How I Built This is a popular NPR podcast featuring founders of world-class companies like Spanx, Southwest Airlines, and Starbucks. Each episode covers one founder’s story at a high level – how they arrived at the company idea, how they started the company, and how they struggled through calamity to break into success.
How I Built This features a wonderful diversity of companies, along multiple dimensions. The founders span a wide range of industries, including consumer goods/retail (Dyson, Spanx, Home Depot), food (Five Guys, Samuel Adams, Clif Bar), and tech/software (LinkedIn, Wikipedia, Stripe). Also wonderful is the diversity of company age – from old stalwarts like AOL and Starbucks to fresh young things Slack and Stitch Fix.
Having a wide range of companies to study lets us tackle the perennially interesting question: how do you build a successful company? What do successful companies and founders have in common, regardless of what product they make?
Inversely, can you succeed by breaking commonly accepted “startup rules”? (like how many founders to have, how much money to raise, how quickly to grow)
I listened to 51+ episodes of How I Built This with these questions in mind. I found patterns of traits and behavior that were nearly universal to all the companies profiled. I also found surprising variation in some factors around how the companies started and eventually reached success.
In this How I Built This summary, learn:
The 3 traits that successful founders almost universally have
How founders get their breakthrough idea and push it through to success
4 key differences that split companies surprisingly evenly
Why you should be careful about your takeaways from success stories like How I Built This (and this analysis)
(Update 2023-03: I wrote this in 2020 when GPT-3 was highly hyped, but ultimately made only <1% of the splash that the monstrous ChatGPT made 3 years later. If I had to rewrite this today, I’d 1) think more kindly about defensibility, especially through deep product, user experience, and marketing/distribution (see Elad Gil article); 2) be more pessimistic about how much value foundation models can capture, given open-source competitors and possibly declining returns to increasing scale. But the rest of it seems to have held up well, especially around how easily incumbents can integrate LLM’s into their products and thus
Remember how this company Birchbox was everywhere 3 years ago? And how today it’s…not?
Turns out after raising $90 million at a peak valuation of $500 million, and after a few years of struggle, in 2018 Birchbox sold a majority stake to a hedge fund for only $15 million. This means after a journey of 8 years, its investors were totally wiped out. Employees who had exercised stock options came out with nothing.
Admittedly, I wasn’t a target customer, and this might have been obvious to their user base for years. But that this wasn’t bigger news (at least in the sources I read) reflects an ever-present survivorship bias in entrepreneurship. The companies that survive soak up the attention; the failed companies fade away with a whimper. We forget how much hype they built up years ago, and we turn our attention to the next hot thing.
But failed companies are where some of the best lessons can be learned. Warren Buffett says, “it’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”
Studying failed companies helps you better differentiate strategies that work from ones that don’t. Studying failed businesses helps you look past platitudes like “culture is everything” to understand the fundamentals of why many businesses fail and some succeed. Studying failed startups helps you discount today’s breathless press hype, and better try to predict the future.
I’ve done a deep dive into 59+ failed startups. Each has a meaningful story to learn from.
Most of these were venture funded by big names: Andreessen Horowitz, Sequoia, Kleiner Perkins.
They raised on average 8 figures of funding, some with $100 million+ – these were serious contenders, once strongly believed in by professional investors.
Many of them have postmortems written by a founder, complemented by third-party analysis of why they failed.
I hope they’re as useful to you as they were to me.
Earlier this year, Jeff Bezos (Amazon), Warren Buffett (Berkshire Hathaway), and Jamie Dimon (JP Morgan Chase) announced a joint venture to tackle healthcare costs. Recently, they named famed medical writer and surgeon Atul Gawande to be the venture’s first CEO.
Very few details about what the venture is actually doing have been announced, leading some to speculate. The more obvious low-hanging fruits are cutting out middlemen like pharmacy benefit managers (hence Amazon’s acquisition of PillPack) and getting some returns on scale by self-insuring a million employees across the 3 companies.
But I think a lot of speculators are missing the point. I predict ABC Health’s ultimate vision is to create a nationwide insurer that can service an entire nation’s employers and consumers. Much like how 64% of US households are Amazon Prime members, ABC Health hopes to build a payer system that the majority of US households will subscribe to.
Getting to that point is the challenge. Here I’ll describe what I see as the root problems of US healthcare costs, the central strategy that will get ABC Health to massive scale, and the exciting opportunities available to it.
If you live with someone, see if this sounds familiar: These tensions are common between people living together, whether that’s between roommates, romantic partners, or families. If you’ve had lingering issues about this, they’ve probably heightened by the COVID-19 quarantine. A year ago, we solved all of our arguments about chores by making one simple spreadsheet. It tracks all of our household chores, how often they should be done, and who’s doing it. Here I describe how the spreadsheet works, then how you can make your own.
I got questions from a high school student about the Ivy League. My response are below. I build businesses, mainly in online education. Brief bio here. No – I was pre-med and went into an MD-PhD program, but decided to drop out to build businesses. I explain why here. Yes – mainly with classmates. Some became my best friends, wife, business partners, and thinking partners. Like with high school, you won’t stay in touch with the vast majority of people you know, but hopefully you’ll have a handful who will stay in your close circle for decades. I don’t keep in touch with