Starting A New Disruptive Business with Strong Culture and Innovation

How can you innovate faster and better? What are the small changes you can make inside teams and companies, that will change things for the better? Why is culture overvalued for this?

Safi Bahcall is the author of “Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries.”

Safi, a physicist and entrepreneur, reveals a surprising new way of thinking about the mysteries of group behaviour and the challenges of nurturing radical breakthroughs.

In this podcast, Safi explains why good teams can kill bad ideas, and details the two phases of executing a great idea: the solider phase and the artist (aka loonshot) phase.


[00:00:00] The Venture Podcast with Lambros Photios.


[00:00:06] When you start a business, you’re told it’s 10 percent idee, 90 percent execution, and the person I’m about to speak to says that good teams kill great ideas.


[00:00:15] Now, I know that’s a bold statement, and that’s why I really want to delve into it a lot further with you. The person I’m about to speak to. He’s actually taken a business to the point of an IPO surgery in that business as the CEO for 13 years and has published a book called Loon Shots, which has been recommended by the likes of Bill Gates and Tim Ferriss. It was an instant Wall Street Journal bestseller and has been the number one most recommended book of the year in the Bloomberg annual survey of CEOs and entrepreneurs. If that wasn’t enough, it’s been featured in Amazon, Bloomberg Financial Times, Forbes Inc, Newsweek and a bunch of others. The person I’m speaking about, though, is a gentleman by the name of Sofie Nicole Sofie. Thanks so much for joining us on the venture podcast. Thanks. Happy to be on your show. So, Sofie, tell us what is lern shots all about?


[00:01:08] Well, it’s about the crazy ideas that can change a course of science, business and history and what teams and companies and even nations can do to innovate faster and better to encourage those ideas that are trapped inside the basements of teams and companies everywhere.


[00:01:24] Yeah, amazing. And I mentioned earlier, you know, one of the points that you make is a good eye. Good teams kill great ideas. Can you tell us what you mean by that?


[00:01:32] Sure. There’s so much out there today about culture, culture, culture. I remember when I was first starting my company, I was I think I was in my early 30s or so and I didn’t know much about being a manager, being a good leader. So I read everything I could try to find, which was all about culture, culture, culture. But it turns out that just talking about culture doesn’t do very much. Just everybody who has been in business or ran a company for a long time knows, you know. I’ll give you an example. Imagine I stick my finger inside a glass of water and I swear I around well, the molecules just slosh around my finger, right? That’s what they do. Except when I change in temperature, all of a sudden the behavior of those molecules totally changes. The water freezes. I can’t stick my finger in anymore.


[00:02:21] Why?


[00:02:22] Molecules inside. Didn’t know there wasn’t a CEO. Molecules saying everybody change from sloshing around to lining up rigidly. You know, it’s it’s or when the temperature rises, everybody go from, you know. Being totally rigid to sloshing around, yet they just totally changed. Why am I talking about it, Glassford? That sounds sort of crazy, but that’s what happens inside teams and companies. You know, leaders will beg teams and beg people to nurture those crazy ideas, to innovate faster and better. And it does nothing just like yelling at a block of ice, you know? Hey, molecules. Could you just loosen up a little bit? Won’t melt that block of ice. But a small change in temperature can get the job done. Small change in temperature can melt steel. And so that’s what moonshots is about. What are those small changes you could make inside? Teams and companies that will transform the behavior of your team or your company, the things that you can do to structure rather than culture that can cause these massive changes in people’s behavior.


[00:03:29] And Sofie, can you tell us? I guess a few examples of where you actually went ahead and executed this within within your own business to see this change, to see this change actually happen?


[00:03:40] Sure. One of the things you start by understanding is why do these things happen? Why is it that good teams will kill great ideas? Why is it and I get calls all the time from CEOs or of tech companies or media companies or banks or actually in the military as well? And it’s always that’s that sort of same question. Why is it that these companies change as they get bigger, as they scale? Why? What can we do? So I’ll give you an example.


[00:04:13] I was a few months ago on a nuclear submarine with an admiral responsible for transforming the U.S. Navy. And if you are on a nuclear anyway’s exactly that same question about how do you balance the core and the new, and if you’re on a nuclear submarine and you are hundreds of miles from shore, deep under water, you don’t want to start hearing clanking noises from your nuclear engine. At the set, that’s your core at the same time, you don’t want to be surprised by a new kind of torpedo, that’s the new.


[00:04:47] So what this is really boiling down to is you have kind of one mode of human behavior. That’s the ice cube that’s totally lined up rigidly where you are focused on on time, on budget, on spec, consistently.


[00:05:00] And you need that. That’s absolutely essential. That’s not a bad thing. That’s incredibly important. If you are on a nuclear submarine, you need that discipline. You don’t want to hear those nuclear engines start making funny noises if you’re running a sales group. You need your sales folks to deliver on time, on budget, on spec. They can’t be knocking on somebody’s door and say, here’s a toaster. What? I ordered a television. That’s you won’t have a business much longer.


[00:05:27] But at the same time, you need those molecules sloshing around. You need that wild innovation. And so the trick is, if you are a leader, a manager is to wear two hats. Understand that you have the artists are the folks who are chasing those crazy new ideas. And they need one kind of structure. And then you have the soldiers and they have another kind of structure. They need metrics that is about on time, on budget, on spec, consistently. And you need to understand if you are the manager or the leader.


[00:06:02] You need to understand that those two groups generally don’t understand each other and they very often don’t like each other. The group that’s making the money rarely likes the group that’s spending the money and vice versa. And if you’re the manager or the leader, you need to see your first priority. That’s kind of bridging the artists and the soldiers, bridging the two of those. And I’ll give you an example, the English word risk. It’s one word for letters. You would think it would mean the same thing to everybody. But if you’re a soldier, risk is a very bad thing you’re trying to minimize. If you go out into a battle situation, it’s a high risk bad on your risk. It. That’s a fantastic thing. Congratulations, General. Give be a. But if you’re an artist. And you tell an artist, hey, you really direst the art. You’ve taken all the risk out of your art. But it’s a horrible insult.


[00:06:57] Right. One group is trying to maximize your risk. One group is trying to minimize risk. So if you’re a leader, you need to understand that these two groups have totally different objectives and you have to put on a different hat when you’re talking to them. You can’t go to the group that’s working on the crazy new ideas and say.


[00:07:15] Well, I think he had four point two ideas on Monday, and I think you’re going to have four. And I saw that you had four points, four ideas today. But in looking back on the record, you’re only up to three point one ideas. So what’s happening? Those artists, those people working on the crazy new stuff will think you’re crazy. So if you’re starting a company, you may not have enough people to divide into separate groups and manage differently. But what you need to do is create time is to understand that they’re two different hats and lead your team is. All right. We’re going to take one day this week or one week. This one, you know, couple day period. This month, I’m going to take off. Our soldier had off on time, on budget, on spec consistently where we’re trying to take away risk. We’re going to put on our artist hat and start imagining all the crazy wild things, even though they’re totally full of flaws that might work. That’s your loon shot phase. And so if you’re a manager or a leader, you have to understand that there are these two phases.


[00:08:22] And your job is to know is to lead your group, to lead your team, to be in the different phases, in the different times, to understand which one you’re doing at the right time and the right place. Because if you don’t understand that, if you’re trying to get your artists and your soldiers just to be the sack same and to be innovating and executing all at the same time. It’s like asking a glass of water to be solid and liquid at the same time.


[00:08:50] All you’re gonna do is get slush now in your book. Learn shots. Just looping back to that. You have the five laws in. The fourth law is one that I found particularly interesting, which is forget culture, create an innovative structure.


[00:09:04] And I think that what happens in a lot of businesses is when when entrepreneurs start businesses, they start them with the kind of typical, I guess, you know, business strategy document that involves vision, mission and values.


[00:09:19] And I think a lot of the time it’s very easy to cross pollinate your vision, mission and values with culture. I’d say that those two perhaps intertwine or believed intertwine a lot more than they probably should.


[00:09:31] And it seems like based on your book on this, I’m mistaken, Sofie, that that those two should be really different. It’s not. You don’t really saying you’re not saying that people should throw away their vision for the business or the mission for what the business stands for or the values I believe are minus understanding of what you’re really saying is that you need to create an innovative structure whereby, yes, we have this common purpose we’re working towards, but we serve a different within these two different, I guess, teams or dynamics, both the creatives and the soldiers, as you say. Ultimately, they can operate. They need to operate in a way that’s suitable to them in their best nature to be able to achieve, to be able to achieve an innovative structure as a collective whole and work towards that vision, that mission and those values.


[00:10:17] Yeah. You know, another way to think about it and which I talk to you and I speak about with leaders or managers all the time is that there’s this. And I summarize it as saying, be a gardener, not a Moses. There’s this myth that the great leader is Moses, who stands on top of the mountain and raises his or her staff and anoints the chosen project.


[00:10:39] The holy loon shot that crazy idea that’s going to make a giant difference in the industry. But if you look at the leaders who have done really well, they lead much less like Moses and they lead much more like careful gardeners.


[00:10:53] They understand that you need one kind of dynamic and structure when you’re nurturing crazy ideas and you need a totally different one when you are focusing on on time, on budget, on spec.


[00:11:05] And they see their job as managing the touch and the balance between those two, because a failure point in innovation is never in the supply of new ideas. You can put a 10 people in a room with a stack of Post-it for an hour and you’ll get a thousand ideas. The failure point is almost always in that transfer to the field.


[00:11:28] And by that, I mean bringing those crazy ideas out of that loon shot nursery. Not too early and not too late. Me taking your early stage ideas and getting out into the field with them and getting the feedback. But at the same time, bringing back the feedback. Working to the artists, to the labs, to the designers. Because an idea never works well the first time. What you have to do, I think of it, is the three deaths of the loon shot. Almost every good idea fails many times before it’s exceeded. Search was searching online. Google was the 18th search company.


[00:12:03] Facebook was maybe the 25th Social Network. Those ideas and if you look at almost any successful idea company, there’s usually a long graveyard of many failures.


[00:12:17] And so what you have to do is understand and expect those three deaths. And the key to that is understanding the transfer, managing and creating the new ideas, even when they seem a little crazy, bringing them out into the field with the soldiers who may not really want to focus on the new. They want to keep doing what they’ve been doing. You know, they got them to where they are today, making sure you get the feedback, bring it back and maintaining that loop. The second thing I think of, since I don’t have a very good memory, I think of it with a mnemonic and I think of that as LSC. Listen to the succ with curiosity. Listen to the succ with curiosity.


[00:13:00] So anyway, especially if you’re an entrepreneur, why do I say that or phrase it in that way? That’s because these ideas will fail so often when you’re working on something early stage. You will always if you’re an entrepreneur, if you’re launching a startup, you will always face rejection. I think the first when I started my company and went to raise money, I probably knocked on 100 doors before I got my first. Yes. And the first check.


[00:13:28] And then, of course, we we grew from there and then went public. But there was a lot of no’s. And the key to succeeding is, is that LSC. And what I mean by that is when somebody doesn’t want your stuff, whether they’re saying no to your product or no to your design or a partner walks away and investor walks away. There’s a strong temptation if you’re an entrepreneur, especially if you put your heart and soul into this new project. There’s a strong temptation to dismiss them as crazy or stupid. You know, you want to punch him in the face, somebody says, you know, your idea does make any sense. But only by setting aside that reaction to want to punch them in the face, to dismiss them, to tell people, oh, they don’t know what they’re doing. And pulling on that thread and saying, could you help me understand? And, you know, putting on your detective hat and saying, could you help me understand what it is about the product, it doesn’t excite you or doesn’t resonate, and people don’t want to tell you that they’re alive. It’s a difficult conversation. They may want to be friends with you later. So they don’t really want to tell you that. But that’s exactly the goal that you need. So you have to be really good at investigating failure at under a teasing out that suck. And when you listen, the reason I say listen to the SEC with curiosity is because most people, when they’re starting something new and people don’t like it, they just dismiss it. But you want to set that aside and get curious, like a Sherlock Holmes. You want to say, help me understand. They don’t want to figure out creative way. You know, one friend of mine calls a third party a mutual friend and gets them to ask the person, you know, what did you really think or why did you really not buy or why did you really walk away? Because then if it goes through a third party, they’re more likely to get the useful feedback. I’ll give you an example. You know, you may you may be going out there with a product you’re finding not a lot of traction you’re seeing. Are these people don’t get it. My product’s going to change the world. But if you stop and ask why and he really, really pulled, maybe someone will tell you. You know, it’s pretty interesting, but there’s a group over there in Idaho, France, that’s got another product like yours and it’s cheaper. And it has this other feature that I like. Well, you didn’t know that. So then you go look at that other product in France and you say, wait, I mean, I could add that feature, too. And not only that, I could do it better than they could ever do it. And that gives me another idea. So only by pulling on that thread, only by listening to the SEC with curiosity, can you actually start that loop, go in and end up developing something great. But it really requires you to set aside that urge to attack and defend and dismiss people who are rejecting you and kind of and ask them for help, which is a very difficult thing to do.


[00:16:35] Yeah. Sophie, you spoke briefly earlier about the false veil. Can you define for us what that is?


[00:16:40] Well, the false fail is it’s related to this idea of rejection and death. I’ll give you an example. The when the scientist who is developing working on a early stage drug that eventually became the statin drugs, which like Lipitor and Crestor, that is now sold close to a third of a trillion dollars and saved tens of millions of lives.


[00:17:07] When he first worked on that drug, he did what you usually do. He came up with this idea. You know, it was kind of a crazy idea.


[00:17:15] Most people thought it wouldn’t work this at all, lowering cholesterol in the blood while there’s cholesterol in every cell in your body.


[00:17:22] That’s got to be the dumbest idea. And so most people rejected the idea. But he came eventually got a drug and he was convinced it would do something and then he gave it. To rats, which is the kind of the first experiment you usually do, usually work with mice or rats in the lab and see if it works.


[00:17:39] Nothing happened.


[00:17:41] And so the few other groups or companies or researchers who are working on it just gave up and said, well, it doesn’t work. And if story. Turns out he was at a bar a few nights later, I was sitting next to a guy who worked with chickens and asked the guy, hey, what are you gonna do with your chickens after the experiment’s over? He said, well, I’m going to have some night. He was in Japan. He said, well, I’m going to have some nice yakitori chicken skewers. He said, listen, before you do that, could you give my drug to the chicken? He started thinking maybe there was something with the experiment. So he did. And boom, the drug worked phenomenally well in chickens. So that was and then the rest is history and then that created hundreds of billions of dollars in sale, became the one the most the leading drug category in the world for many years. That was an example of a false fail. It was a flaw in the experiment, not the underlying idea. And that happens all the time.


[00:18:45] Yeah, yeah. I mean, it’s a fair point, I think. I think there is a fine line, though, Sophea. I think one of the big things that really concerns me is it is persisting with the wrong idea for too long is, I guess, the juxtaposition to that. Right.


[00:19:00] So I think it’s important to recognize, perhaps recognize failure and make sure that you do persist to a degree, as in make sure that you’ve adequately, as you said, listen to the sucker of curiosity, which I love this mentality of of listening to the feedback, listening to what others have to say about your product or service or whatever it is you’re taking out that a market. But then on the flip side, you know, there is that important element of, you know, if you if if if perhaps if perhaps your cure doesn’t work or a drug doesn’t work in your product, does it? Or in the case or a product or service for startups, if your product or service isn’t solving a problem, sometimes it is important to recognize a failure at a certain point in time. Return back to the drawing board and work out. Wait a second. Why is it that people didn’t like this? I do want to talk a bit more about failure, Sofie. I think that I think that it is one of those things that is very interesting in startup world, because I think that even if you look at different demographics or geographical areas, I think there’s a different perception of failure, depending on where you are in the world.


[00:20:13] I think in Australia, for instance, there is a I think there is a culture of of, I guess not being particularly fond of failure, whereas I think when it comes to say, you know, Silicon Valley and startup world, particularly on the on the on the West Coast of the United States, I think that this mentality of fail fast, fail smart, but fail. Foss leads to the idea of exactly what you said, which is that if there’s ongoings, you can take in as long as you can take in feedback and use it to generate something constructive that then betters your product or service. It’s OK to fail as long as you take that failure. Take that feedback and iterate on it quickly. What’s it what’s your philosophy on failure? Is it is it something that you that you think is is is ness a necessary evil or do you think that it should be avoided at all costs?


[00:21:11] Absolutely. Failure is learning. If you’re not failing, you’re not learning. So if you’re not failing, you have a much bigger concern than if you’ve never failed. Because if you’re not failing, then you’re not learning. So I’ll give you give me another example.


[00:21:28] What you’re getting to is what an old friend of mine, a scientist who made some great discoveries and certainly would have won the Nobel Prize had he lived a little longer for his discoveries used to call.


[00:21:40] How do I tell the difference between stubbornness and persistence?


[00:21:46] And he persisted on his idea for 32 years before it eventually proved right and transformed the treatment of cancer. His name was due to Folkman, but he used to give that talk and talk to people a lot about the question you just ask, which is the difference between stubbornness and persistence. And I think you you hit it right on the nose there. For me, the LSC, the listening to the succ with curiosity is the litmus test. If I’m failing, but I’m still listening with curiosity, meaning I’m teasing out, what did I learn there and how does it give me a new hypothesis? And I’m creating new hypotheses and new ideas based out of that. Then I’m learning and I’m on the right track. But if I’m just shooting down everybody who is.


[00:22:35] Rejecting the idea, the project or the startup or the funding, and I’m not listening with curiosity and I’m not learning and I’m not creating new hypotheses. Then I’ve gone over the edge into stubbornness. So for me is my own temperature, my own thermometer is LSC. I’ll give you a failure is is incredibly important. It actually makes a difference in very large companies. I was just at Amazon, for example, and you may or may not remember, but they had this massive effort to create something called the Firefly to go into the mobile phone business. That was a spectacular failure. There is no Amazon phone today for you. You might. There are a lot of companies that making phones. But one of them is not Amazon. But you know what, there is everywhere today, Alexa. And you know where Aleksic grew out of the fire phone? The technology they developed for the phone is what brought them to Alexa. And so the the group, their lab there, you know, the secret lab at Amazon that works on these devices, their philosophy is exactly as you say, these new projects, these new products are experiments.


[00:23:51] And if they don’t work, they’re looking for the learnings. And as long as there were some important learnings, it was in many ways a success might not be immediate success, but it could be the next thing like the Alexa. So if there’s one thing your audience. I hope remember this. It’s that listen to the succ with curiosity. I’ll give you an example of how it made a billion dollars. Someone a billion dollars, just that less.


[00:24:15] So when in 2004, when a young guy named Mark Zuckerberg was out shopping, his idea for a new social network called the Facebook? It was like I said earlier, maybe the 20th or 25th Social Network. So many of them had failed. And the investors, all of them were passing because they said, look, there’s this other there was right at that time, there was another social network called MySpace that’s actually called Friendster, and it was imploding at a grant, grown up really fast. And then it was imploding and people were leaving for another one called MySpace. So the people the investors said, well, look, these social networks are just like fads, just like clothing or jeans. So, you know, you had Friendster one season and now it’s MySpace another season. So they’re not really good business models. So there’s one invest  was a fail. One investor, though, said, I wonder if that’s really true. I wonder if I can get some data on that. And he happened to know some people at Friendster. So he went in, he said. Can I get your data on user retention, because he knew that Friendster had attracted a lot of people very quickly, but their Web site wasn’t very good. It was crashing like every 10 minutes. So they had kind of a lousy Web site, which had to do with the fact that they didn’t build the right back end infrastructure. So he got the data and he said, wait a minute, people are staying on this Web site for hours, even though the Web site’s crashing all the time. If someone is staying on a Web site for hours, even though it’s a lousy Web site, there’s probably something good there. It might actually be a good business model. So he wrote Zuckerberg a check for five hundred thousand dollars. His name was Peter Teil, and he sold it eight years later for a billion dollars. That was a false fail of Friendster.


[00:26:14] It was a fail that scared everybody off the social network business, but it was a false fail and only because he was listening to the SEC with curiosity. Was he able to get to that next idea? So if there’s one thing for your audience, I hope they remember is that listen to look with curiosity when you’re pursuing your new idea, your new project or your new venture, take off that urge to dismiss an attack and investigate.


[00:26:39] Yeah, I think there’s an interesting lesson there. It’s it’s a it’s one which reminds me of the story of Marc Randolph, who’s one of the two co-founders of Netflix whose own wife told him, told him that the idea was to fail. And we had him on the podcast not too long ago, Saffy. And, you know, he spoke about this. This is the same mentality that, you know, this.


[00:27:04] While there’s an importance of recognizing when something is going to fail, it’s also important to a persists believing your idea.


[00:27:14] But to take on take on that feedback, listen to the suck with curiosity, take on that feedback, evolve, grow, and make sure that your idea improves. I think it’s so easy to get caught up with an idea and to think that this isn’t this is not an ego thing. Right. It’s just so easy to get caught up with. I think my idea is the best possible idea. I think it’s going to change the world. But I think that if you can’t adapt, if you can’t adapt to what the market wants, what people need, then people aren’t going to use your product or service. And the second thing that I really like about that, that kind of story that you gave there about about Facebook, which was preceded by MySpace and Friendster, is that sometimes being the first to market is not necessarily the best, the best way to Tuite to execute things.


[00:28:03] A lot of companies like Amazon to this day will intentionally not be the first to market because they want to learn from the folks failures of their competitors. They want to see others fail because if they can learn from those failures and create a product which does not have those shortcomings, then they can get a they can get a product out to market, which is going to be adopted much more heavily from the first from the first step from the launch.


[00:28:30] And I think from that perspective, it’s it’s incredibly important to pay attention to failures, whether they’re your own or someone else’s. Learn from them, understand what the market wants, and then create something that is going to solve a problem for your for your end user. And I think that, you know, the laws in your books, in your book, sorry, Learn Shots, really talks, really talk quite heavily about this in particular two and three, which are mine. The folks fail and listen to the SOC with curiosity.


[00:28:59] I agree. Yeah, that’s. I hope that is helpful for your audience. I know some of those lessons. I wish I’d known the first time I started that company would’ve helped me a lot, but that those are my own failures, that I went through my own three deaths to learn some of these things.


[00:29:23] But I agree, and it’s especially hard, you know, when you are starting something new. Your new idea, your new project is like your baby. And you’re so excited about this beautiful baby and nobody likes to hear someone say your baby is ugly.


[00:29:44] But that’s that’s hard to hear it. But it’s even hard to pause and ask them why. Help me understand.


[00:29:55] That’s especially hard. But that’s actually exactly what you need to do. If you want. To nurture that little baby and help it grow up, graduate and become this awesome.


[00:30:08] Yeah, yeah. And a great finishing note for those who are interested in breeding more Saffy’s book, Loon Shots How to Nurture the Crazy Ideas that Win Wars, Cure Diseases and Transform Ideas is out there. It’s been recommended by Bill Gates, Tim Ferriss. It’s a it’s a phenomenal book that you should all get your hands on, particularly if you found this information valuable and you want to get more deep with this. You can check it out on his website. It’s w w w dot, but call dot com.


[00:30:38] We’ll put the link up on the podcast description. And as always, if you like this podcast, make sure that you hit that subscribe button on iTunes or Spotify. Saffy. It’s been an absolute pleasure. Thanks so much for your time. Thanks for having me.


[00:31:06] The venture podcast with Lambros Photios.


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