Arnold Kling  

Wisdom from Ben Casnocha

Health Care Cynicism... Income Mobility...

Advising would-be entrepreneurs with no business background, Ben Casnocha writes,

Learn by doing, learn by failing.

...Leave the office and go immerse yourself in the life of the customer.

...Your network is probably larger than you think. Somewhere in this network is probably a good co-founder for your business, too. Companies with 2 or 3 co-founders do much better than solo warriors.

I just finished reading Ben's book, which I really enjoyed. He and I share a very similar philosophy about learning and business.

For example, here is another quote from the blog post:

If you ask someone to sign a non-disclosure agreement, or if you simply pass on the opportunity to receive useful feedback because you're scared someone will steal your idea, you are hanging a big, white poster on your chest that says, "I’m naive." In the early stages, you want as much feedback as possible. This means sharing your ideas with others. There is no such thing as a new idea. Besides, it is execution that distinguishes successes from failures, not raw ideas.

On the last point, in my own book on entrepreneurship, I wrote,

Entrepreneurs will say that they are operating in "stealth mode."

If you are in "stealth mode," then I suggest that you do the following:

1. Go to the bathroom.
2. Stand in front of the mirror.
3. Say, "I see a corpse."

...The only secrets that "stealth mode" protects are the secrets of what the market really wants. Those are the secrets you need to learn, and "stealth mode" keeps you from learning them.

My book also has a section called "Learning by Selling," where I write

selling does not just feed your mouths. It feeds your minds. Of all the ways that you can gather information to improve your offering and strengthen your business, the selling process can be the most powerful. From this perspective, selling is a form of trial-and-error learning.

Ben and I both discuss the issue of luck. In my book, I write,

I consciously decided that whenever I got stuck...I would try to meet new people. I might call a customer and ask for a referral. I might attend a conference. I might attend a meeting of an organization. I did these things in order to improve my luck.

Ben's way of putting it is:

Expose yourself to as much randomness as possible. Attend conferences no one else [in your field] is attending. Read books no one else is reading. Talk to people no one else is talking to.

I would note that the philosophy of "expose yourself to randomness" is something I also associate with Tyler Cowen. The phrase could almost serve as a motto for the entire blogger community.

This fall, Ben will be starting his freshman year of college, at Claremont. He is the type of student I would enjoy teaching. My teaching style, which is to give students interesting things to read and ask them to write their reactions, would not strike him as odd.

I think that Ben would make a good economist, but I don't necessarily think that economics would be good for Ben. He probably would be better off challenging himself with as much cognitive neuroscience as he can find.

If more economists had actual business experience, I believe that the quality of economic analysis would improve. But it's hopeless telling economists that they should actually try working in business themselves in order to learn something about it.

It's a bit less hopeless to suggest that economists should occasionally go slumming and read business books. Ben's book would be a good one to try.

Comments and Sharing

COMMENTS (6 to date)
Brad Hutchings writes:

"Expose yourself to randomness" is also something Nassim Nicholas Taleb drives home in the preface of "The Black Swan". In some (mostly left liberal) circles, it has been fashionable to a point of annoying cliché to write off the success of others as just luck. Perhaps they were on track to finding the right insight in their derision. But you don't get lucky unless you take the field and play the game.

banala23 writes:

I think your view of "stealth mode" is biased by people who in groups of two or three were pretending to start a company. Stealth mode was a convinient excuse for their lack of progress. Your experience with losers saying they are in stealth mode shouldn't bias you against the entire concept. Sometimes it is appropriate.

eric writes:

I'm not sure 'exposing one to randomness' makes any sense. Should he join the Peacecorps, study poetry, the army, learn java, learn Chinese, solid-state physics, post WW2 Lesbian fiction, etc? ... the set of all things unrelated to what you know is infinite, so you need to focus on things different yet kind of related. Luck is still when preparation meets opportunity, so you have to be somewhat familiar with these things you sample.

Brad Hutchings writes:

banala... Different strokes for different folks. I have to agree with Arnold. Every couple of months, I get a request from some gung-ho entrepreneur who wants to use some of my software with their product. The first thing they do is ask me to sign an NDA. So I tell them I don't do that and get an earful about how it's standard practice in the industry and blah blah blah. About 1/3 of them will come back later and tell me about their product anyway, and it's super boring. (Since I didn't sign the NDA, I can say that.) On the other hand, the long term clients that I've taken never asked for one. They are few and far between, but they are the ones who are worth the effort. YMMV.

On a somewhat related note. Guy Kawasaki has a post on doing your own PR (Link here). It was written by a friend of his in response to a posting where Guy interviewed someone on tips for working effectively with a PR firm (Link here). Perhaps like NDAs, there isn't a right or wrong answer. If you aren't good at self-promotion, get a PR firm. If you generate a wake every time you open your mouth, don't waste your money and do it yourself. Similarly with NDAs... If they attract the kind of people who play the NDA game and are right for your company, by all means, use them. If you need the kind of people who have no tolerance for that BS, steer clear.

Michael Sullivan writes:

The key to the observation "expose yourself to randomness" is that there are a lot of opportunities in the world with a small chance of a large upside that can be undertaken at a very low cost and almost no downside risk. Most people pass up nearly every such opportunity that arises in their life.

Those who make it a habit to go after opportunities that fit that profile, either by their nature or by a very specific explicit decision, will usually "get lucky" at some point, because they give themselves so many small chances to do so.

If they are buying lottery tickets, that "lucky" for most of them isn't big enough to cancel out the expense. If they are meeting people, reading books, going to events, taking classes, building things, trying to sell ideas, etc., many of those small decisions will have positive long-run EV, and their eventual "luck" turns out to be not only more than worth the costs of many blind alleys, but really just the product of sound decisions.

IOW, chance favors the prepared mind.

It's not really that chance favors the prepared mind, it's that the prepared mind is able to take advantage of good outcomes and not lose too much on bad ones.

Derek Scruggs writes:

On exposing yourself to randomness, a great example is Steve Jobs. Before meeting Woz and starting Apple, he took a course on typography design just for the hell of it. Roughly 10 years later, the ability to easily visualize and apply font styles became a critical part of the Mac's success with graphic designers. He talked about this in the commencement speech he gave at Stanford a couple years ago.

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