July 19, 2021 • 13min

Breakthrough Lessons: Find your wave before your market

Pattern Breakers

This episode explores how the most successful startups tend to "ride a wave" that represents a major sea change or shift. These powerful waves give founders the ability to introduce radically different ideas that can change both the subject of discussion and the future itself. The episode uses the example of Jerry Yang and David Filo at Yahoo to illustrate this concept, and provides insights on how founders can leverage this approach to find their own path to startup greatness.

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Key Takeaways

Great startups offer a radically different future from what people expect. Before developing a minimum viable product, founders need to explore a radically different future and build a product that brings it to early true believers.
Follow "waves of change" that represent sea changes - waves so powerful they can be leveraged to change both the subject and the future.
Two main ways founders discover surprising futures:
- Intentionally exploring startup ideas based on a wave they're already interested in (e.g. Todd McKinnon at Okta exploring cloud opportunities)
- Stumbling upon a wave while exploring the future as a hobby/obsession (e.g. Jerry Yang and David Filo with Yahoo)
Focus on finding the right wave, not just being a good "surfer". The wave you choose is your biggest weapon as a founder.
Look for markets that will exist in the future rather than subcategories of today's markets. Arrive at great markets by following waves to different potential futures.
You may be building a breakthrough without realizing it if you're "living in a time machine" with unique access to future trends/technologies.
Get out of the present by defining massive technology and adoption waves that you can ride to greatness, rather than starting with customer development.

Introduction

This episode explores how the most successful startups tend to "ride a wave" that represents a major sea change or shift. These powerful waves give founders the ability to introduce radically different ideas that can change both the subject of discussion and the future itself. The episode uses the example of Jerry Yang and David Filo at Yahoo to illustrate this concept, and provides insights on how founders can leverage this approach to find their own path to startup greatness.

Topics Discussed

The Importance of Waves in Startup Success (00:00)

The episode opens with a quote from Jerry Yang about being "in the right part of the tide", highlighting how riding big trends can lift startups to success. Mike Maples emphasizes that founders should focus on finding the right wave first, rather than immediately trying to think of a startup idea or market.

Great startups offer a radically different future from what people currently expect
Before developing an MVP, founders need to "get out of the present" and explore a radically different future
Build products that bring this future vision to early true believers
Follow "waves of change" that represent sea changes - powerful enough to change both the subject and the future

Two Approaches to Discovering Surprising Futures (01:39)

Maples outlines two main ways that founders tend to discover the surprising futures that propel them to greatness:

Intentional exploration: Founders get out of the present deliberately to explore startup ideas based on waves they're already interested in and have domain expertise in
- Example: Todd McKinnon at Okta exploring cloud opportunities from his experience at Salesforce
Accidental discovery: Founders stumble upon a wave while exploring the future as more of a hobby or obsession
- Often means they're "living in a time machine" without fully realizing it
- Examples: Jerry Yang and David Filo with Yahoo, Mark Andreessen with Mosaic browser, Bob Metcalfe co-inventing Ethernet at Xerox PARC

Finding Your Massive Wave (03:47)

Maples emphasizes the importance of not just being a good "surfer" (founder) but finding the right wave and catching it at the right time. He outlines different types of change waves worth considering:

Technology waves: Represent exponential improvements in technology (e.g. Moore's Law, DNA sequencing costs, AI prediction accuracy)
Adoption waves: Represent accelerating adoption of new technologies (e.g. smartphones, AirPods) or changing beliefs (e.g. telemedicine adoption during COVID)
Regulatory waves: Major shifts in behavior due to government/governing body decisions (e.g. changes in telemedicine regulations during COVID)

Maples notes that combining multiple big waves into one insight is even more powerful, using Lyft as an example:

Technology wave: GPS chips bundled into smartphones
Adoption wave: Mass adoption of smartphones
Combined insight: Sharing economy could work with moving cars (like Airbnb for housing)

The Danger of Starting with Markets (07:36)

Maples warns against the common trap of trying to think of a startup market at the beginning:

While the market will ultimately determine success, founders should look for markets that will exist in the future rather than subcategories of today's markets
Starting by trying to think of a startup orients you in the present, looking for gaps in current markets
Change waves allow for "asymmetric warfare on the present" - providing the force to change the subject rather than play the comparison game
Arrive at great markets by following waves to different potential futures

Recognizing Breakthroughs in Progress (08:51)

Maples highlights that founders might be building a breakthrough without realizing it:

If you're "living in a time machine", don't discount the potential of your work
People in the present often won't recognize the importance because they have a different frame of reference
Examples: Mosaic browser, Ethernet, early days of Yahoo
Breakthroughs often don't seem like businesses at first, even to the people building them

Key Takeaways for Founders (10:51)

Maples summarizes the main lessons for founders:

Don't skip the insight phase - going straight to customer development risks iterating to a local maximum
Get out of the present by defining massive technology and adoption waves you can ride to greatness
Follow change waves to arrive at markets rather than trying to identify gaps in today's markets
The biggest markets come from unexplored territories of the future, not precisely defined current markets
Consider whether you're already working on a breakthrough without realizing it - examine your frame of reference

Closing Thoughts (12:04)

Maples reiterates the core message: whether looking for a new startup idea or working on an existing project, the key is to "get out of the present" by finding your waves. He encourages listeners to consider whether they have unique access to future trends or technologies that could lead to breakthrough ideas.

Conclusion

This episode of Pattern Breakers emphasizes the critical importance of identifying and leveraging powerful "waves of change" when pursuing startup success. Rather than focusing solely on current market gaps or customer needs, founders are encouraged to explore radically different future scenarios enabled by technological, adoption, or regulatory shifts. By aligning with these massive waves, startups gain the power to introduce truly transformative ideas that can reshape entire industries.

The key lessons for founders include:

Prioritizing the search for the right "wave" over immediate product development
Looking beyond present markets to envision future possibilities
Remaining open to accidental discoveries while exploring future trends
Combining multiple waves for even more powerful insights
Recognizing when you might already be working on a breakthrough without realizing it

By following these principles, founders can position themselves to create startups with the potential for outsized impact and success, riding the waves of change to build the companies of tomorrow.