Book Extract: Pattern Breakers

Pattern Breakers has its roots in the time when Mike Maples, a seasoned venture capitalist, was stumped, unable to get a grip on why some businesses he funded-Twitter, Twitch, and Okta, for example-took off, while others, some deemed "most likely to succeed," shut their doors despite doing everything right. Was it dumb luck that separated gold from dross? What Maples and Stanford University's Peter Ziebelman discovered contradicts accepted wisdom and upends today's formulaic approach to entrepreneurship: that one should look for a big open market, talk to prospective customers to find their highest needs, their "pain points" in that market, and then build what is missing. Rather, patterns are broken and the potential for breakthrough opportunity created when inflection points-events that offer the potential for new empowering capabilities-are harnessed, transforming how people think, work, feel, and act. Uber and Lyft, for example broke the pattern of transportation by harnessing the power of the GPS-enabled smartphone. The Covid pandemic spurred telemedicine. Pattern-breaking ideas like these unlock different powers and radically change the rules, driven by people with the independent-mindedness and courage to divert from the consensus. With intriguing and entertaining storytelling based on a lifetime of experience, Pattern Breakers vividly illustrates what differentiates breakthrough ideas from those that initially seem promising but that meet with mediocre results, and why others that initially seem unworthy-even idiotic-end up radically changing how people live.

Mike Maples, Jr is an entrepreneur, venture capitalist, podcaster, and the co-founder of Floodgate, a leading seed stage fund in Silicon Valley that invested in companies like Twitter, Twitch, Okta, and Outreach at the very beginning of their startup journeys. An eight-time member of the Forbes Midas List of Top Venture Capital investors, he was one of the pioneers of the seed investing movement, which started in the mid-2000s and now is a mainstream part of startup funding. Mike has 82,000 Twitter followers and a popular podcast, Pattern Breakers (previously Starting Greatness).

Peter Ziebelman splits his time between academia and the business world. He teaches entrepreneurs as a lecturer at the Stanford University Graduate School of Business, where he is the principal instructor for the popular graduate school course on entrepreneurship and venture capital. He has also lectured at the Wharton School and the University of Chicago. He started his career as part of the innovative start-up team for speech synthesis semiconductors at Texas Instruments and then later he was a systems software entrepreneur at a venture-backed start-up. In 1996 he co-founded, Palo Alto Venture Partners, an early-stage venture capital firm. He consults with Fortune 500 companies on entrepreneurship, and advises start-up companies as an independent board member.

The following extract is the entire introduction to the book. It has been used with permission and for which we are grateful. It is over 4000+ words long but it was essential to share it in its entirety, instead of a tiny portion as the concept of being a patter breaker is a bold idea that takes a while to be internalised. It is imperative that the spirit of the concept be understood before being channelled for the changes that need to be wrought in the individual's life. In fact, the two authors are like the co-conspirators they refer to, who with their zealot-like behaviour exhibit an idea in an animated manner, thus motivating others to follow suit. This canniness is an essential principle to imbibe in the start-up ecosystem. It is also that which makes these very leaders' heroes later. There are plenty of case studies and tips to glean from Pattern Breakers. Not all of them are easy to encapsulate here. The introduction does a fair job to give some insights in the chapters but it is better if you read the book for yourself.

—Jaya Bhattacharji Rose

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INTRODUCTION

What's Luck Got to Do with It?

Humans are expert pattern matchers.

Each day greets us with rituals and routines, in how we wake up, ready the kids for school, or wind down after a day's work. Beyond our everyday habits, we also adapt to the collective
patterns of our communities, resulting in smoother social inter-actions and a sense of belonging.

In business, "best practices" codify what works best. Executives look for patterns in past data to forecast the future. Managers gauge potential new hires from their previous performance. Public companies must report their finances according to generally accepted accounting principles.

Pattern matching guides almost all human activity. Neuroscience suggests the reason why: our brains are designed for it, to help us find order, predictability, and safety in an otherwise chaotic world. Drawing from past experiences and knowledge, our minds can process new information more efficiently, streamlining decision making. This ability also helps us bond with others and
find our place in the community. It also contributes to academic success, enhanced social reputation, and a longer, richer life.

And that's why so few of us create breakthroughs.

Breakthroughs require pattern breaking.

Pattern-breaking founders create something that breaks the mold. Their pattern-breaking ideas boldly challenge us to depart from current habits.

Many of us consider these pattern-breaking ideas impossible or unthinkable-at first. Ironically, the experts we respect most are often the least able to see the potential for a break from the past. Often it is the outsider, unburdened by the past, who becomes the pattern-breaking person behind a pattern-breaking idea.

Consider the breakthrough of human flight.

George Melville, the US Navy's chief engineer, called aviation a "useless dream" in 1901. Two years later, the New York Times published a piece, "Flying Machines Which Do Not Fly," that foresaw the accomplishment of human flight as something that might be conquered in the very distant future. Here's how the article ended: "The flying machine which will really fly might be evolved by the combined and continuous efforts of mathematicians and mechanicians in from one million to ten million years. . . . To the ordinary man it would seem as if effort might be employed more profitably."

Fortunately, the Wright brothers weren't ordinary. They flew their first plane at Kitty Hawk, North Carolina, sixty-nine days after that Times editorial.

Orville and Wilbur Wright were not formally trained in physics or aeronautics. They owned a bicycle sales and repair shop in Dayton, Ohio. But they exemplified the independent thinking and peculiar mix of life experiences that often lead to a breakthrough. The principles they understood about balancing and steering bicycles significantly contributed to their eventual understanding of flight control.

Despite the experts' staunch belief that human flight was a fantasy, the Wright brothers defied the odds and shattered age-old perceptions. What they lacked in credentials they more than made up for with curiosity, persistent tinkering, analytical observation, practical mechanical skills, and sheer determination.

George Bernard Shaw captured their spirit in his play Man and Superman:

The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.

Shaw grasped an essential truth: Those who thrive within the current rules ("reasonable" people) are not the ones who steer us to new horizons. Breakthrough progress comes from the
"unreasonable"-those who won't fit the mold, who see a different world and bend it to their will-the Pattern Breakers.

My job is to back unreasonable people who have unreasonable ideas, long before the rest of the world believes in them. For the past two decades at the venture capital firm Floodgate, I've invested in pattern-breaking founders and their pattern-breaking start-ups at the very beginning of their journeys.

Today, Floodgate is known as a pioneer and leader in the niche world of seed investing. I cofounded Floodgate in 2005 and helped define seed investing as a new category in venture capital. Unlike traditional investing, seed investing often involves backing just a couple of founders with an idea or possibly an early prototype with virtually no customers or historical financial information.

Our venture team has been fortunate to be the first investors in and to work at the earliest stages with some of the most dynamic breakthrough start-ups of the last two decades: X/Twitter, Twitch, Okta, Lyft, Rappi, and many others that have become household names or critical to the operations of major corporations. (Sadly, I've passed on more than a few breakthrough companies too. I'll discuss that a bit later.)

As seed investors, we have a very specific risk profile. We typically lose all our money in most of our investments, pinning our hopes on the occasional massive payoff when a start-up is wildly successful.

Investing into a start-up isn't like investing on Wall Street, where you can buy or sell at any time. Once we invest in an early-stage company, we stick with it until it is acquired by a larger company or it goes public on a stock exchange. Each investment journey can take several years, and there's no off-ramp in the interim.

Due to these factors, seed investing is deeply personal to me. I often say I invest in people I'd gladly get into trouble with, because trouble happens just about every single time. I pride myself on being more than just a financier. I'm a co-conspirator with ambitious founders in their rebellions against the status quo.

The breakthrough start-ups we have backed were all led by pattern-breaking founders who challenged conventional wisdom and convinced others to embrace a radically different future. They achieved this through a combination of pattern-breaking ideas that were radically different and pattern-breaking actions that persuaded the rest of the world to think, feel, and act differently.

Pattern-breaking ideas offer something radically different from anything that's come before. At first, these ideas can seem crazy. Why would anyone stay in a stranger's home? Yet Airbnb
proved they would. Why would someone catch a ride in a stranger's car? Uber and Lyft, having dispatched tens of billions of passenger rides, answered that question. How could 140-character
"tweets" ignite the most explosive media revolution of the last two decades? X/Twitter, with its simplicity, transformed the media and the public square.

Despite the initial strangeness of these transformative companies, their very uniqueness gave them enormous strength. They eluded the comparison trap, for there was often no precedent to measure them against. Instead of besting their rivals, they stood alone.

Throughout this book, you'll see why better ideas aren't enough. Remarkably different ideas are essential for achieving a massive impact. While pattern-breaking founders envision a different future through their ideas, that's not all there is to it. They must pull others along with them to make their ideas real. Asking the world to leave the known for an unsure tomorrow is a provocative act. It's unsettling to most. So these founders don't win by blending into the crowd or following conventional approaches.

Instead, they persuade others to change their habits through their pattern-breaking actions. They draw a stark dichotomy between the world as it exists and the world as it could be, urging
us to embark on a journey to a different future with them. Because their ideas and actions are so radical, pattern breakers often face the fierce resistance of a world reluctant to change. Often
their closest advisors and family try to bring them back into the mainstream, critics scorn them, incumbent corporations try to defeat them, and sometimes governments even try to outlaw them. But they forge ahead, driven by a purpose far beyond conventional acceptance.

JUST A LUCKY FOOL?

In August 2014, I was feeling particularly uneasy, and not because of an embarrassing investment failure. It was because of an unexpected investment windfall. I had backed the start-up that became Twitch from its beginnings seven years earlier. Since then, Twitch had attracted tens of millions of users. Then Amazon acquired it for close to $1 billion.

But the investment success felt like a forward fumble. The original idea I'd backed many years earlier was very different from the product Amazon had acquired: it was originally an internet reality show called Justin.tv that featured cofounder Justin Kan live-streaming his daily activities 24/7. After a few years and a lot of major course corrections, Justin.tv launched Twitch as a separate entity.

Twitch's popularity had skyrocketed, but I hadn't fully understood why.

I checked in with Spencer, my fourteen-year-old son and resident video game and YouTube expert. "What's the big deal about Twitch?" I asked.

He looked confused. "I thought you invested in Twitch?!"

Spencer gave me a quick tour of live channels from streamers with names like Captainsparklez, PhantomLOrd, and Nightblue3. Over a hundred thousand people were simultaneously watching someone play League of Legends-more spectators than you'd see in stadiums for major sporting events. Another streamer owned the world record for "speed runs" through Super Mario 64.

It blew my mind. These streamers weren't movie icons or rock stars, at least not how I understood it. They were ordinary people playing video games. Yet some had massive followings any celebrity would envy. Why would anyone-let alone millions of people-tune in to watch some random person play a video game? It challenged my beliefs about entertainment and fame.

But that wasn't all that unsettled me. That same week, a start-up founder I would have pegged for near-certain success shuttered his company. Again, I didn't fully understand why. He'd raised money from some of Silicon Valley's sharpest investors and had excelled at all the things he was supposed to-customer development, finding a big market, building a great team, and
defining a high-performance culture. His start-up could've been a case study of what to do. Except it failed. After years of sacrifice, waves of layoffs, and waning morale, investors and supporters lost faith. He lived the agony of watching his start-up slowly die.

And this kind of event-a start-up that seemed to do the right things yet still failed-wasn't isolated. I saw it happen again and again.

Thad calculated that more than 80 percent of the most impactful start-ups I'd worked with had pivoted. That is, they'd moved in a new direction that differed-often quite radically-from their starting point.

Twitter wasn't Twitter when I invested in 2005. It was a podcasting company called Odeo. But when Apple made podcasting free in iTunes, Odeo was in deep trouble. Twitter, called twttr
at the time, was started by Jack Dorsey, Evan Williams, and Biz Stone as they frantically searched for a new direction.

I invested in Twitch when it was a live internet reality show called Justin.tv. Four years later, it transformed into the streaming platform we now recognize as Twitch.

Chegg was a classified site for colleges when we provided seed funding in 2006. When it went public in November 2013, it provided a range of educational services totally unrelated to its original service.

Lyft was called Zimride when we seed-funded it in 2010. It was originally designed for carpooling at colleges and companies. In 2012, it shifted its focus to become the ridesharing service we recognize today.

The founders of Zimride executed extremely well in their shift. But you might be surprised to learn that many founders of breakthrough start-ups didn't necessarily plan or execute better than the founders whose ventures never took off.

Take X/Twitter for example. The founders differed on the vision. They kept changing who was in charge. The "Fail Whale" frequently appeared due to site overload, which happened almost every day.

There was chaos during the early days of Twitch as well. Emmett Shear, the CEO, has been open about the management dysfunction back then, marked by unclear roles, cultural challenges, competing visions, and the struggle to make decisions at pivotal moments.

Since pattern-breaking start-ups often shifted their initial ideas, and great execution didn't always guarantee success, a deeper concern came to mind: maybe the success or failure of the start-ups I'd chosen was due to dumb luck.

The Lucky Fool is a key character in Nassim Taleb's Fooled by Randomness (one of my favorite books). The lucky fool succeeds mostly due to luck, but in hindsight he ascribes the success to something else-not to good fortune, but to skill or strategy or genius or work ethic or some other factor that he tailors to fit the facts.

Was I being fooled by randomness? Were the breakout founders I worked with lucky fools? Was I just a lucky fool riding their coattails? And what about the founders who didn't achieve break-throughs? Were they just unlucky?

MY INNER ANORAK

That's when my inner anorak kicked in. "Anorak" is British slang for a socially inept person with an obsessive-compulsive hobby of tracking arcane subjects the rest of the population would usually find boring. The term comes from train spotters, who frequently wore anorak-style jackets. They would stand outside at train stations for extended periods, regardless of the weather, jotting down the numbers of passing trains.

I'm an incurable anorak. I became obsessed with uncovering the reasons behind why some start-ups achieved extraordinary results while others, despite seemingly following the right steps, struggled or achieved only modest success.

Figuring this out was tough. Start-ups are random and complex by nature. No two start-ups are totally alike. Luckily, I had good relationships with lots of founders. Most would speak honestly with me when I asked. Some had reached greatness, others had suffered failure, and a few had experienced both. I chose my questions carefully, seeking objective truths in their stories.

We are all fooled by randomness in one way or another. Past events always seem less random in hindsight. We can easily underestimate the role of luck in our success and instead overestimate the impact of our abilities or strategies, especially when we've been extremely successful. Taleb believes that many successful people are lucky fools-at the right place at the right time-rather than the skilled geniuses we imagine ourselves to be. Recounting our successes, we combine random events into a pattern that describes a coherent story in which our skill makes us the central figures of our success narrative. By overlooking the role of chance, we miss deeper truths and the opportunity to learn from them.

At the same time, I sensed that there was more to these outcomes than pure chance-that there could be an explanation for why start-up A had a better chance of achieving outlier success than start-up B. I wasn't looking for a magic formula, but I wanted a better understanding of the factors for success. I had to know. I kept digging.

I surveyed our database to pull the successful outliers from the thousands of founders we'd taken meetings with. If we'd rejected the opportunity to invest in an outlier, I reviewed the research work we'd done, the rejection email we'd sent to the founder, and the emails and internal correspondence between me and the rest of the team at Floodgate.

I focused a lot of effort on understanding how founders came up with their ideas. I tried to avoid open-ended questions like "Why do you think this product took off?" because these questions can invite explanations with hindsight bias. Instead, I asked questions like "What motivated you to start building when you did? Did you set out deliberately to build a start-up, or did the idea visit you in a flash of inspiration? What else were you doing at the time? Who were you spending time with to test ideas?"

I asked every founder, "What changed from your first product idea to what it became? What caused you to change course? When was the first moment you started to see things working?"

I searched for unexpected surprises, both positive and negative, eager to decipher their role in shaping success or failure.

I also spent a lot of time trying to learn how founders located their first believers-their early users-as well as the needs of those users and why they had decided to abandon their existing
patterns of behavior to embrace something totally new.

All this work was aimed at answering a single question: What was the most important factor that contributed to breakthrough success?

Some days I felt like a lost wanderer, with clarity always slightly out of reach. Still, my research began changing the way I thought about and talked about start-ups. I shared these experiences with students when I made guest appearances at the entrepreneurship course taught by my coauthor, Peter Ziebelman, at the Stanford Graduate School of Business.

Peter said my perspective was strikingly different from that of other guest lecturers. Most speakers emphasized entrepreneurial best practices. They explained how to identify attractive market sectors, how to interview customers to detect their key pain points, and how to create or build a minimum viable product with a defined business model that solves the problem.

In theory, following these best practices seemed logical. Yet looking closer at the founders who tried them, I saw a familiar tale.

Despite their meticulous efforts and strong commitment, many failed to achieve their desired impact. The reason? They poured their energies into ideas that appeared promising on the surface but lacked pattern-breaking potential. They didn't have a way to recognize which ideas were worth pursuing in the first place.

Spending more time with Peter's classes, my attention shifted toward the mindset required to birth a pattern-breaking idea. As we pushed our class discussion in this direction, the students' excitement grew. They said it had changed how they thought about testing the power behind their existing ideas and what it might take to build a breakthrough start-up. Peter and I met regularly to wrestle with the questions I was exploring. Slowly, answers began to take shape.

The usual frameworks for understanding why start-ups succeed or fail aren't wrong. They are helpful tools that assist founders in preventing avoidable mistakes. They help a founder adopt proven patterns to be better at the job. People were teaching entrepreneurship like they might teach math or physics or English-like there was a formula or recipe that, when followed correctly, would lead to a right answer.

My research revealed a counterintuitive truth: Founders don't create outlier start-ups by mastering established recipes or best practices. Instead, they embrace pattern-breaking as a core part of their job description and start-up journey. Being extraordinarily different is a key aspect of the breakthrough founder's job description. It's a different type of mindset, one that demands a talent for pattern breaking, an aptitude for breaking the mold.

Interacting with students, we saw the skill, drive, and smarts we look for in founders. Yet if you evaluated their start-up ideas and strategies, they were chasing conventional ideas unworthy of their talents and seemed headed for mediocre success at best. They were dutifully following the best practices, but it felt like a paint-by-numbers exercise rather than an approach to mastering the art of breakthrough start-ups.

It's even sadder to see a founder try to maintain momentum in a start-up years after realizing it won't make a difference. Driven not by enthusiasm but by obligation, they bear a profound responsibility to family, friends, investors, and employees. Feeling trapped, they waste many of their prime years. This is the real tragedy.

Peter recommended that we give form to the ideas we were developing, a framework to capture the thoughts more precisely. We could offer something new in the conversation of how break-
through start-ups are created.

This book is written in my voice, but you'll find Peter's influence in every line.

ANOTHER PATTERN IN DISGUISE?

Some of you must be thinking that if we analyze characteristics of breakthrough start-ups, aren't we looking for patterns? And isn't the book trying to propose a pattern for achieving breakthroughs? Isn't that a contradiction?

This is a thoughtful question, and to answer it, Tl concentrate on two key distinctions.

First off, 'm not saying that pattern matching is inherently "bad" or breaking patterns is always "good." They are distinct mindsets, each with benefits and limitations.

Pattern matching is a crucial cognitive skill. It helps us process information efficiently, make decisions, learn, avoid danger, and adapt. It's vital for everyday functioning.

However, these mental shortcuts can also make us miss significant anomalies right in front of us.

Consider a Harvard experiment where students were asked to count basketball passes among players in white shirts. Amidst this, a person in a gorilla suit walked into the frame, lingering for nine seconds while jumping up and waving its arms. Would you have noticed the gorilla in the room? This question provokes a confident "Of course!" from most. Despite this, half the students didn't notice the gorilla. This oversight, highlighted in the book The Invisible Gorilla,
reveals our perceptual blind spots. It's a clear example of how we overlook the obvious around us.

To achieve a breakthrough, you'll need a different mindset to see what you and others would normally overlook-a pattern-breaking mindset. Discovering breakthrough ideas is challenging, not because they're hidden secrets, but because we're conditioned to notice the
familiar, while overlooking what might be.

This leads to the second point: many people look for formulas for success. But the pattern-breaking mindset can't provide a fixed recipe. There's no set of steps guaranteeing a breakthrough; by nature, breakthroughs are undiscovered. Therefore, the concepts in Pattern
Breakers are not patterns to emulate for guaranteed success. Rather, they are strategies to nurture a mindset that breaks free from conventional thinking and actions. This is different from most business methodologies you'll encounter.

THE PATH TO PATTERN BREAKER

Pattern Breakers will challenge you to rethink why only a select few start-ups transcend the ordinary and achieve the extraordinary.

We first look at how pattern-breaking founders think differently: What gives their ideas the power to dismantle the status quo instead of simply enhancing what already exists? Then we turn to how pattern breakers act differently: How do they draw the right co-conspirators into their orbit, ignite movements to spread their ideas, and ultimately redefine how people think, feel, and act? Our aim is to distill these insights into practical, actionable steps you can apply directly to your own efforts.

Chapter 1 raises the central questions in Pattern Breakers: What nonobvious forces power ideas that upend the status quo? How do pattern-breaking founders succeed at spreading these ideas to other people? When do pattern-breaking principles contradict many of the best practices for start-ups?

In Chapter 2, we show how inflections are the underlying force that helps start-ups spark radical change. You will also see, in Chapter 3, how timing is crucially important, and how to turn
it into a source of advantage. We'll explore examples of start-up ideas that seemed good but failed because they lacked strong enough inflections to fuel their success.

Having powerful forces behind your start-up idea is necessary, but outlier success demands more. Chapters 4 and 5 describe how your idea also must contain an insight. This is a vital element often overlooked by even the best entrepreneurs. Insights provide uniqueness that helps you escape competition. We'll show why a start-up insight needs to be non-consensus and right if it seeks to break patterns.

In Chapters 6 and 7, we emphasize why "living in the future" is the likeliest path to the most powerful insights. We explain the difference between living in the present and living in the future and lay out actionable steps to propel yourself into a future-focused setting. We show you ways to test your insights with potential early believers in Chapters 8 and 9. You'll see why it's vital to seek feedback from those in sync with your core vision while steering clear of people more likely to cling to current norms. We will also help you figure out whether your idea has attracted the necessary enthusiasm among the right circle of early believers to justify the commitment and sacrifices that building a start-up demands. In several chapters, we provide stress tests to challenge whether your concepts truly have the capacity to overturn established patterns.

Next, we move from the concept of pattern-breaking ideas to the decisive pattern-breaking actions necessary to turn those ideas into successes in the real world. In Chapters 10 and 11, we show you how to enlist your co-conspirators-the first true believers who form the heart of your early start-up team, early customers, and initial investors. In Chapter 12, you find your first true believers and start your movement. Chapter 13 describes the importance of effective storytelling to energize your movement. In Chapter 14 we show that for those intent on breaking new ground, being disagreeable is an asset, not a flaw, and how this differs from just being a jerk.

We emphasize in Chapter 15 that pattern-breaking is not just for start-ups; larger companies can apply these concepts to their new products and lines of business. We spotlight companies that have mastered this.

I focus on a handful of start-ups in depth-Lyft, Okta, X/Twitter, Twitch, and Airbnb-while briefly touching on others. I chose these start-ups for in-depth consideration because I saw
them in their rawest form, in the thick of their formative chaos, while they were still grappling with the unknown, well before they achieved the milestones that would propel them to become
the household names we know today. Peter and I recognize that we're describing these successful founders and their start-ups as pattern breakers after the fact of their successes. These examples offer not only good stories but also glimpses into the world of those who defy convention. Your path will be different since every pattern-breaking start-up is a unique journey in its own right.

Not everyone views new technology and its creators with hope; skeptics and critics abound. We agree that it is important to see the whole-the excesses in addition to the successes of technology. Yet our demands for such honesty must acknowledge that advances in technology are not just a backdrop to our history; they are a protagonist in it. The mastery of fire, the dawn of agricultural practices, the rise of cities: these aren't just footnotes in our story; they form the very center of human progress. Absent these leaps, our daily lives would be as they were in old times, limited to focusing on our immediate survival needs.

The future doesn't happen to us. It happens because of us. It comes to life when someone dares to supplant old ways with a different way. You will get the most out of these concepts if you embrace the viewpoint of the "unreasonable" person championed by George Bernard Shaw-the mindset of a pattern breaker. Doing so may go against your initial instincts and what your parents, mentors, and well-wishers taught you. That's the magic of it.

Mike Maples Jr. & Peter Ziebelman Pattern Breakers: The Secrets Behind the World's Most Successful Start-Ups Macmillan Business, an imprint of Pan Macmillan, London, 2024. Pb. Pp 280 Rs 899