better ways to meet them.
Ford knew that what his customers didn’t really want a faster horse. They wanted faster transportation. And he found a way to give it to them reliably and affordably.
To do something new, don’t focus on trying to do something new. Focus on trying to solve your customers’ problems in a better and often non-obvious way.
RECOMMENDATIONS
How Innovation Works: And Why It Flourishes in Freedom by Matt Ridley
“The surprising truth is that nobody really knows why innovation happens and how it happens, let alone when and where it will happen next.”
That’s the problem Matt Ridley sets out to remedy in his most recent book. He makes a good start at a solution.
Ridley examines the history of innovation in energy, health, transportation, food, communication, and computing. He also looks at prehistoric innovation and, in one of the most fun chapters of the book, a number of unheralded low-tech innovations. (My favorite was the story of why it took so long to get luggage with wheels.)
But unlike typical histories of innovation, Ridley goes beyond telling the stories of how we got to today’s world of plenty. He tries to extract the lessons that will tell us “when and where” innovation takes place. For example, here’s his list of “innovation’s essentials”:
Innovation is gradual
Innovation is different from invention
Innovation is often serendipitous
Innovation is recombinant
Innovation involves trial and error
Innovation is a team sport
Innovation is inexorable
Innovation follows a “hype cycle”: people tend to overestimate the impact of a new technology in the short run, but underestimate it in the long run
Innovation prefers fragmented governance
Innovation increasingly means using fewer resources rather than more
What emerges is not coherent picture of “how innovation works,” but a collection of fascinating stories and observations (some more convincing than others) about dozens of factors relevant to innovation.
Ridley’s book isn’t the last word on how innovation works (nor do I think Ridley intended to be). It is, however, a delightful and stimulating starting point for anyone thinking about the causes of human progress.
Until next time,
Don Watkins
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