On startups, headless chicken, trend following and execution

So I recently told someone, “I don’t like your business idea. It’s too brick and mortar for me”. By publicising that I said this, I’m probably ruling myself out of a large number of possible job openings, if I want to get interested in those things. For the buzzwords nowadays in the Indian startup world are implementation, delivery, execution and getting one’s hands dirty. By professing a dislike for “brick and mortar”, I’m basically declaring myself to be a sort of a misfit for the Indian startup world.

Traditionally, things like what I’ve mentioned above – implementation, execution, delivery, etc. have never been sexy. They’ve basically been the necessary work that has had to be done to get full mileage out of one’s sexy work. The sexy work has traditionally been getting ideas, solving problems, negotiating, cutting deals and all such. And in the traditional model the unsexy work has gotten outsourced to the underlings and the less capable and to “Bangalore”.

But then this model wasn’t very sustainable. A bank I used to work for insisted that quants code their own trading algorithms, arguing that the transaction cost of explaining the algorithm to a specialist coder was significantly higher than the cost of coding it themselves. Recently, an interview with Jay Parikh of Facebook revealed that they’ve stopped bifurcating employees as those that do “day to day work” and those that work on “breakthrough ideas”.

Basically, companies started figuring out that the necessary but unsexy work was actually much more critical than they had imagined, but it was hard to motivate people to do a good job of them. So the next natural step was to play up the roles that had traditionally been unsexy. So execution became part of the mantra. Corporate leaders and gurus would talk about how they were successful due to an extreme focus on “rolling up their sleeves and getting their hands dirty”. And it seems to have worked.

Rather, I think it has worked too well. Implementation and execution has been played up so much that nobody can talk much about the kind of work that used to be sexy. So people don’t talk about ideas any more – the consensus seems to be that ideas are cheap and anyone can generate them, and what matters is only execution. Venture capitalists talk about execution, too, and of investing in companies based on the execution capabilities of the founders. And having invested, they drive their investees to simply “execute away”, and get things done.

I don’t have too many closely observed data points to corroborate this, but my reading of the Indian startup scene is that it is full of headless chicken. The focus on execution is so extreme, and the push from founders and venture capitalists in that direction so strong, that it appears that people have stopped thinking any more. And (again, this might appear speculative, and it is, for I don’t have much data to back this up) it appears that such sectors are headed for a kind of equilibrium where extreme execution is the norm, and people who like to deliberate and think before acting are getting weeded out.

I’m not saying that we should not execute, or give execution its due. All I’m saying is that we’ve gone too far in that direction, to a state where thinking might actually be penalised. And it is this bit that needs to be kinda “rolled back”. But then who will execute this roll-back?

Market makers and executionists

There are two kinds of people in the world – market makers and executionists. Market makers are great at spotting gaps in markets, and deriving business ideas out of them. They could also be great at finding and executing solutions, but their primary skill is in identifying the gaps in the market and framing the problem.

Executionists are great at execution and problem-solving. However, they need the problem to have been defined in the first place. Their ability to spot gaps in markets and thus lay out problem statements is questionable, though.

Executionists fall under different levels. It has to do with how much ambiguity they can handle. There are some for whom the problem must be defined as well as the method to solve the problem. “here is a problem. Do a logistic regression and solve it”, you need to tell them and they will use logistic regression (assuming they are trained in the subject) to solve the problem. At the next level you have people whom you can ask to find patterns in some data, but then they will figure out that the problem can be framed as a logistic regression problem and will then proceed to solve it. Further up, you just give them a business problem, and then they will figure out what data set can be used ot solve it, figure out that doing a logistic regression will solve the problem and then they will solve it. And so forth.

Then again, the first line of this blog post is wrong. There is no real barrier between market makers and executionists. There are people who are both (good for them) and those who are good at neither. However, you realize that if you are an executionist of level i, you will need the guidance of an executionist of level i+1 or above. And that if you are a highest level executionist you will need the guidance of a market maker.