Missing The Forest Through The Trees

At the tail end of the post that I wrote on how USV (me in particular) missed the first round for Airbnb, I wrote:

We made the classic mistake that all investors make. We focused too much on what they were doing at the time and not enough on what they could do, would do, and did do.

But we sometimes get it right when others get it wrong. When Henry Ward, founder and CEO of Carta (then known as eShares) wrote about their Series A round, he said:

I used to try explaining that $20 stock certificates were an entry point into something bigger. It never worked.

Same issue. Most investors looked at the business of selling $20 electronically issued stock certificates and missed that it was simply the entry point to moving the entire private securities market to the cloud.

Investors have figured that out now and Carta is one of the fastest growing SAAS companies out there.

But missing the forest through the trees is a common mistake that early stage investors make. I make it. We make it. Everyone makes it.

My partner Brad Burnham has the best framework for thinking about this issue that I know of. He calls it “finding the narrow point of the wedge.” The analogy is trying to hammer a piece of metal into a block of wood. If the metal is large and flat, you can’t do it. But if it is narrow and thin, you can. And, of course, once you get the narrow point of the wedge into the block of wood, you can hammer it all the way in.

So, that’s what we all have to think about. Is there a large market out there that can be fundamentally changed with technology (like moving the private securities market to the cloud, or turning empty real estate into places to stay when you travel)? And what is the simplest and easiest way to get into it (like selling $20 electronic stock certs or putting air mattresses on living room floors)?

We try to keep Brad’s framework in our heads at USV, but we forget it frequently. And it is often the costliest mistake we make in the VC business. Because high impact companies do not come along that often, and when they do, we have to find a way to say yes.

#VC & Technology

Comments (Archived):

  1. William Mougayar

    Yes, but even when you realize that- “focused too much on what they were doing at the time and not enough on what they could do, would do, and did do.”, the bigger assumption is that the team can and will deliver on it.Execution of driving the thin edge of the wedge is key, and arguably another piece of the puzzle. I have seen teams not able to deliver a wonderful strategy that was theirs for the taking.

    1. LE

      the bigger assumption is that the team can and will deliver on it.This is exactly true. For example in traditional business if someone told you they wanted to open an Italian restaurant or Sushi place you wouldn’t be questioning the idea at all. You know that a good restaurant, while difficult, will do well if executed correctly (and in the right place). Your decision to invest would depend on whether you felt the team could pull it off. Not whether the product will sell.In the case of airbnb the way Fred has told the story (that I remember) is that it was an idea that didn’t sit well with older people but did with younger members of USV and maybe others he spoke with. I have said here a few times that I would have done and thought the same thing. The idea of renting out my place (or a room) to strangers is not something I would personally ever do. I have also mentioned that my much younger millenial brother in law after he was married (to a beautiful woman no less; like a model) had no issue going away for ‘gigs’ and leaving his wife alone with strangers and a spare room. (I was the one who turned him on to airbnb way back this was many years ago).So what happened here appears to be simple. The people pitching the idea were not able to communicate why what I would not do (or Fred might not do) is not what might occur in the market (by a different age group of people raised differently). [1] Paul Graham liked the idea but then again he spends most likely way more time around younger people (who he could see would do this) than Fred did. Fred did not have the seat of the pants feel for the market potential and/or it wasn’t communicated to him in a way that he could understand or buy into. And sure to your original point maybe he didn’t believe they could pull it off as well.[1] How I was raised? My mom wouldn’t let us sit in the living room on the furniture. It was literally for show only I guess. My Dad wouldn’t let anyone drive his car. Workmen in the house? You go around and make sure they don’t steal anything. Why? Money hard earned not the same as my stepson who leaves money and giftcards around in his room and wouldn’t know if it’s missing.

      1. Richard

        While you probably didnt intend to do so, let’s not conflate the risks that women take when spending the night with a stanger with whether they are model. Sexual assault is a viscous criminal act – it’s a perversion.PS your bother-in-law is foolish

        1. LE

          I intended to convey stupid in any case but ‘risk higher if hot’. This is not the same as ‘blaming the victim’ or anything like that either.I think most normal people perceive a higher risk (even if irrationally) when the person of the opposite sex is attractive and appealing. For example a man traveling on business who takes his 60 year old assistant along (who is not particular attractive in any way) is not going to be viewed by his wife/girlfriend the same way as if the took his 25 year old assistant who is attractive on the same trip. Anyone who argues that is not the case is honestly not seeing reality. And has nothing to do with ‘trust’. The fear is primordial as well as irrational hence it can’t be overcome with logic.This is actually something that unfortunately holds women back in business. A man can socialize and help a man but can’t do the same (to the same degree) with a woman.

          1. Richard

            What you are missing is what I call the only woman the room phenomina. There is no evidence that Sexual assault is a function of the attractiveness of the victim once the probablility is conditioned on scarcity.Your example above has nothing to do with the Airbnb scenario. You made a reduculous comment. Just man up and recognize it.

          2. LE

            Flight of the Conchords, a classic:https://www.youtube.com/wat…Well, looking ’round the room, I can tell that you Are the most beautiful girl in the room In the whole wide roomAnd when you’re on the street, depending on the street I’ll bet you are definitely in the top three Good looking girls on the street Depending on the streetAnd when I saw you at my mate’s place I thought, What is she doing at my mate’s place? How did Dave get a hottie like that to a party like this? Good one, Dave, ooh, you’re a legend DaveI asked Dave if he’s gonna make a move on you He’s not sure, I said, “Dave, do you mind if I do?” He says, he doesn’t mind, but I can tell he kind of minds But I’m gonna do it anywayI see you standing all alone by the stereo I dim the lights down to very low, here we goYou’re so beautiful, oh, you could be a waitress You could be an air hostess in the 60’s You’re so beautiful, well, you could be a part time model And then I seal the deal, I do my move and dance the robots

          3. Richard

            You are in a hole, stop digging. Probability is today’s calculus.

          4. LE

            I was not talking about sexual assault at all. You brought that up. And he married her because (among other things) she was beautiful. While we don’t have a close relationship when he was dating 4 or 5 different women (at the same time) he did send me text photos of all of them and the one he married was ‘the hottest’ by his words (or similar).Looks do impact behavior. With men and with women. This has nothing to do with bad actions. People have opinions and luckily some of us don’t have to walk on eggshells. If I continue to dig the hole exactly what happens to me by the way?

          5. Richard

            I could care less what you say. I’m just pointing out that you made a statement about that your bother in-laws is somehow more naive leaving his wife alone with a stranger in their home because she is “the hottest” of his girlfriends? I get that you can’t take the 80/ philly mentality out of a you, but for the most part you try to be logical. what would your brother in law be concerned about other the sexual assault? having his wife swept off her feet by Brad Pitt checking into his spare bedroom. The point you were trying to make was not “Looks Impact any behavior”

          6. LE

            My exact words which you appear to be having a problem with is this:after he was married (to a beautiful woman no less; like a model)Somehow you are taking that to mean more than it is. It is just a modifier to a statement to enhance it’s impact. Surely you have seen the same thing in writing elsewhere. And in advertising.It is no different than if I said “I drove into a bad neighborhood where they were buying and selling drugs, in my brand new Rolls Royce no less”.Now you can take that to interpret the writer is bragging about his Rolls Royce or you can see it as simply what it is. A way to enhance a story and make it more interesting and appealing to a reader.I don’t think there is anything that I said to indicate that he had crossed the threshold of stupid regardless of looks. Meaning if she was not as attractive or if they were not newly married it would have still been a mistake.

          7. Richard

            Fair enough. But it doesn’t effect the impact of someone deciding or not deciding to open their home to strangers. All other things being equal, whether his wife had the looks of a model or the looks of an average person, has NO bearing and should have no bearing on the risks of a man staying in one house overnight. I did start this off with the conditional statement “while you may not have intended to do so….”. That said, any man – your brother in law – who married her because she was the “hottest” of the 4 or 5 he way dating – and says so to his brother in law – clearly has some issues* Anyone who hasnt dated multiple people simulanaeously missed out on a one of the great joys and freedoms of society.Watch out for this guy!

          8. Pointsandfigures

            Foundry Group will parody this someday

          9. LE

            You should do it for your group and get the resulting publicity. The controversy will result in more than 15 minutes of value.

          10. Pointsandfigures

            No one wants to see nor hear me sing. They only let me mouth the words in church.

          11. LE

            My brother in law actually looks like the guy in the video. He is an opera singer. So is his wife (and yoga teacher). They would do this gig as would 1000 others. The setup is a board room meeting where a younger partner (not you) plays the role of the guy singing and the company they are investing in is played by a woman. And it revolves obviously around the business idea not sex.On the phone is the ‘friend’ who is actually another investor who intro-ed you and now you are taking the lead.

          12. Pointsandfigures

            Damn, I cannot play the younger partner…….you are insulting everyone today. Wait, I am younger than Fred.

          13. Susan Rubinsky

            OMG. This thread is priceless. I am literally crying, I’m laughing so hard.

  2. Dan T

    This is why “Selling the Wheel” is one of my favorite book recommendations for young entrepreneurs.https://books.google.com/bo

    1. MyAccountWasCompromised

      dantinpa ):

  3. ErikSchwartz

    Everyone thinks The Alliance of American Football is a football league with a tech team. We are actually a sports data, predictive analytics, and ML company that has invested a bunch of money in a football league as a content play as our reference app.

  4. Richard

    Might there be another approach that is more profitable and much more common in VC and maybe even more with more liquid companies /publically traded companies.Companies that are fairly valued today, but according to some key favors will be predictably mispriced in the next 3-7 years. It would be much less of a ego boost and nobody will remember your name for these types of investments when your winners have a great 3-7 year time frame but a a very poor 5-12 year time frame. But if – for a number of factors – if forward upward mispricing is forecastable, it’s feels like a blue ocean approach.

  5. Marcosardi

    From the entrepreneur point of view, it’s very tricky. When the entry point is part of the deck, most investors will jump to the conclusion your market is too small. But if it’s not in, everybody will see you as “too early”. Again, finding the match in a VC is hard, but there is no way around it.

  6. sigmaalgebra

    Broadly the post is saying that VCs have a tough time with the main separation problem of separating wheat from chaff. In this separation problem, there are two ways to be wrong, (1) believe that a project is good and invest in it when it is bad and (2) believe that a project is bad and not invest in it when it is good.Our civilization has lots of such separation problems with some fields, organizations, or people with good solutions and some such with poor solutions.From what I’ve seen, good separation has some good methodology.If get a lot of cases to separate, some tones of wheat from a farmer’s field, some research proposals, some engineering calculations for civil engineering projects, some product designs, some startups seeking Series A funding, then for good results need both (1) good separation and (2) lots of good candidates, e.g., lots of good wheat in those tons from the field. That is, can’t do well at Pillsbury, even with good separation methodology, if nearly all the tons from the fields are chaff:https://upload.wikimedia.or…To me, the batting average, fraction of investments that are good, on Sand Hill Road, looks awful. The situation looks poor on both (1) and (2) — poor separation and not enough good candidates.For Sand Hill Road, we can try to look for separation methodology from the history, that is, what methodology would have done well, that is, have invested in all the big winners, HP, Intel, AMD, Microsoft, Apple, Cisco, QUALCOMM, Western Digital, Google, Facebook, Amazon, etc. and rejected all the losers? Difficult question, Maybe one reason the question is difficult is the role of luck or not enough information or “the unknown unknowns”.Another reason for the difficulty is that heavily Sand Hill Road needs to find projects that are both good and new. The need for newness means that simple, superficial, empirical patterns from the past can’t work very well — we will see below that deeper, less superficial, but still simple, empirical patters from the past at times have worked. Lesson: Look a little deeper.To have something to do when my hands are busy eating lunch or dinner, commonly I watch some video clips or old movies. Recently I watched The Big Short and, then, read the book from the PDF athttps://themodern.farm/stud…The story was awash in separation problems handled poorly, And when the one guy at Scion Capital in California had some plenty good enough methodology and made his investment, all he got from everyone else, even through the end when he had spectacular results, was anger, ridicule, contempt, and eventually fraud. Organizations really slow to do well on the separation problem, with the usual reason of poor methodology, included the rating agencies, the bond departments of the major investment banks, and the institutional investors.So, struggles with the separation problem extend all over finance and are not limited just to Sand Hill Road. And the struggles extend through much of business, politics, medical care, romantic match making, and the rest of civilization.In the rise of civilization, the problem used to be worse — people tried superstition, e.g., killing people to pour their blood on a rock in an effort to forestall the disaster of the sun not moving across the sky. With The Enlightenment and The Age of Reason, we soundly rejected superstition and looked for good methodology. Currently we have more superstition that would shut down much of the world’s economy by restricting CO2 from human activities in an effort to throttle global warming when there is not even as much as zip, zilch, or zero good evidence that CO2, from humans or anything else, has any significant effect on global temperatures or that global temperatures are doing anything at all unusual. Some people even go so far as to assert that CO2 warms the planet because it absorbs sunlight; let’s see, exhale and try to see where the CO2 blocks some sunlight. CO2 doesn’t absorb sunlight. We’re talking totally sick-o methodology.My guess about Sand Hill Road is that they look for projects that have some good version of traction significant and increasing rapidly in a large market and where the founders are desperate for some cash.For investing, apparently James Simons found some good methodology: So, someone out on Long Island at Renaissance Technologies could get all excited and rush in and exclaim that their gut told them with near certainty that they should go long Theranos and short AirBnB. As Simons explained, they refused to do any such thing. Instead they built models, using a LOT of data they had collected, tested the models over and over, no doubt continually, and then just did what the models said to do. Gut feel and nearly everything common in stock picking was rejected as bad methodology, So, maybe Simons and Co, missed out on both the gains from AirBnB and the losses from Theranos. But there was nearly no end to the tons of stuff from the farms where he could separate the wheat, even just a little of the good wheat, from the chaff. Sand Hill Road may need more tons of such input stuff.But the entrepreneurs also need good methodology. Then here is, IMHO, a huge bottleneck for Sand Hill Road, much as faced by the guy in Short who first saw to short certain housing bonds — even if an entrepreneur has good methodology, as the guy in Short did, Sand Hill Road, as did investors in Short did, will ignore the methodology and the investment. The attitudes, contempt, insults are well presented in the movie.Or, at one point in the movie, the skeptical, patronizing, insulting, arrogant, thoughtless investor said, IIRC: “So we pay premiums on short positions in housing bonds until something happens that has never happened before.” Right. So, that investor was looking for superficial patterns in the past and rejecting out of hand anything that was new and different. Uh, clearly everything that is and has ever been was at one time for the first time; really good projects may be even more likely for the first time; so looks like at times we need to be able to analyze projects doing something for the first time,So, what was the methodology of the founder of Scion Capital? As the movie explained right at the start, he “looked”. So, he looked at the data on the actual mortgages, one by one, and then, as mentioned above, applied essentially just, well tested from the past, standards of credit worthiness long well understood and practiced by small town bankers, So, he still used the past but just a few levels deeper than his critics who, with feet locked in reinforced concrete, flatly refused to do or even consider.Yes, doing well with something new is necessarily rare. So, need some good effort on appropriate methodology.E.g., look at the Large Hadron Collider — LHC. Big bucks, thousands of people, and many years were invested in looking for the Higgs boson. They found it, just about where they thought it would be. Good example of some good methodology.Fields with good methodology include math, physical science, medical science, and engineering. Leading applications have been to US national security. Investors good at using such methodology are problem sponsors in the DoD, NSF, and NIH. Their results, batting averages, ROI, etc. have been fantastically good. In response, Sand Hill Road just laughs — laughs, usually loses, and at times gets lucky.

    1. Michael Elling

      “Currently we have more superstition that would shut down much of the world’s economy”. SA, just wondering where you believe ANY regulation or oversight of ANY industry is necessary? How do you measure or introduce negative externalities into your uncertainty (risk) models and who should bear their costs?I wake up every morning looking at a mirage. One big negative externality. And it’s not what you think (density, pollution, etc…). It’s the wealth created by $300 trillion of global debt raised in the last 40 years and foisted on future generations. Arguably, about 25% of that wealth, due to network effects (where the (geometric) value is captured at the core while the (linear) costs are born at the edge), has been captured by those who work, live and play in the picture. Who, ultimately, will pay for that leverage that clearly will be a negative externality at some point in the future? The other 99%. That’s why I call it an illusion. https://uploads.disquscdn.c…Apply this same thinking to humanity’s impact on the environment. Humboldt did. And he was right. Perhaps your “world economy” would be better understood if you factored in the negative externalities.

      1. sigmaalgebra

        SA, just wondering where you believe ANY regulation or oversight of ANY industry is necessary?I just wrote what I meant and meant what I wrote. It would be a wild extrapolation to suggest not “ANY”.I don’t like to see animals going extinct. We lost the Passenger Pigeon, and we’ve lost more. Some of the animals in New Zealand and Australia are at risk, and it will be tough to save them all. So, sure, I really like all the mammals — cats, dogs, foxes, wolves, raccoons, skunks, possums, beavers, monkeys, apes, sheep, goats, deer, elk, … bears, bison, elephants, dolphins, whales, etc. We can save nearly all of those easily enough and we should and maybe we are doing well at all of that or nearly so.But, sure, there may be some small mammals in Florida at risk from the invasion of the Burmese pythons — we should try to get rid of those and we are.For some years, coal burning power plants in the Midwest caused some acid rain in the US NE, but apparently stack gas scrubbers, etc. have throttled that. Besides, might get some sulfur could sell for industrial sulfuric acid! But maybe the price of sulfur is low from the huge piles of the stuff Canada gets from their oil sands.Sure, I like cod fish — good for a fish fry. It’d be a shame, and economically foolish, to have the cod fish stocks get too low.Somehow some of the fishing in the Grand Banks has caused the lobster population to grow from more food for the lobsters or fewer predators. I like lobster, with some French cooking techniques using stock, cream, shallots, wine, etc.! How do you measure or introduce negative externalities into your uncertainty (risk) models and who should bear their costs?I see no gain in addressing that issue in general. Instead, as have to do to be effective anyway, need to address the issues one or at most a few at a time. Having Greenies screaming evil humans with unlimited negative externalities and the tragedy of the commons, etc. is too blunt a club.We have lots of regulations now: Can’t import elephant ivory. Can’t shoot the wolves in Yellowstone. Can’t let a packing house dump enough waste into the local river to lower the oxygen level too much. Can’t let integrated circuit manufacturing plants pump their waste underground and, thus, pollute the ground water. So, at least in principle, we are agreeing that we need to constrain the externalities, damage to the commons. If some packing house is violating the rules, then both the Federal and the state EPAs are likely on the case. E.g., Trump has said often that he is for clean water.I don’t want polluted ground water — my water comes from a well.It’s the wealth created by $300 trillion of global debt raised in the last 40 years and foisted on future generations. Without a LOT more detail, rational, objective, correct, I’m no longer impressed by that issue.E.g., first cut, the “future generations” can pay off the debt easily enough, just print money,Of course, next, the main reason not to print money is that too much printing causes inflation and, thus, hurts people who save cash, etc. But since the crash of 2008, the US has printed a lot of money with very little inflation. If eat too much, then get fat, but if eating and not getting fat then maybe are not eating too much.A growing economy needs a growing money supply. The way we get it is to print it. For some of the details, the Federal Reserve loans money to member banks. The banks pay some interest on that money, and the interest can go to help meet the Federal budget. If the Federal budget is in the red, then the US Treasury can sell T-Bills to, say, Citi bank which pays for them from money loaned to them by the Fed or some such. Or maybe the Fed just buys the T-bills directly.As I understand the US macro economy now, we want to put people back to work, have them being productive, and then have them paying taxes. As they are productive, we stand to avoid inflation from shortages. Having lots of qualified people not working is a bummer for all concerned. If printing some money to put them back to work doesn’t cause inflation, then start printing.This stuff about not printing money is what kept the Great Depression going for 12 years until people started shooting at us. Then we decided to print money, and we had 2-3 jobs for everyone able to work and were out of the Great Depression, permanently, in 90 days flat.But, IMHO, the reluctance to print money in November, 1929 caused the Great Depression, really serious problems with US social capital still with us, and WWII and the deaths of 50-100 million people. During the 1930s it was totally obvious what needed to be done — print money, and that was clear even in a Betty Boop cartoon.So, why print money? Well long one of the main sources of money was fractional reserve banking: So, I work hard and deposit $100 in my local bank. They loan out $90 which gets deposited. Then they loan out $80, or maybe even $190, …. So, more money as demand deposits is created.Well, in 1929 when the banks went bust, and much the same in 2008, suddenly all that money from fractional reserve banking and loaning of demand deposits dried up and, thus, greatly reduced the money supply, drained the engine oil out of the US economic engine. Bummer.So, now we put some regulations, reserve requirements, on the commercial banks. We want the money supply to come from the Fed, not bankers. And as in the movie The Big Short we don’t want Wall Street investment banks to buy mortgage bonds on thin margin with 90% of the money loaned by commercial banks that got the money from either the Fed or fractional reserve banking. That stuff is what caused massive inflation, bubble blowing, in much of US housing and, then, caused the crash of 2008 that we, 10 years later, are only now starting to come out of,

        1. Michael Elling

          “I don’t like to see animals going extinct.””I don’t want polluted ground water””I see no gain in addressing that issue in general.””just print money”It is easy to rationalize and not be consistent at the margin. The post is full of contradictions and citing historical “fact” when it is convenient. That’s why I specifically wrote ANY.Socio-economic and political ecosystems are networks. And those who control the core, be they bankers, academics or politicians, can do serious harm. 1920s, 1990-2000s, 1600s are all alike in that respect. Risk was imbalanced by those actors and ecosystems were thrown out of whack. There needs to a subtle balance and consistency.That’s why I focused on your superstition comment; because it is highly ironic and the other way around in the face of what is obvious. You like your well water just as long as it is not near any fracking operations. The negative externalities are very real. Enough said.

          1. sigmaalgebra

            > The post is full of contradictions …I don’t see any. Pick the worst and let me know and why.> Socio-economic and political ecosystems are networks.The definition of a network is some nodes and arcs with each arc with a node at each end. That definition is so general and abstract that one can find some sense in which “ecosystems are networks” doesn’t yet mean anything.On fracking, the information I got was from Newt Gingrich athttps://www.youtube.com/wat…Those two coeds are really lively, passionate, and fired up, totally duped, lacking in any rationality, fully irresponsible, i.e., all with reproductive advantage, etc.!You’ve been talking to them? At YOUR age???Where can I apply to be back in college, at Amherst, 20 again, and knowing what I know now about some girls at that age!!! WOW!!!”Honey, clearly you are really good at science. Not many girls are. Good for you! Shooting stars, have they covered those in physics yet? This is a good evening for them. We can see the Perseids only occasionally, but they are out this evening. So, we have a chance to do some observational astronomy. We can take a time lapse photograph. We need to get away from the glare of the city lights. If we hurry, we might also see the Evening Star Venus. We can put the top down, get some blankets, some sandwiches, and a thermos with some hot consomme. Okay?”Ah, another case of ecological networking!!!!!”Youth is such a wonderful time of life. Too bad it is wasted on young people.”

  7. jason wright

    Do investment decisions ever come to you in your dreams?

    1. Richard

      You need some sleep!

      1. jason wright

        Robert Frost rules.

    2. Pointsandfigures

      Why not? Can come from anywhere. Reading sci fi, just experiences in life. I used to dream about trades all the time. Prior to 24/7 electronic trading we had to do stuff on other exchanges in Asia and Europe and rely on their people to execute.Best story: I was dead asleep and working a position in Singapore that I had. It wasn’t a small position. I needed a market move on the yield curve and was short one part of it and long another. In the middle of the night I woke up and startled my wife. I said, “I am filled”. The phone rang around 10 seconds later telling me I was filled.

      1. Lawrence Brass

        I am usually a skeptic but have been reading about quantum entanglement and the latest experiments and it opens up a new dimension. A mystic friend told me that my problem was that I was too “newtonian”.What if thought entanglement based in the same quantum physics rules can happen?

        1. sigmaalgebra

          I’m impressed with the usual examples of entanglement, “spooky action at a distance”, but there is an easier relevant case: Just use one or two beam splitters. So, send a particle through a beam splitter. With the right beam splitter position, one half of the wave function of the particle goes one direction and the other half goes in a perpendicular direction.But there is only one particle, and it goes in only one of the two directions? Nope! Just from Young’s double slit experiment or the Michelson Morley experiment with two beam splitters, the two halves MUST continue to exist.Okay, put a detector in the path of each of the two halves, each detector the same distance from the beam splitter (for some experiments might have the two distances not quite equal).Now get a detection at at most one of the two detectors or violate conservation of energy. So, once get a detection at one beam splitter, then essentially instantaneously, much faster than the speed of light, the other half of the wave function has to disappear.It appears that if believe that could detect the gravitational wave of half of the wave function, then could have instantaneous communications, much faster than the speed of light, between the locations of the two detectors once the halves have reached them.If we would program a simulation, then it looks like for each particle interaction, have to stop the simulation, stop simulated time, go around all over the universe, visible or not, and clean up the pieces of the wave functions, and then start the simulation again, Then start to look for conflicts in just how that clean up operation could be done.I don’t believe any of this, but the quantum mechanics I’ve studied is so crude that it’s tough to say where this idea is wrong.

  8. Pointsandfigures

    But, a qualifier. It depends highly on the team. If the team can’t execute doesn’t matter if you see the forest. I have seen poor teams screw up great ideas.

    1. Lawrence Brass

      It is at least 4X harder than you think it will be. Time.

    2. JLM

      .Nothing in the world more painful than watching a team stomp on a bird’s nest on the ground.JLMwww.themusingsofthebigredca…

  9. JamesHRH

    I use a completely different analogy. A fence.Every new market is surrounded by a fence. At different points, it is lower, higher, covered in grease or topped with spikes.Somewhere there is a narrow gate with a lock. If your product / service fits the lock, you pour in through the gate and try to keep other from climbing the fence.But, hammering a wedge works too.Ever used one of these, they are a riot: http://www2.fiskars.com/Pro

  10. Jeffrey Warshauer

    Think big, start small.

  11. JaredMermey

    Hopefully extending the metaphor correctly……how do you think about timing launching the ancillary businesses/revenue streams as the wedge is getting hammered deeper into the wood? How/when and with capital generated from profits of the existing business or VC/outside partners?…the goal – I imagine – is to keep hammering the wedge in further so long as there is it can continue to generate (net) value?

  12. Jeff Mcneill

    Great article, and absolutely worthless discussion.

    1. jason wright

      That’s how it can go. There are no guarantees. Stay in bed all day?

  13. jason wright

    Was the title of this post inspired by backcountry skiing in Utah?

  14. Jim Peterson

    Fabulous framework Fred. Big picture thoughts bubbling out as you “relax.”I see this framework can also apply to a business that has driven a wedge into a market and needs to review the forest again for the best larger opportunities in that market- ones that may not have been in view.

  15. awaldstein

    What we limit ourselves to is basically who we are.Marketing and sales is all about what we choose not to say or surface.A client sent me an old post this week from years ago. I was both humbled and honestly needed the reminder.http://arnoldwaldstein.com/

  16. Adam Parish

    The trendiest coffee shops have less than four menu items.

  17. LE

    ..Welcome back Charlie.So who’s the customer? Everyone. Well, that pitch didn’t work so well with a lot of, shall we say, narrow thinkers who wanted something super concreteI think it’s more valuable in sales or marketing to not put that on the person who did not buy. Nothing to be gained by that. The idea is to think what it was, that when selling, you didn’t communicate that could have changed their mind. (Welcome back!).As far as restaurants you are describing a deli or a diner. In those types of places they have typically more repeat customers or those who know what they will be getting (and go straight to the omelette section). I hate large menus as well usually. Especially if they use language that I don’t understand.As far as choice the idea is to be not overwhelming but not limited (the way I see it).Will note that in many forms of advertising being limited will mean you lose the sale. For example in yellow pages ‘all kinds of printing’ works no where near like an add that literally stuffs every single thing into the ad that you can produce. Because people come looking for a product and will choose the vendor that sells that product. I know this for a fact obviously having done well in this area. (How did I figure this out? By studying what others did with their advertising in a wide range of products in the yellow pages).Plumbing. You want your drain cleared? Which ad? The one that says ‘all types of plumbing’ or the one that includes ‘drains cleared or no charge!’

  18. JamesHRH

    Hey Charlie! How’s the bakery?Great to have you in the salon / saloon.

  19. Richard

    Lots of changes happening at WholeFoods since the Amazon takeover. Has your wholesale accounts with then held up?

  20. Salt Shaker

    The heck w/ all this bs, more importantly, how’s your health? Nice to see you here.

  21. Lawrence Brass

    Charlie!… good to see you, man.Every time I am having coffee and ice cream and I am NOT under a sycamore, I think about you.

  22. JLM

    .Nice to see your mug, Charlie Crystle. Merry Christmas, Happy New Year, welcome back.You were missed.JLMwww.themusingsofthebigredca…

  23. sigmaalgebra

    Been baking, individual pizzas, each one a lunch or dinner, and did think of your business!Dough: Add to a 5 quart bowl 700 ml water at 110 F, a package, about 8 grams, of active dry yeast, mix, add 1 1/2 T table salt, mix, add in thirds 1 Kg Sam’s Club Chefs and Bakers flour, mix, knead, let rise, deflate, divide into 1/8ths, place each 1/8th in its own 24 ounce ZipLoc covered plastic bowl.Sauce: Usual suspects for flavorings with one 28 ounce can of crushed tomatoes, one 6 ounce can of tomato paste, mix, cover, heat gently and uniformly to 180 F, chill.One pizza in 20 minutes: On a microwave proof plate, form into a circle about 6 1/2 inches in diameter one of the 1/8ths and heat in microwave at 100% power for 3:30. Place in a well seasoned, stamped steel, restaurant style saute pan with a flat bottom about 7″ in diameter, deflate, add sauce, Mozzarella cheese, and four slices of pepperoni, cover, place on burner at medium heat for 13 minutes. Cut into 1/4ths, one piece of pepperoni per piece, and eat. About 660 food calories.The steel pan gives a bottom crust. The microwave gives the rest of the dough a headstart. The cover on the pan creates a small oven.US agricultural productivity is pretty good: The flour for one pizza costs about 9 cents at Sam’s Club.The star of the show is the fragrant yeast dough!

  24. Donna Brewington White

    Hello, Charlie. Happy New Year!

  25. Richard

    The most profitable ones have more. McDonald’s and Starbucks have shown how important it is getting customers In your stores throughout the day

  26. JamesHRH

    What did they serve when they broke through?You are looking at the end of the story, not the start.

  27. Rick Mason

    If you’re not a coffee drinker then Starbucks fails the customer. Last time I was there you have a choice of way overpriced water or hot chocolate made without using real milk. They also used to charge for the wi-fi. They must be doing something right though. Maybe it’s the muffins?

  28. Richard

    I hear ya, but focus better be 10x in value or quality. If it’s mediocore, you better have variety.

  29. Richard

    As a very very early adopter of over priced coffee, they did few things differntly and proberbly more important had great timing (the rebuilding of urban living) . They offered 1) consistently amoungst stores 2) open seating 3) a novel cappuccino menu.

  30. LE

    It’s not about the coffee. The coffee is actually a ‘front for the Symbionese Liberation Army’.The SLA is therefore a ‘sugar delivery system’. Starbucks makes money off of the sugar drinks they sell. Go in and observe what people are actually buying. Additionally the atmosphere and the experience. It’s a nice place generally to go into and it’s comfortable and predictable. The “K” of the lighting is warm and inviting. Unlike Duinkin and McDonalds. The people that work there are acceptably non-loser like.Dunkin and McDonalds are uncomfortable and not appealing on purpose. They don’t want you spending time there.

  31. Vasudev Ram

    Not sure, but I think the Cafe Coffee Day chain in India may be modeled on Starbucks. Just a guess:https://en.wikipedia.org/wi

  32. Rick Mason

    It’s a comfortable place to do business meetings and that’s what initially attracted me to the place. But I was repelled by the choices offered to a non-coffee drinker. Then I discovered a local startup business called Biggby’s. They were just as nice for meetings, free wi-fi and they offered a lot of choices for the non-coffee drinker.Locally lots of coffee places open and then close. Biggby’s must be doing something right because they’ve spread from Lansing to eight states. A little less than half the country doesn’t drink coffee and they value a nice place to hangout as well.

  33. JLM

    .Impressive note on the light color “K.” That is actually a very big thing.Thirty years ago, I used a consultant to pick women’s bathroom lighting and mirror glass colors. It was hard to find warm lighting in those days.Today, you can get incandescent replacement LEDs for down lights. I just replaced all the can lights and bulbs in my office and the change is noticeable.A young developer I know who has several Sbux tenants was telling me a weird story as to the amount of power consumption in a Sbux unit — the tenant pays for their own electricity and utilities.I don’t know if it is true, but it was 3X normal.JLMwww.themusingsofthebigredca…

  34. JamesHRH

    Read Schulz’ book.He wanted a Third Space, inviting & warm; he wanted espresso drinks but also to fit NA customers ( great long anecdote about ‘purists’ versus ‘food service pros’ that ends w Schulz & power walker walking out & across the street to order a skinny latte ).Compared to any other coffee shop or bakery – Starbucks was 100x better UE.He tools a Milanese espresso bar and created an acceptable NA version ( could have been a Parisian Boulanger is too, but whatevs ).

  35. JLM

    .The European coffee houses in the university towns kept the light of civilization alive during the Dark Ages.Schulz admits to copying European coffee houses.Nothing new under the sun.JLMwww.themusingsofthebigredca…

  36. JLM

    .I love the vibe of local coffee shops. I go to two different places in Savannah and they are like home offices.JLMwww.themusingsofthebigredca…

  37. Rick Mason

    Know what you mean, I take a lot of meetings in the Biggby’s near my place. If you ever get up to North Charleston check out the Biggy’s there and let me know what you think of the place.

  38. Lawrence Brass

    Moooom.. Jeff is voting up his own posts… 🙂

  39. JLM

    .I’ve been to both the N Charleston and Summerville locations, but it was 5 years or so ago. I don’t remember them to be honest.I will check them out next time I go to Charleston.JLMwww.themusingsofthebigredca…

  40. LE

    The first thing I do when I buy a property (because you know I am such a big ‘operator’ haha) is to change the lighting from fluorescent to LED. In the last property though (the one I bought from the bank for 1/2 what the guy who defaulted paid prior to the renovations that he did) I only put in some LED’s and I replaced all the ballasts and completely changed all the bulbs just so they would be uniform. I hate people who miss-match those bulbs. Took a handyman over a day to do that and some ballasts. Default owner was showing the property with lights out and flickering etc. Deplorable. And he was a residential RE agent.Back in college I worked for Coldwell Banker when they opened their office in my city. Was the first commercial RE office not on the west coast they opened in a brand new class a building ‘smell the carpets’. The branch manager found out I did photography and had me take slides so he could show to other managers at their meeting his brand new office. I researched the type of film and filters I would need to make sure the florescents didn’t come out green (which as you know they will do). He loved the photos. He said at the meeting though everyone was drinking and wasn’t paying attention. He offered me a job after I graduated which unfortunately I passed on taking. I remember the books around the office talking about shopping center mix. He said ‘have you considered a career in commercial real estate??’. Every other student working that summer wanted that job and I was offered it. Because I was serious all the time and they were joking.A young developer I know who has several Sbux tenants was telling me a weird story as to the amount of power consumption in a Sbux unit — the tenant pays for their own electricity and utilities.High because of the warming and coffee brewing and ovens etc. So makes sense. My ‘invention’ for a single unit where I have multiple tenants was to build in an electric and cleaning cost that they pay per month and back that out first of the rent. Then I tell them if it goes over the amount that I’ve allotted (as a group) they pay the extra amount split. This is because it’s one meter obviously and 5 or 6 tenants. Psych wise (which was the point) it definitely impacts how they set the thermostat. All I had to do was quote the rent as $x per month plus 1/5 of $x for utilities and cleaning. This also keeps the cleaning down. I have people who show up a few times a week to empty trash and keep the place clean. When they complained that the cans weren’t being empty what did I do? I didn’t have the cleaners come more often. I gave them extra trash cans in the storage room and told them to swap out the filled cans -or- I will charge them more every month. Worked very well.I don’t make a great deal on this stuff (relative to other things I do). I do it because my Dad did this type of thing and I kind of feel it’s good to have a diverse set of eggs in several baskets. And of course I enjoy it and getting checks (even if small) every month.Thirty years ago, I used a consultant to pick women’s bathroom lighting and mirror glass colors. It was hard to find warm lighting in those days.A great example of ‘operator’ vs. ‘financier’ in terms of making money. One thing that bugs me to no end is people who don’t sweat the small stuff and quality stuff. (Probably because I am jealous when in spite of that they make tons of money I have to admit).

  41. Lawrence Brass

    LED for down lights, interesting. Do they dim continuously or in tiny but noticeable steps?

  42. Susan Rubinsky

    A couple of years ago, I told several of my friends that a local restaurant they all liked would close in a couple of years. They said no way, great food, great wine list, etc. I said really bad, bright lighting and minimalist blue/grey color scheme feels cold and harsh, especially in Winter. The place closed down about a month ago. I don’t know the details of why but I’d have placed a bet on my reasoning.

  43. sigmaalgebra

    I suspect that of several dozen cleaning solutions in a grocery store, they all come from just a few now very standard, commodity industrial detergents and then get labeled each of the narrow purposes the customers have in mind.

  44. sigmaalgebra

    Yes, I like coffee. With good ground coffee and the little Melita setup, can get good coffee. No, I don’t like that: What I like is after add some genuine cream and a lot of sugar! It’s good! But when I added up the calories, I quit — haven’t had coffee in years!

  45. sigmaalgebra

    Never been to a Starbucks, Now, if they would be more like a coffee house in Vienna, hmm …! So, it would be Sachertorte mit Schlagobers:https://www.stadt-wien.at/t…The emblem on top is likely from the Hotel Sacher in Vienna.In the picture, it looks like they went to the trouble of dispensing the whipped cream, Schlagobers, from a pastry bag!So, appropriate music:https://www.youtube.com/wat…Nice building!Alsohttps://www.youtube.com/wat…with another nice building — trying to build one of those could really set one back!Not just J. Strauss but some Mozart, right, Bartoli & Fleming – Le Nozze di Figaro – Sull’aria:https://www.youtube.com/wat…They all go well with Chocolate cake!Last I heard, could become a citizen of Austria for about $25 million! High priced chocolate cake!Back when I was learning to cook, I made that cake a few times. It’s right up there as the best chocolate anything I ever ate and one of best deserts I ever ate.A dairy here in Upstate NY sells whipping cream with 38% butter fat — ah, the good stuff, one of the few, old time flavors left to enjoy where in the past needed your own dairy farm to get such cream!

  46. Vasudev Ram

    Samuel Johnson and many others frequented them, I’ve read … The discussions in those days must have been something to watch, considering all the changes that were going on.

  47. JLM

    .Dim as usual. You can get them in a much cleaner color. I favor a blue white. You can retrofit existing can lights. Huge savings in energy. Prices have come down from $100/fixture to $40 for high quality ones.JLMwww.themusingsofthebigredca…

  48. jason wright

    It’s just not cricket.