The Successful Entrepreneur Formula w/ Salim Ismail | EP #47 Moonshots and Mindsets

you know in the old school companies you would hire a consultant to tell you what to do well that's gone today because the market is changing too fast the day before something is truly a breakthrough it's a crazy idea it's the most fundamental archetypal process in life you never know where the Breakthrough idea is going to come from your ability to adapt is going to drive market value failure is okay so you just got to go with it and so you have to be able to build that deeply into your business to succeed properly especially in a volatile world so if you're an entrepreneur starting a company one of the things I you know beseech you to try [Music] is Welcome to our next episode of moonshots and mindsets I'm here with my dear friend selem Ismael my co-author of our newest book exponential organizations 2.0 the first CEO of Singularity University Sim let's talk about one of my favorite subjects of an EXO which is experimentation you know we're living in a world where your ability as an entrepreneur to experiment on your products and services at lightning speed is better than ever and ultimately you know we're giving up our belief that we humans know what's right and saying forget about that let's find out what actually works as a product and a service uh but before we get into that my friend would you refine Define what is an exponential organization so uh an EXO as we call it is a 21st century organization design that goes away from the top- down hierarchical pyramid style command and control structures of the 20th century and moves to a much flatter uh experimentation driven purpose-- driven agile flexible scalable organization structure and we found that they we looked at the fastest growing unicorns and teased out the model so we're not kind of inventing something we're putting labels on what already exists and EXO is delivering typically 10x better faster cheaper than its peers in the same space um just to give you a hard data point we mapped The Fortune 100 against this model and found that the top 10 most EXO friendly of the Fortune 100 I would perform the bottom 10 least like the least flexible least agile of the Fortune 100 over a 7year period delivered 40 times better shareholder returns uh between the top 10 and bottom 10 this just blows your mind as the external World becomes more volatile your ability to adapt is going to drive market value right so if you're an EXO a key driver of that adaptation is running experiments and constantly sensing the outside world yeah I mean people need to wake up to the fact that things have changed this is not your dad's or your granddad's old business environment people are building brand new types of companies that are outperforming multi-billion dollar conglomerate global companies at lightning speed so we talk about in previous podcast the idea that we have internal attributes that your company us uses your employees use to run an exponential organization and external uh ways that you manage the external world or you leverage the external world and experiments are you know they cross both right you can run internal experiments and external I I'll mention this you know I have an an EXO my PhD Ventures that manages a lot of my companies and products and I am constantly just demanding that the team be running experiments um and it's like uh one of the things I realized is a lot of companies that are being born today these are startups by entrepreneurs started today are born uh with a culture of experimentation from the very beginning they're running experimentation versus the old school which was you know in the old school companies you would hire a consultant to tell you what to do and that consultant had over time built a model in their mind and you were paying them for their for their knowledge but that's just broken right now it's completely broken and and this is a really key Point that's the difference between the old and the new right in the old you Rose to the leadership of a big company let's say you were the head of supply chain for BMW it's because you ran supply chain at some local level and understood the Dynamics of that then you Rose to a country supply chain level then you were supply chain for one one type of a car and you understood okay if a bit of a recession what suppliers do I go after Etc then you grows in prominence over usually by senority and having deep intuition about that domain space yes intuition important intuition you drove your thing by Deep experience and intuition and you had a gut sense of how the market was operating well that's gone today because the market is changing too fast anybody who's got uh 20 years of experience with supply chain of combustion engine cars is relevant as as electric cars come along because the Dynamics are completely different right so now what the only way to make sense and do sense making of the outside world is constantly running experiments testing the outside world you think of an amoeba right constantly probing outward from itself trying to see what's going on and then absorbing the things that it sees with food that's kind of the way we think of organizations in the future you know it's interesting uh as a young startup you have you go in with an assumption you go in with what I think people are going to want and then the ability to run not just a couple of experiments like you know what subject line should we use but thousands of experiments simultaneously uh given the rise of you know generative Ai and algorithms uh is is massive and a lot of times our intuition is wrong about what people want or what they're going to react to and it's only when you run these experiments do you find yourself evolving the product rapidly and there got to be building an internal culture of experimentation one in which failure is okay because if you're going to experiment probably 90 to 99.9% of the time you're going to be failing and a failure means okay I've learned something I'm not going to do it that way exactly you know I got a little story here when we when I was a Yahoo uh we came across this because AB testing on a website is kind of one of the original forms of experimentation you throw out a million pages with this and a million pages with this see what the responses and you have hard driven data as to what works on the Yahoo homepage there used to be seven headlines in the middle box okay and we found over tweaking this if you reduced it to six or increased it to eight the click-throughs dropped off radically but seven for some reason was a magic number that worked nobody knew why it worked nobody had any IR rationale for why that number worked it doesn't make any sense at all but for some reason and we found that just from AB testing and triing and experimentation that number works so you go okay it works you go with it but you have no idea why and how and that's the thesis of the external world you may some come across something that works you can't explain how or why so you just got to go with it and the only way you're going to find that is running lots and lots of different tests and experiments I was on stage with Steve wnc for an hour and a half debating this and he called it tinkering right can you just get in back and just play let let your people just play with stuff and interesting things will happen a quick break from our episode on June the 6th selem and I are going to be running a free 3-hour workshop on how to actually build and design an exponential organization would love to have you join us if you join us on June the 6th first of all you'll get free access to the book exponential organizations 2.0 access to an AI that we built that allows you to query the book and helps you design your exponential organization it's June the 6th it's 3 hours it's free we've never done this before click on the link below DM andis.com backo and join us all right now back back to the episode yeah and you know it's a lot of for larger companies that are trying to figure out where they go next right your products and services are stayed and you're trying to design what do you do I remember in my book bold uh we wrote about something called a 555 plan which was a form of experimentation now if you have a thousand employees um imagine forming groups of five um and you say to them listen over the next 5 days uh we want you to uh in your group of five which by the way diversity in the group like having an engineer and a scientist and an uh you know executive assistant like different groups you're not it's not all engineering or not all marketing um we're going to give you uh $500 budget we want you to go and experiment out there with designing new product or service it works really well in the digital world right and if you get hundreds of ideas and they're experimented on um then you find a signal in the noise is like huh this idea that we didn't expect and if you're running a 555 experiment uh it's really important to incentivize people to try crazy ideas right one of the things I like to say is the day before something is truly a breakthrough it's a crazy idea right if it wasn't a crazy idea yesterday then it wouldn't be a breakthrough today it would be an incremental Improvement and so if in fact breakthroughs require experimenting with crazy ideas you know when I'm in the boardroom or I'm on stage like you are I say where is your crazy idea Department inside your company if you don't have one if you don't allow your team to play with crazy ideas you're stuck on incrementalism you know Amazon in fact actually measures this down to that level they've asked for every team inside Amazon you're asked how many experiments did you run this quarter how many succeeded how many failed if you're not running enough experiments and not enough or failing your bonus gets dinged right because you're constantly pushing the learning of the organization at a whole not by accident is Amazon one of the biggest companies in the world yeah Jeff Holden uh uh who was a friend I haven't seen him in a while though unfortunately but Jeff uh was on my board at ex prise and he was the chief product officer at Amazon and also at Uber and he was deeply involved in fact I think Amazon built a a experimentation engine I think it was called morphus which yeah and and they were exactly doing that it was like they're running thousands of experiments remember Jeff Bezos uh I quoted him said you know the success of Amazon is a function of the number of experiments we run per year per month per day and um because we actually as humans are biased but we don't know what works until you try it until you try with check writers out there so if we lift up a level this gives the rationale for this I think very powerfully because the external world today is so volatile and so unclear as to what's coming we have 20 Gutenberg moments you call them asteroid impacts we've got pandemics we've got Bank closures we've got geopolitical risk at a kind of a crazy level the only way you know in the past your senior Executives based on their intuition would go off and hunker down and come up with a strategy um and you can't do that anymore that's irrelevant what you need to be doing today is basically running a thousand experiments constantly probing the edges of the world and seeing what works and making doing sensemaking in that way seeing what works and ruthless ly following that even though it goes against your gut that it might see goes against your experience goes against your intuition just ruthlessly following that um Eric Reese talks about this as a startup being an experiment looking for a business model right that's a startup and so you just got to run tons of experiments and you look at the biggest companies in the world all of them started with tinkering okay Larry and Sergey playing with algorithms and and Sten Steve Jobs and wnac tinkering with a computer um uh playing around with Facebook groups all of them started as little companies that experimented a lot and iterated like help and sometimes your intuition like you said is wrong so when Holden Jeff Holden was telling me about at Amazon when uh Prime was first proposed you know the idea of free shipping for people it was thought of as a crazy idea and and Bezos said let's try it and of course Amazon Prime is now driving you know huge double digigit majority of their of their revenue use their profits it's incredible when when people come across those things in hindsight it looks so obvious right and at the time it looked like a crazy idea just as you talk about and you won't find them unless you have that culture what I think is one of the most powerful developments today is with the rise of chat GPT and auto GPT and some of the generative AI capabilities we can now train AI to run those experiments and even conceive of those experiments so you should be kind of going hey AI go run a thousand experiments on this domain and figure out what works yeah it's we're getting there very quickly and uh you know one of the companies out there that's one of probably uh the great experimenting companies of our of our lifetime is Google right and Google uh not only experiments at the at the tiny level of you know bits on a you know sort of pixels on a page uh they built something called Google X uh when Google went to alphabet it became known as X and astr Teller uh runs that and he's been uh on my stage now a number of times uh a good friend and a brilliant individual and he talks about the importance of Rapid experimentation with companies so Google uh Google X I'll call it from the moment versus x uh has built and experimented with thousands of companies um and you wouldn't know that because it's it's kept somewhat internally secret I asked him why do you keep all the companies you're experimenting with secret and he said because we kill so many of them so rapidly we don't want to have on the front page of the news in San Jose Google fails another company right it looks like we're we're doing poorly but the idea of starting an experiment and failing it quickly is critical because if you have a startup and a startup can be a single person spending their afternoons or weekends or a small team and you have a uh you know a thesis for what you're going to create but after a period of time you realize it's not working the worst thing you want to do is keep spending your time and your money on that so the best thing you can do is kill it quickly and then recycle those individuals uh and to another idea and make sure you trap the the learning uh I may have some uh small part to play in this Peter in 2010 we had a singularity event Larry Paige was there remember he came and spoke at the closing ceremonies and he he grabbed at the reception afterwards and he said hey your your Brick House unit Yahoo is really great should I do that at Google right and I said no I said don't do it because uh Yahoo used our Innovation unit as a PR exercise to show the world that were really cool which put a massive Spotlight on us which meant we couldn't fail right I said keep it stealth and point it into adjacent areas and now part you know obviously lots of his own thinking but then that essentially is Google X where they keep it stealth you have to be able to fail elegantly and take the learnings the the thing that I remember that was the most powerful from your conversations with Astro was that when they do a project at X they they will say what are the 10 reasons that this might fail let's take them go tell us really important heuristic it's called a premortem so we all know what a postmortem is like after a project has failed or product or service or company you look back and say okay why did it fail and you said at what we do is something called called a premortem so before we launch a product or a service uh we get together with the team um and we say okay I want you to imagine that we are uh 3 months after the launch of the product of the service and it failed miserably and you know why it failed write down on a piece of paper the reason that this product failed and they collect all of those and then they discuss them and sometimes they find actually great reasons why this is going to fail but no one was was felt permission to share their idea so anyway that's like for me these ideas of a premortem are are what I led about what I loved about that approach was they take the reason the biggest reasons why it might fail and they and they test those first right and then you you should be able to knock that idea off the perch pretty quickly if you take the top highest reasons it may fail and then just work your way down the list but if you get to the end of the list this is going to be a successful product cuz you worked out all the big issues this episode is brought to you by levels one of the most important things that I do to try and maintain my Peak Vitality longevity is to monitor my blood glucose more importantly the foods that I eat and how they Peak the glucose levels in my blood now glucose is the fuel that powers your brain it's really important High prolonged levels of glucose what's called hyperglycemia leads to everything from heart disease to alzheimer's to sexual dysfunction to diabetes and it's not good the challenge is all of us are different uh all of us respond to different foods in different ways like for me if I eat bananas it spikes my blood glucose if I eat grapes it doesn't if I eat bread by itself I get this prolonged spike in my blood glucose levels but if I dip that bread in olive oil it blunts it and these are things that I've learned from wearing a continuous glucose monitor and using the levels app so levels is a company that helps you in analyzing what's going on in your body it's continuous monitoring 24/7 I wear it all the time really helps me to stay on top of the food I eat remain conscious of the food that I eat and to understand which foods affect me based upon my physiology and my genetics you know on this podcast I only recommend products and services that I use that I use not only for myself but my friends and my family that I think are high quality and safe and really impact a person's life so check it out levels. l/ Peter give you two additional months of membership and it's something that I think everyone should be doing eventually this stuff is going to be in your body on your body part of our future of medicine today it's a product that I think uh I'm going to be using for the years ahead and hope you'll consider as well I mean there's so many other uh things that have changed in the world that allow us to do rapid experimentation uh like you you know basically uh being able to launch a website product even before it exists or go out with Google Search terms and see whether people will search on your term or you can you can describe an offering um get people to the credit card page where they would click to buy and say I'm sorry this product is not available right now but when if it becomes available we'll let you know thank you for your willingness to buy I mean you can run virtualized experiments on virtualized products and get the data to the point where you know I'm pretty clear this is going to function we we talked about this in the last episode a bit but was worth re restating Kickstarter I love Kickstarter um crowdfunding means that for the first time in the history of business you can get Market validation for a product before you build a product right that's just unbelievably powerful uh to getting an idea to Market especially for Consumer facing products and I think this is where this entire even think about the idea that the evolution itself operates on an experimentation basis right we throw out gene mutations and you see what works and those for Survive by natural selection it's the most fundamental archetypal process in life and so you have to be able to build that deeply into your business to succeed properly especially in a volatile world so if you're an entrepreneur starting a company uh or you're in a company and you're managing a team one of the things I you know beseech you to try is building a culture of experimentation that constantly be be uh describing experiments that you're going to run uh what you're looking for as the answer and then run those experiments um and it at a minimum it you know it's the subject line of the emails you're sending out uh at a maximum it's like let's come up with 10 variations of the business and try an MVP in some of those and see what actually works MVP for those unfamiliar is from lean starter what's the minimum viable product right what's the smallest set of features that get it out there and allow you to test and iterate uh when we were building products at Yahoo Peter um I remember Karina we brought Karina fake to come in she was the founder of flicker uh and she would say to the teams okay great you're building this product with 20 features fabulous it's going to take you two years give me the two features that are going to have it succeed which are the two out of the 20 they' go oh this and this she go great build those two show me that the product succeeds at all and then iterate and add the others rest don't wait till you built 20 features before you get out there you may fail so uh that's essentially the birth of that entire idea of MVP critical idea you take the smallest feature footprint get it out there and iterate very very fast yeah I mean what you're battling uh as an EXO is what I'd call the tyranny of confidence like you know what the right answer is and the reality is you don't uh and you've got to be running these EXP experiments and it's easy for a startup especially at T equals z uh in the culture uh for you as the founder or Founders to say just you know every time you're meeting it's like what's the experiments we're running what are the variations we're running what's the data we're collecting and just getting into that mindset of Rapid experimentation if you're a large company um and you're deal you're dealing with the tyranny of confidence the tyranny of uh of uh seniority um you know which is a problem um it's a huge issue I love that phrasing tyranny of of confidence you know what solves that is the is the dedication to the MTP right if you're if you're really trying to solve that problem okay it doesn't matter how many times you fail it doesn't matter you just keep plugging away at it because you're so emotionally excited and connected to the problem space so let's talk about experimentation in large companies I mentioned the idea of a large company uh running these f 555 experiments it's unleashing you never know one of the important things here is you never know where the Breakthrough idea is going to come from you you think it's going to come from your head of engineering or your you know but it could be the person in literally the production the mail room or the executive assistant who happen to put two or two together it's typically again a crazy idea it's not coming from your normal sources so how do you tap into the wealth of knowledge inside your organization this this is this is the hardest thing for big companies to adopt because big companies don't tolerate failure right it's what we call a CLM a career limiting move um you fail you're done right that's the basic Etha so people stay keep it safe and they never test an experiment and this is the hardest cultural Paradigm to shift that's why you have to build the company as an EXO to start or start exos at the edge in order to do this um you have to and you can turn it into a game you know what Adobe did that was really successful they gave every employee a red box a shoe box with startup instructions and $1,000 check and they said If your manager won't let you build some feature or some product that you think was worth building here's $1,000 go Build It Go hire some developers uh in Estonia or India or wherever and start building that so people got together pulled their red boxes got together 10 20 30 grand and started building features and it turned out something like 50% of adobe's revenues 3 years later came from those red box programs and crazy crazy if you let them go and you know um Google talks about this as their 20% time right which yielded Gmail uh um 3M I think is the most legendary they would give their researchers 30% time to Tinker and play okay I I think in today's world it's got to be 50 to 70% of time like let people just play around uh and and you'll find those results or the or where things work one of the other places you can go to get uh great ideas that you might not think think about is not inside your organization but it's the community out there right it's your your customers and people who love what you do and what you stand for well this is where community and crowd are so critical as elements right if you can run experiments in the community it gives you a free place to test things and then you bring them in and you know you've given an example before of actually going out to community and saying what features should we add what product should we create yeah this is um uh Chris Anderson doing DIY drones did this you know got 300,000 people that are drones enthusiasts when they want a product they just go what do you guys want and they go oh we want a DIY kit great that's that drives your product development and I think successfully running and asking the community or getting your community to run experiments and sourcing that back in is essentially the future of most products going forward in the world but in order to run an organization that is that experimental it's got to be agile it's got to be data driven you have have to be able to actually collect the information um measure it and make decisions based upon the data there's some critical cultural prerequisites right you have to have the culture allowing failure you have to have an MTP by the way so and you have to the third one you really need we'll talk about this in another episode is autonomy you know GE uh worked with Eric Reese and they ran the biggest corporate training exercise in business history they trained 60,000 managers on Le startup okay and it failed and it failed why because they didn't have autonomy okay they were expected to experiment only in that particular domain which blows the reason for experimentation it's it's antithetical to experimentation and play and tinkering right and so there there's some prerequisites it's not an easy attribute to put into Legacy organizations maybe the one of the hardest but it's the most critical you know it's interesting um uh I was just at a board meeting yesterday of V which is uh Eric puller's uh company that creates these extraordinary metaverse experiences and they've built the toolkits that allow people to build on top of their platform and the stuff that was coming out of it would have you know the company's relatively small engineering staff uh and what these other companies were building was crazy right so it's like Roblox as well um you know Roblox offers a a platform that allows other people to build you know games on top of and so they get thousands of new games and there's no way that the internal team could have built any of these successful games at scale yeah so this becomes incredible if you can build a platform and offer tool sets to a community and let them build on top of you then you're on to a total winner and nobody will unseat you from that because you're you're the coral reef right and a million little organisms are running around around building on top of your coral reef and adding to it as time goes by hey everybody this is Peter a quick break from the episode you know I'm a firm believer that science and technology and how entrepreneurs can change the world is the only real news out there worth consuming I don't watch the crisis News Network I call CNN or Fox and hear every devastating piece of news on the planet I spend my time training my neural net the way I see the World by looking at the incredible breakthrough in science and technology how entrepreneurs are solving the world's Grand challenges what the breakthroughs are in longevity how exponential Technologies are Transforming Our World so twice a week I put out a Blog one blog is looking at the future of longevity age reversal biotech increasing your health span the other blog looks at exponential Technologies AI 3D printing synthetic biology AR VR blockchain these Technologies are trans transforming what you as an entrepreneur can do if this is the kind of use you want to learn about and shape your neural Nets with go to demand.com back/ blog and learn more now back to the episode so we just to wrap this up I want to just bring back how all of these EXO internal and external attributes work together so we've been talking about experimentation here and experimentation works when you've got access to first of all Ai and algorithms to help you analyze the data you're experimenting with the second is you have dashboards that allow you to measure um how and track which experiments are working and which are going in the wrong direction because if you're building an EXO things move fast and you need those dashboards to be live and visual to everybody involved autonomy like you just said to allow teams to go off and try crazy ideas because if they can't have the autonomy to try to follow their you know their gut and try things out then then you're then you're stuck and then you know uh we're talk about community and crowd which is you can tap the community and crowd to help generate ideas for you and an engagement for you to able to like engage them incentivize them to play these games with you and then the MTP becomes the guiding directive thing saying okay this is the direction which we're going you know if you look think about your X prises Peter right the I'm super proud to be on the board and the way the what get me so excited is you have a huge problem like curing cancer or fighting wildfires right and then you get you're you're essentially allowing the entire world to run experiments uh and win an incentive prize as a result of that experiment right so you've I think ex prise has learned how to run experiments at scale in the crowd at a global level unlike any other organization in the world uh thank you for that and uh I'm very proud of what what the team has has done you know I think it's important to realize that um MTP as The Guiding Light I going come back to that again and I think everybody here and please if you're an entrepreneur if you're running a company even if you're running you know part of a company or for yourself or for your family having a massive transformative purpose that helps you decide what to do and what not to do you know I'll go back to that quote from Martine rothblat uh where she said listen the difference between successful and very successful people is successful people um learn to say no to a lot of things very successful people say no to almost everything they're focused right and if you're running experiments inside of an organization you know you want to make sure that your experiments if you're a a coding company don't take you into making shoes I mean it's like what's your what's your purpose in life and running experiments that all are Marching In the right direction because you might find yourself in a business area that you don't care about anymore and and money is not a reason to be making a business work it really is to make a difference on the planet and money comes along with that you know i' I struggle with this cuz I get excited about so many things I'm terrible at this like the focusing and the naring down I'm like oo let's do that o let's do that and then you end up chasing a ton of butterflies and you're not effective at all so the MTB becomes critically important to kind of keeping yourself on the on the on their rails all right buddy well this was fun again just to Echo experimentation is something you can now do uh it wasn't something easily done even 20 years ago but today experimentation is table stakes and your ability to use AI to use the crowd to be running experiments um is fundamental to being an exponential organization cuz your intuition may not be what actually is the best decision for your product or service an easy thing to try go to Chachi PT and say Here's my company what experiments should I be running yeah aming query just run some iterative queries on that you'll find something some amazing things to test and try out pricing models customer interaction Behavior changes etc etc all right pal good to have this conversation great greaters excited for exponential organizations 2.0 to make a difference in the world it's a big experiment it [Music] is

Channel: Peter H. Diamandis

Views: 7,134

Keywords: peter diamandis, longevity, xprize, abundance

Id: oU6QJi5NF7g

Length: 33min 27sec (2007 seconds)

Published: Thu Jun 01 2023