Prototyping to overcome our bias
From Teresa Torres:
As a refresher, the escalation of commitment is the cognitive bias where the more time and energy we invest in an idea, the more committed we become to it. If we do all of the work to design A, B, C, and D, we become committed to that design. Even those of us who have every intent to hear and integrate customer feedback will struggle with this.
And thanks to confirmation bias, the bias where we are twice as likely to hear confirming evidence than disconfirming evidence, we will miss most of the feedback from our customers that our idea isn’t working quite as we intended.
This is why we often see that even when we interview customers and usability test our ideas, we still find that our ideas didn’t have the intended impact when we release them.
Unleash your creativity
Jobs once said the secret to creativity “comes down to trying to expose yourself to the best things that humans have done and then try to bring those things in to what you’re doing.” In the past few years, books and research papers have proved that Jobs was right. The world’s most creative entrepreneurs look outside of their fields for ideas.
For example, Jobs roamed the kitchen appliance aisles to get ideas for the Apple II, the first real user-friendly computer that looked something you’d actually want in your home. Jobs studied the Ritz-Carlton before opening the first Apple Store. That’s why greeters were called “concierges.” The Genius Bar, too, was directly inspired by hotel bars.
Creativity doesn’t just happen. Expose yourself to ideas outside the field you’re working in.
From Carmine Gallo
Taking Tesla Private
August 7, 2018 The following email was sent to Tesla employees today:
Earlier today, I announced that I’m considering taking Tesla private at a price of $420/share. I wanted to let you know my rationale for this, and why I think this is the best path forward.
First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.
I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve.
This is especially true for a company like Tesla that has a long-term, forward-looking mission. SpaceX is a perfect example: it is far more operationally efficient, and that is largely due to the fact that it is privately held. This is not to say that it will make sense for Tesla to be private over the long-term. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets.
Here’s what I envision being private would mean for all shareholders, including all of our employees.
First, I would like to structure this so that all shareholders have a choice. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%). My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium.
Second, my intention is for all Tesla employees to remain shareholders of the company, just as is the case at SpaceX. If we were to go private, employees would still be able to periodically sell their shares and exercise their options. This would enable you to still share in the growing value of the company that you have all worked so hard to build over time.
Third, the intention is not to merge SpaceX and Tesla. They would continue to have separate ownership and governance structures. However, the structure envisioned for Tesla is similar in many ways to the SpaceX structure: external shareholders and employee shareholders have an opportunity to sell or buy approximately every six months.
Finally, this has nothing to do with accumulating control for myself. I own about 20% of the company now, and I don’t envision that being substantially different after any deal is completed.
Basically, I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible.
This proposal to go private would ultimately be finalized through a vote of our shareholders. If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us. Either way, the future is very bright and we’ll keep fighting to achieve our mission.
3 things to watch out for your industry
Entrepreneurs in any field can learn from the changes the insurance industry is experiencing. For starters, these three conditions signal an industry is ripe for tech disruption:
A shift in customer preferences. Thanks to companies like Geico, customers went from being wary about applying for insurance online to expecting to handle almost everything online.
Expansion of funding options. It used to take a lot of capital to make an insurance company work, meaning it wasn’t an accessible industry for startups. In the last few years, though, funding has become available thanks to increased use of reinsurers to distribute risk.
The availability of new technology or data. Insurance companies live and die by the accuracy of their underwriting. Today’s data processing technology, combined with the wealth of publicly available data, mean that insurers can underwrite more accurately than ever, can control their loss ratios and can pass the savings along to customers.
Not politics but ideas
After you come back from your politics cleanse, how can you keep from falling back into your old patterns? Resolve to pay attention to ideas, not just politics.
They aren’t the same thing. Ideas are like the climate, whereas politics is like the weather. Ideas change cultures and nations over years and decades, while politics changes from moment to moment. Just as the weather can obscure truths about the climate, politics can make ideas harder to understand. Ideas, like the climate, require thought and study. Observations about politics, like opinions on the weather, require no expertise at all. The world is full of ersatz political weather forecasters. The world needs more people who are thoughtful about the climate of ideas.
Ikea: we are in the business of emotions
Changing the iconic flat packs for a better customer experience.
“Imagine if you take that whole thing away and keep the nice walkaround, you can make it much easier. Then we can merge fully into the kind of inspirational, emotional journey (where customers) can get tips and ideas.
“We are in the business of emotions. We want you to come into our stores and say, ‘I don’t like that but I like that one’, start a conversation with a partner. It’s about feelings and emotions, that is the most important part.”