Is it the horse or the jockey?

"Is it the horse or the jockey? And the answer is yes."

– Andy Rachleff


Is entrepreneurial success dependent mostly on the quality of the team, or the idea? Over the past year or so I've heard this question asked many times. I've also been asked my opinion on the question, which I found funny since I don't have much experience forming entrepreneurial teams. Curiously, this question divides most VCs, professors, and entrepreneurs I've talked to into highly polarized camps. There are those who swear that it's all about the team. After all, given smart people who work well together, enough time, and determination, they will come up with a great idea; conversely, a bad team won't be able execute even the best of ideas – they will just screw it up and forfeit their chance. And then there are those who equally confidently claim that it's all the idea: with a crappy idea, any team, no matter how good, will fail. More – they claim – if a crappy team is paired with a good idea, you can always replace the team.

I am of the opinion that your perspective depends on where you stand. More precisely, the answer will depend on what you are invested in, what you control, and what you're optimizing for. Based on these metrics, "success" may mean very different thing. For example, if you are a VC, you are tasked with creating value for your LPs. You know the entrepreneurial teams well, and you have access to a wide network of people. Assuming that you can evaluate ideas accurately, you would consider them more valuable than the teams, which you can modify more or less at will. So it's natural that you would prefer a horse to a jockey. And, from where you stand, you would be right – you don't have time to let teams experiment with ideas; you have access to a lot of ideas and can change teams more easily than you can change ideas (the latter of which, as a VC, you really shouldn't be doing).

On the other hand, if you are an entrepreneur in an early stage of a venture, you are invested in a particular choice of a team, and you believe that you can change the world. Then naturally you believe in jockeys. And, from where you stand, you are right – assuming the team is good, and you have time, and you don't give up, you are bound to produce results.

However, obscured in the above assumption is what makes a team good. Clearly, it's not just a bunch of smart people who like each other. In fact, intelligence and good team dynamics are sometimes not even required. I would argue that to beat a bad idea, a team must have a good idea development process: knowing when to give an idea up, knowing how to evaluate ideas, assessing what works and what doesn't work in a team. In fact, I would say that the process is actually more important than the team, because a good process will help all systemic issues surface, and assuming that the team acts on these issues, with enough time the team should stumble on a good idea.

Of course, the problem with the entrepreneur's perspective is that this may take a long time. If you have good people available, and if you know an idea is good, you're better off changing the team. For VCs, for whom time is scarce and people are plentiful, this is a rational preference.

But a problem with the VC's perspective is that it's usually not clear whether an idea is good or terrible. So, the entrepreneur retorts, that's where the team comes in. Leave it to the team to pursue an idea even if it initially seems ridiculous.

As usual, the answer to the question at the top is "it's both". We should take the more holistic view, and agree with Andy Rachleff who gets this question a lot, but has a witty answer ready. It's both the team and the idea. One may be more valuable to you than the other, but that depends on where you stand, what you can control, and what you're more invested in.

Faster Horse? Nonsense!

I am involved in a lot of classes, panels, workshops etc. about entrepreneurship, and about every three days, I hear the all-too-familiar statement:

Before the automobile, if you asked people what they wanted, they would tell you that they wanted a faster horse.

Usually, the person bringing it up is attempting to make a point that customers don't know what they want and that sometimes one just ought to have a strong vision for a product rather than talk to customers. Often, it's a response to an attack of the "build it and they will come" philosophy, which many smart people (including myself) have at some point subscribed to, or still do.

The problem with the "faster horse" allegory is that it is wrong. It's based on a false premise that what you should be doing when around customers is asking them what they want. Given that premise, yes, you're better off not talking to customers. But the corollary is not to stop talking to customers.

To illustrate, let me build a little more (updated with today's lingo) context around the above quote. 

It's before 1886 and you're interested in the personal transportation space. Maybe you've worked at a carriage company, or maybe you've worked for an owner of a few horses. You believe that the space has a lot of untapped potential – it's a large market, but the users aren't served as well as they could be. Maintenance is relatively expensive, and it's very difficult to scale the business.

You decide to do customer discovery. You find people who travel by horse (probably via a stagecoach) and sit down with them. You ask them for their experience. Maybe you ask them to tell you a story about their last travel. You tell them that you want to make personal transportation better. You ask them to tell you what they want.

Of course they will tell you that they want a faster horse.  Speed is likely the biggest pain for them. It takes 3 days (given the average mileage of 60 to 70 miles traveled a day) to travel from Boston to New York.

It's unsurprising that the customers will tell you that they want a faster horse, because by the time you asked them what they want, they have already pictured a horse, they recalled the pain of traveling at 5 miles per hour, they connected the two and they can't wait to share their need with you.

Now, if you were a good interviewer, you would never, ever conduct an interview in this way. A good interviewer would extract precisely the kind of information he or she would need to build a car. The key thing is to get the customer out of their familiar frame of reference. The key is to understand what motivates them, what they value, and why they do what they do. The best customer interview rarely invokes the image of a horse.

After all, we're not talking to the customer to hope that he or she will come up with an automobile. That's our job. Our hope should be to understand the various dimensions of personal travel, and our customers' valuation of each. By doing this, we can hopefully understand how much of a pain it is to spend 3 days en route between Boston and New York – and that it's become more and more of a pain over time. Knowing this makes a prospect of a more expensive, but significantly faster method of transportation very appealing.

In my experience building products, I have found talking to people to be the single most important element of my work. Talking to people has two primary purposes, and they are both invaluable.

  1. It helps you solidify your vision. By forcing yourself to talk to someone who is not you, you need to phrase your area of interest and your ideas and thoughts in a way that's understandable by others. It's a great way to find the weak spots in your thinking. (Incidentally, that's the same reason for having a blog)
  2. It also allows you to get original data, rather than permuting the existing data that you already have in your head. Too often we stay in our heads, tricking ourselves into an illusion of progress, while in reality bathing in the soup of old ideas. The issue with surrounding ourselves with the same thoughts over and over again is that in the absence of "thought competition" our brains begin to confuse longevity with truth, and we begin to really hold on to these unvalidated ideas. Making a habit out of talking to people ensures a fresh flow of ideas, which creates a ripe environment for the selection of the fittest ones.

Whenever I hear the "faster horse" analogy, I can't help but think that it's a poor excuse. Maybe whoever used it got burnt on a bad user interview before. More likely, they are not a good "needs finder". Or, worst of all, they just want an excuse not to talk to customers. So no matter whether you are just trying to come up with a faster horse or an automobile, start by talking to customers. And do it well.

On Advice

Some time ago this "ultimate cheat sheet" circulated through my various social networks. A couple of my friends asked me what I thought of it. My intuitive reaction was a negative one, but I needed to think about why I felt that way. This, in my mind, unraveled into a deeper theme, which I thought worth sharing.

But first, some context.

I am currently in my second year at Stanford Graduate School of Business. Prior to that, I spent six years working in a financial services firm. I left because I wanted to explore the broader world, and get back in touch with my deep passion (solving big problems with the help of software, which has the incredible ability to provide unprecedented leverage to almost any human activity – software is, after all, eating the world). Stanford allowed me to do it in a community of people who have great ideas, are ambitious, and surprisingly diverse (if you know where to look).

Throughout my first year I've taken classes that immersed me in the world of business, and particularly early-stage ventures. I went to panels, where novice, seasoned, successful and failed entrepreneurs alike shared their experiences and gave their advice to wide-eyed business school students. I went to lunches with people who had something interesting to say. I extracted the essence of more than a hundred cases I've covered in class. I read articles that my classmates sent me, scavenged the Web for advice given by founders, CEOs, salespeople, and everyone else. As a result, by the end of my first year, I had an impressive cheat sheet of my own. I keep it in Evernote, titled "business advice", and despite being written in concise, bullet-point form, it now exceeds 20,000 words. So it remains useful, I organized it into about 50 themes over 5 major categories.

As I was restarting this blog, I considered sharing the entire file with the world. Why not? After all, it's a compression of more than a year of advice, given to me in various forms, ranging from very personal to heavily broadcast.

The problem with the advice I so diligently collected, and with James's advice, is that it's useless. It's useless, because it's compressed so much that it becomes almost impossible to apply. It lacks any context whatsoever to be put in practice. It is more than just "dead knowledge". It's knowledge that's been dead for years and is now shriveled, dehydrated and turns to powder as soon as you touch it.

In fact – and this is what was bothering me so much when I read the post – I believe that such advice has negative valueA big problem is that cheat sheets like this give their readers a false sense of security  – a belief that there is "the" right answer. There isn't. The astute adage "Ask ten people for advice and you'll get eleven opinions" is spot on. Every one of these rules is an outcome of a thought process or an experience. Each of them is a black box – whose inputs are the pros and cons, the context that the author faced, and the set of things he valued, and the output is a decision. And so to present these one hundred and three processes (or more, if these rules were came out of several experiences) as rules totally misses the point and encourages the reader to question the world around her less, rather than more.

I have no intention on picking on James. In fact, I am grateful to him for coming up with his 100+3 rules. I was staring at my own advice for more than a year and failed to see what was wrong with it. I needed to see someone else's advice to really get it.

- - - 

People ask me why go to business school. After all, you can read all about accounting, marketing, finance, and management in books (many of these are sold at the airports or at Fedex Office). You can borrow all the cases from a friend and read them cover to cover. But in this case as well, all you would be getting is dead knowledge. Business school is not about the books you read or the cases you cover. It's about being immersed in the context of business. It's about being exposed to the lingo over and over until you become proficient; being a part of a community that discusses business issues over and over until you work out your intuition; thinking about business over and over until you start looking at the world in a different way. That takes context, time and effort. You can't pick that up in a book, or in a cheat sheet.

Even then, it's not enough. I realized that first hand: equipped in this wonderful toolbox, I set out to put my knowledge into practice over the summer, working on a project with a couple of classmates of mine. And we did everything we weren't supposed to do. As I go over my 20,000-word business advice, I can highlight dozens of bullet points that I violated. The problem was not only that there was a lot of advice to absorb. More importantly, each of these bullet points comes with its little decision mechanism, and when you're on the ground, faced with an actual situation, with actual data, things don't look as black-and-white as they do in "business advice".

There truly is no free lunch. Yes, reading a book saves you time. But it's no lossless compression scheme. Reading a bullet point of advice might save you the 2 years (and $$$) of business school and 1 year of going out and trying, and failing. But by reading a bullet point, you sacrifice the mental focus that you would subject yourself to if you actually had to read that case, think about that issue, then discuss it with your classmates, then hear the guest speaker's synthesis (which by now has all this wonderful context that you'll hopefully remember, even partially), and then write it up as a bullet point in your own "business advice", and then try it in the world, and fail, and finally internalize what it means.

- - - 

I haven't deleted my "business advice" note. In fact, this note has a lot of value to me . It has a lot of value, because I do have the context. So long as my memory is good enough to trigger the circumstances that made me write down each piece of advice, I can use this advice as a starting point to making decisions.

And in fact, that's what advice is meant to be. It was never meant to replace good old thought process. But the more we expose ourselves to information digests, the more we skip the long article and skim over the TL;DR line, the more we shortcut our own thought process, seek comfort in our crutches wherever we go, and aim to become context-free. But – as your computer scientist friends will tell you – "context-free" is not very "intelligent".

Technology, Venture, and Design

Before embarking on this second incarnation of my blog, I reflected on the past four years of my experiences in an effort to extract a theme closest to my heart. What stood out was an intersection of three areas. I think it's a particularly powerful intersection, one worth taking a deeper look into. These three areas are TechnologyVenture, and Design.

But let's step back a little.

We live in a bimodal age of both specialization and "skilllessness". Some of us specialize – they earn their PhDs, they deepen their understanding of a particular subject matter, they become comfortable in their very narrow and specific job roles. Others go in the opposite direction – they remain "generalists," a term which, more often than not, means having no particular skill but boasting the general ability to deal with people, with maybe an uncommon amount of common sense sprinkled on top. If successful, the former become fantastic individual contributors, and the latter become great managers.

But if we want to aim higher – if we want to change the world in small ways or in big ways, we need to change the way we look at it, and we need to revisit our role in it. We need to know enough about everything to tackle the increasingly complex problems, straggling the increasingly larger number of distinct fields. But we also need to know a lot about enough things to be able to actually make a difference. You may have heard of "T-shaped professionals", having some breadth of knowledge and one area of depth. I want to go one step further, advocating for the need to have deep expertise and experience in more than one area, in addition to the breadth of knowledge elsewhere. At the most basic level, it's because the best insight comes out of understanding several things so well that you can spot the subtlest of connections between them.

There are lots of combinations of areas which can offer such synergy, but I want to focus on three which I think are the most powerful.

- - - 


Technology truly is the driver of mankind's progress. Technology – literally the act of applying our knowledge – has a transformative ability. An insanely powerful flavor of technology that emerged in the twentieth century – software – is the best testament of that. Software frees us from most physical constraints. You can stack software on top of other software, which lets us create remarkable leverage. Fluency in technology – and software, specifically – is indispensable in the twenty-first century.

Many of the people I interact with hope that a superficial understanding of technology will do. After all, they can outsource the technical work. Well, as many firsthand experiences have taught me, there is absolutely nothing worse than having someone who does not understand technology attempt to manage, or in some meaningful way contribute to a problem that requires technology. Those people are like that broken wheel in the grocery cart – yes, it supports the cart, but it's really not that much more difficult with just three wheels, and boy is that broken wheel frustrating! You have to stop all the time, adjust the wheel and hope that it will continue moving in the right direction.

Here in business school, some of my classmates hope that they can just take an intro CS class and check the technical box. While they will no doubt do very well in that class, I'm afraid it's not enough. The flip side of that ability of technology to provide massive leverage is that to understand (let alone to harness) technology means to have to dig very deep, layer beneath layer, to achieve proficiency. You not only have to be able to write a Hello World! application; you have to understand what makes the computer print Hello World. It's a deep stack to understand, and for that, you also need to have a good command of mathematics. One CS class just won't cut it. It's about a mindset, a way of seeing the world.

I was fortunate to be exposed to leverage-providing technology very early in my life, thanks to my father who foresaw the rise of software and smuggled a computer into the country for me to play with. For those who believe in the importance of technology, but who don't have the background, the best advice I can give is to unconditionally immerse oneself in it. Set a goal – to write a photo-sharing app, or something – and be relentless in getting to that goal. At first, you won't even know what questions to ask. Struggle! Get help, google incessantly, learn by failing a hundred times which stackoverflow comment is useful and which one is useless.

 - - -


The desire to build a business, or a deep understanding of what makes businesses successful and unsuccessful, is an ability that I only learned to appreciate relatively late in life.

Business is the ultimate applied science. The best way to test an idea is to build some life support around it and open it up to the world, to see if it can survive. You may have arrived upon the best theoretical result, but to change the world, you should turn your theory into a sustainable business. Being venture-minded is also a great way to ensure that you don't solve problems that nobody has, and that you don't just create a science fair project. Subject your ideas to the harshness of reality. If they blossom, you have come up with something of great value.

The best way to acquire a business intuition is to be in business. You have to have enough exposure to what makes a business tick. I spent six years at a company, but – while the management was wonderfully transparent, allowing me to learn what a company should and should not do – I barely saw the tip of the iceberg. That's why I recommend joining a company small enough so that you can understand fully what it does and why it does what it does.

You can also start a venture. The learning curve is steepest, and the things you learn you will never forget; but you will be subjected to the ebbs and flows of luck.

If you haven't had much experience with business, you can try business school. That's what I chose – and I'm glad I did. By immersing myself in a rich ecosystem focused on business issues, I've acquired an intuition I haven't had before. I think about the world differently now. But all the theory, the cases, the conversations are just one part of the equation. You have to go out and apply what you learned. 

 - - -


Design, or rather, the art of human experience, is another area that I consider essential. You may have the best technology, and the best business model, but to be truly successful, you have to understand how your product or service integrates with humans, their workflows, their pains, needs and desires.

You can't change the world if you don't interact with humans, be it a product that you design that people want to use (Tesla is changing the world – it's doing so by creating products that people love), or an institution you establish (which consists of a number of human beings), or even a book you write (which is read by humans).

Many of my friends think of design – or the experience that humans have with their creations – as secondary. I think that's what differentiates good solutions from great solutions. You can't outsource design: if you think you can, you betray the critical fact that you don't understand your product and your customer enough.

 - - -

Understanding technology, being venture-minded, and caring about design and the human experience are incredibly powerful. In the next few decades, as software continues to eat the world, as technology roles remain the most lucrative, and as techniques such as analytics and hypothesis-driven experimentation push their way into most job descriptions; as consumers and businesses alike continue to demand human-centric products and services that understand user needs and reduce frictions to use; and as more ideas start seeing the light of day in the form of viable businesses, these three areas will seem just as indispensable as the ability to communicate or to use a computer is now.

Better be on the forefront than try to catch up when it's too late.