Mar 3, 2020 · 1h 32m · knowledge-project
#77 Mike Maples: Living in the Future
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In this episode of The Knowledge Project, venture capitalist Mike Maples Jr. shares Floodgate's proprietary mental models for identifying breakthrough startup insights, evaluating asymmetric risk, and scaling disruptive companies. He details how exceptional founders live in the future, hack true customer value, and navigate the transition from chaotic early-stage experimentation to predictable growth engines.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shane holds 11.6% of the talking time here. How this is scored →
Shane as informed peer 2.8 Guest teaching 5.0 Guest disagreement 0.2 Shane pushing back 0.1
speaking balance: gold is Shane, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 55:41 Techno-optimist pushback on manufacturing decline
When Shane asks if outsourcing is causing a loss of competitiveness, Mike rejects the pessimistic framing and asserts that software-defined networks and 3D printing are revolutionizing manufacturing.
Hardest push from Shane ▶ 1:30:37 Shane asserts culture over technological/executional moatsShane gently challenges Mike's emphasis on execution advantage by arguing that technical and execution advantages are inherently temporary, whereas culture is the sole enduring competitive advantage.
Biggest teaching moment ▶ 32:30 Entrepreneurs are artistic visionaries, not business managersMike reframes Shane's question about teaching reality by demonstrating that great founders operate like artists moving people beyond logic rather than traditional business executives.
Shane holds their own ▶ 59:10 Shane connects mimetic desire to Lou Brock's idiocy quoteShane demonstrates strong grasp of psychological models by instantly linking Girard's mimesis to the hedonic treadmill and quoting Lou Brock on the strategic necessity of being willing to look foolish.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shane as informed peer | Guest teaching | Guest disagreement | Shane pushing back | Why |
|---|---|---|---|---|---|---|
| Managing Daily Inbound and Time Allocation | 1 | 3 | 0 | 0 | Shane opens with open-ended conversational questions regarding Mike's daily routine and dealing with inbound requests. Mike explains his philosophy of prioritizing founders living in the future over reactive high school buddy introductions. | |
| Developing Mental Models Tailored for Startups | 3 | 4 | 0 | 0 | Shane brings up Floodgate's mental models framework, referencing their earlier offline conversation and prompting Mike on whether startups are truly companies. Mike credits Shane's Farnam Street blog and Charlie Munger before breaking down why traditional investing models fail on early-stage startups. | |
| Insight Development: Living in the Future | 2 | 6 | 1 | 0 | Shane asks for details on the core breakthroughs, and Mike delivers a masterclass on insight development versus looking for present-day white space. Mike reframes startup ideation around time travel and starting movements rather than standard market mapping. | |
| Early-Stage Startup Teams as Improv Jazz Bands | 4 | 5 | 0 | 1 | Shane contributes a sharp mental model about execution being multiplicative by zero, prompting Mike to detail the difference between corporate marching bands and startup improv jazz ensembles. Shane also probes on startups prioritizing fake growth over genuine value propositions. | |
| The Learn-It-All Leader and Leadership Evolution | 4 | 5 | 0 | 0 | Shane shares his personal theory that winning startup founders are not static optimal CEOs but the most adaptable learn-it-all leaders. Mike heartily validates Shane's thesis, citing examples like Bill Gates and Mark Zuckerberg shifting gears across startup phases. | |
| Forensic Post-Mortems of Investment Hits and Misses | 2 | 6 | 0 | 0 | Shane asks how Floodgate developed these mental models, prompting Mike to describe their forensic post-mortems of missed opportunities like Airbnb and Twilio. Mike explains the humility required to realize surface flaws in pitches often obscure massive underlying insights. | |
| Evaluating Asymmetric Risk and Founder Insights | 3 | 5 | 0 | 0 | Shane asks whether mental models increase batting average or slugging percentage. Mike explains the power law of venture capital where 10 startups produce 95% of value, contrasting Buffett's risk avoidance with taking asymmetric risks on insights. | |
| Founder Motivation and All-In Commitment | 3 | 5 | 1 | 0 | Shane asks Mike to pull back the veil on pitch meetings, and Mike criticizes founders who identify present-day market white space or remain tentative about leaving their day jobs. Shane chimes in with observations on escaping competition. | |
| Exclusion Filters and Tackling Boogeyman Risks | 2 | 5 | 0 | 0 | Shane asks about exclusion filters and common self-deceptions. Mike shares an amusing anecdote about a founder lying about a Tetris world record and explains why startups must confront their core boogeyman risks head-on. | |
| The Entrepreneur as an Artistic Visionary | 2 | 6 | 0 | 0 | Shane asks how to teach people to face reality, and Mike reframes entrepreneurship away from business functions toward artistic vision, comparing founders to Michelangelo sculpting the Pieta. Shane acknowledges that this perspective is completely novel to him. | |
| Visionary Conviction and Monetization Dynamics | 3 | 5 | 0 | 0 | Shane asks about the role of charisma versus sheer conviction and how monetization timing fits into the equation. Mike details how consumer mobile iteration speeds dictate monetization tolerance compared to high-stakes enterprise sales. | |
| Defining Mental Models and the Earned Secret | 3 | 5 | 0 | 0 | Shane prompts Mike to define mental models and break down the concept of the earned secret. Mike illustrates the earned secret through Brian Chesky discovering trust mechanisms during the origin of Airbnb. | |
| Why Now: Technology and Adoption Inflections | 4 | 4 | 0 | 0 | Shane actively contributes to the discussion by pointing out GPS accuracy improvements alongside smartphone adoption for ridesharing. Mike builds on Shane's point, explaining how smartphone hardware advances enable collateral revolutions like cheap commercial drones. | |
| Navigating the Idea Maze | 2 | 5 | 1 | 0 | Shane asks about Balaji Srinivasan's idea maze concept. Mike explains how founders must master the historical boundaries and failed attempts in their idea space rather than relying on hand-waving assertions that their team is smarter. | |
| Thinking Wrong and Asymmetric Attacks | 2 | 5 | 0 | 0 | Shane asks about the 'think wrong' model, and Mike explains how orthogonal business models (like transactional pricing vs. per-seat pricing) disorient incumbents and prevent easy competitive counterattacks. | |
| The Myth of Total Addressable Market | 4 | 6 | 0 | 0 | Shane raises the myth of Total Addressable Market (TAM) and cites Clayton Christensen's mini-mills example. Mike expounds on Christensen's sword and shield framework using historical examples like the telephone versus the telegraph. | |
| Software-Defined Networks and Decentralized Manufacturing | 2 | 5 | 1 | 0 | Shane asks if outsourcing manufacturing is eroding competitiveness. Mike presents a contrarian techno-optimist view, arguing that software-defined networks and 3D printing will decentralize and revolutionize global manufacturing. | |
| Antifragility and the MacGyver Gene | 4 | 5 | 0 | 0 | Shane introduces the team model of disagreeableness, and Mike introduces Rene Girard's theory of mimetic desire. Shane immediately connects mimesis to the hedonic treadmill and quotes baseball player Lou Brock on fear of looking foolish. | |
| Contrarian Recruiting and Spotting Emergent Signals | 2 | 5 | 0 | 0 | Shane asks about storytelling and antifragility in team building. Mike explains how early founders must act as Yoda guiding their followers on a hero's journey, combining builders with persuasive storytellers. | |
| Value Models: The Rule of 20 Experiments | 3 | 5 | 0 | 0 | Shane brings up contrarian hiring in corporate bureaucracies. Mike expands on this using the PayPal mafia as an archetype of undiscovered talent and explains how sensitive entrepreneurs spot unexpected emergent signals. | |
| The Herbie Model and Bottleneck Elimination | 3 | 6 | 0 | 0 | Shane asks for a breakdown of value model experiments. Mike shares his practical 'Rule of 20' from his time running Motive, describing how observing Netscape support techs led directly to uncovering genuine user pain without pitching. | |
| Advising Founders and Navigating Investment Mistakes | 2 | 5 | 0 | 0 | Shane asks about Goldratt's Herbie model from 'The Goal' and how Mike advises founders bi-weekly. Mike details how Floodgate identifies the single slowest bottleneck in a startup rather than overwhelming founders with unfocused advice. | |
| Growth Models: Harmonizing the Four Gears | 3 | 5 | 0 | 0 | Shane asks how Mike navigates investment mistakes and transitions into growth models. Mike outlines the four interlocking gears of growth (acquisition, engagement, monetization, enlistment) and how they must turn in harmony. | |
| The VP of Nothing and Truth-Seeking Cultures | 4 | 4 | 0 | 1 | Shane and Mike discuss the VP of Nothing role when transitioning from zero-to-one into scaled execution. Shane pushes forward the thesis that corporate culture is the ultimate enduring advantage over technology or execution, which Mike agrees with before praising Okta's Todd McKinnon. |
Statements from this episode (43)
Maples: Conventional investing mental models fail when applied to startups
“There seemed to be a lot of mental models for investing or operating companies, but they didn't seem to apply to startups.”
Maples: A $250K seed check in Airbnb would be worth $1B
“Had I invested 250,000 dollars in Airbnb at the time, it'd now be worth a billion dollars.”
Mike Maples Jr.: Startups Are Not Companies, but Founders With Future Insights
“What we've come to realize is that a startup isn't really a company at all. A startup is a set of founders with hopefully a set of proprietary insights that are a result of them living in the future.”
Maples: Startups Must Achieve Three Crucial Breakthroughs to Become Real Companies
“What a startup has to do to become a company someday is they have to achieve three or four crucial breakthroughs. One is they have to have a breakthrough insight. And then they have to have a breakthrough value proposition. And then they have to have a breakth…”
Maples: Searching for market white space causes startup failure
“Insights are the bedrock of a great startup. And the failure mode in insight development is to live in the present and to look for market white space. Because if you're looking for gaps in today's markets, chances are lots of people have tried that. And if you…”
Mike Maples Jr.: Startup Teams Must Operate Like Improv Jazz Bands, Not Marching Bands
“Teams are different in startups than they are from companies because I like to say that in a company, it's more like a marching band. People need their sheet music and they need to dance in formation and play their instruments in exact terms. Whereas I don't k…”
Maples: Startups must prove value hypothesis before testing growth hypothesis
“And then and only then do you start to, you know, only when you've proven your value hypothesis do you start to test your growth hypothesis.”
Maples: Compelling value propositions turn growth into education, not persuasion
“And so if the truth of your value proposition is super compelling, then growth becomes the exercise of syndicating the truth. And if the truth of your value proposition is not present, you have to grow by throwing money at the problem of growth. You have to sp…”
Maples: 10 out of 10,000 startups create 95% of annual venture value
“First of all, this is why 10 companies out of 10,000 every year create 95% of the value in the startup business.”
Maples: Floodgate passed on investing in Airbnb, Pinterest, and PagerDuty
“And I looked at all the companies that we had passed on that we should have invested in, Airbnb, Pinterest who else, PagerDuty, Anaplan.”
Maples: Floodgate invested early in Zimride (Lyft), Twitter, Twitch, and Okta
“So, for example, we invested in Lyft when it was Zimride back in 2010, and it would be very easy for us to believe we knew more than we knew at the time we made that investment. Same with Twitter, same with Twitch, same with Okta.”
Maples: Non-consensus right insights give startups time to build without competition
“And so, you know, great insights avoid the trap, you know, the best competitive strategies to not compete with anybody.
And if you find a non-consensus and right insight, then you've got much more time to develop the idea without the threat of competition.”
Maples: Floodgate avoids funding founders who have not quit their day jobs
“So, so for example, I don't react super well to we're all still working at our jobs and we can't wait to leave as soon as we get funded.
So I I'm like, look, if you're not passionate enough to leave your job and do this full time, why would I be passionate en…”
Maples: Founders lying about non-business trivia is an investment red flag
“When somebody lies about something that is in no way germane to their business, I'm like, that's a red flag for me, right? Like, that's somebody who has a difficult relationship with the truth and facts and reality.”
Maples: Best founders confront their existential boogeyman risks early
“The best founders I know, know what are the most important risks that stand between themselves and success. And they tackle those risks early, because if you eliminate those risks, you massively improve the probabilities of winning, as well as you make the com…”
Maples: Startups should charge customers even when products are half-done
“We'd be better off charging a price when the product's half done, because, you know, then we're going to find out how visceral is the pain and how compelling is the value that we're here to deliver for them.”
Maples: Defining characteristic of startup leaders is artistry, not business expertise
“There is a, I believe a big element of startups where a business function is not the right way to describe an entrepreneur. Entrepreneurs aren't experts in business functions as you and I would think about them. Yes, very often they're technical, but the defin…”
Maples: Compelling vision matters far more than personal charisma for founders
“I think charisma helps, but I think it's more about the power of the vision. So, you know, Steve Jobs, super charismatic, obviously, but Bill Gates and Mark Zuckerberg, I wouldn't say are, you know, a standard deviation, more charismatic than most people. But …”
Maples: Consumer Mobile Apps Must Prioritize Distribution Over Early Monetization
“If you're a consumer mobile app, you might iterate twice a week or even more often. And if that's the case, I care very little about how you're a monetize. I care more about are you coming up with clever ways to get distribution to spread your idea very quickl…”
Maples: An earned secret is a counterintuitive insight discovered through direct work
“So it's basically
Some work that you did to discover something that most people would think is non-intuitive.”
Maples: Lyft could not have succeeded in 2006 without smartphone adoption
“So back in 2006, when the smartest phone was a Blackberry, Lyft couldn't have worked no matter how good the idea was.”
Maples: Cheap drones would not exist without iPhone and Android scale
“So you wouldn't have drones as cheap as they are if it wasn't for the iPhone and for Android. Because now you have cameras and sensors and chips that never would have been built just for drones, but now are mass producing to be harnessed by drones and by other…”
Maples: Idea maze requires analyzing why past category attempts failed
“What you want to do when you go through an idea maze is you want to look at every previous attempt At the boundary of your idea. Oh, am I going to charge for my software? Okay, great. Has it ever been built in open source? Am I going to charge for it by the co…”
Maples: Claiming superior team intelligence is a weak startup justification
“What a lot of people tend to do, which is an answer I don't love is my team is awesome. That's why now the other teams haven't been as awesome as my team. So we're going to win when they haven't, because they weren't as smart as we are. That, that may be true,…”
Maples: Startups need a differentiated business model, not just a different product
“You don't want to just have a product that's different, that's the what. You want to have a business model that's different, which is the how.”
Mike Maples Jr.: Sizing TAM for Early-Stage Startups Is Wrongheaded
“And so trying to quantify the total available market, it's wrongheaded. It's more about quantifying the potential energy of the insight.”
Maples: Startups Defeat Incumbents Using 'Sword and Shield' Asymmetry
“The shield is, your go-to-market strategy is so different, and the customer context that you're targeting is so different, that the incumbent doesn't feel an incentive to attack you. They just say, ah, you can have that market. That's stupid product, stupid id…”
Maples: Software-defined networks will replace traditional corporate hierarchies across every sector
“Every sector of the economy Is going to get reimagined from a traditional hierarchical corporation to a software defined network that has machine platform and crowd intelligence.”
Maples: Great startup leaders prioritize vision actualization over crowd approval
“What I find in the great startups that I've seen is the great leaders are very often willing to be disagreeable. And they're not motivated as much by approval seekers, or they don't seek approval as much as they seek the actualization of their vision.”
Maples: Antifragile Founders Improve and Perform Better Under Extreme Pressure
“Some founders, when they're under pressure, actually get better, whereas most people get stressed out and freak out, and they're more likely to panic under pressure.”
Maples: Effective founders make their audience the hero of their story
“And what entrepreneurs who tell stories will succeed at, is they realize they're not the hero in the story. The audience of their message is the hero in the story. And what they're doing is they're helping that person go on a hero's journey. To co-create a bet…”
Maples: PayPal mafia members were not established in tech before PayPal
“So, for example, if you look at the PayPal mafia, none of them were established in tech before they joined PayPal.”
Maples: Great startups recruit undiscovered talent before the world recognizes them
“And so like, I like to say that the great startups find people who are one day going to be great before the world knows they're great. And going after people that the world already knows is great, it can work for you, but usually you have to be a very establis…”
Maples: Early Customer Discovery Requires 20 Non-Pitch Target Market Interviews
“The rule of 20 was, you talk to 20 people that don't really know you, but that are in your target market segment. But they're not talking to you just because they're your buddies. The first five discussions you have, you just sit there, and you just ask them a…”
Maples: Customers failing previous solution attempts validates startup market need
“And you know, you're on the right scent when they say, oh yeah, we tried that already before, but it didn't work. And most people think that's bad, but it's good. And the reason it's good is because they know they have the problem. And they've actually done so…”
Maples: 100% confirming experiments waste time compared to negative data
“The worst thing is an experiment that a hundred percent confirms everything you believed, because then you just wasted time teaching yourself what you already knew. Even negative data is good in the sense that you now know more.”
Maples: Startups Must Master a Few Priorities Rather Than Everything
“And so the reason I love the Herbie metaphor for startups is I think a lot of startups get very bad advice. They get advice that is sort of exhaustively correct, but what they don't realize is that when you're a startup, you can't do everything well. You got t…”
Maples: Marketing Before Retention Is Worse Than Useless
“Let's say that our Herbie is that when customers try our product, they're not sticking with it. Well, then investing more money in sales and marketing is useless. In fact, it's worse than useless. We're just going to get more unhappy customers that say bad stu…”
Maples: Product-Market Fit Means Eliminating Every Bottleneck Before Scaling
“Product market fit can be thought of as progressively eliminating all Herbie's until there are no more Herbie's. And then you're in a mode where you can invest in growth because it's frictionless.”
Maples: Involuntarily replacing a startup CEO almost always worsens the company
“What I found is that when you replace the CEO involuntarily, you almost always make the company worse.”
Maples: Exponential organic growth driven by customer enlistment indicates product-market fit
“One of the great heuristics of true product market fit is exponential organic growth. And exponential organic growth happens because your enlisted customers tell cross-referenceable other people, this product rocks. And it's the most efficient way to grow beca…”
Maples: On-the-job training fails during startup growth phase
“On the job training doesn't work in the growth mode of a startup, because if we have to TEDx our revenue in 18 months, we can't learn that on the job. We have to have people in those roles that know the job and can be trusted to execute.”