“If you have weak, scattered, or non-systematic observations about the market driving your decision making process, you can make some pretty bad decisions, even if you get all the strategy concepts right.” — Nathan Baschez

In this second episode of Outliers, I sit down with Nathan Baschez (@nbashaw) to discuss his startup and tech successes and failures, his writing routine, and his thoughts on business strategy.

Nathan Baschez is one of the world’s leading thinkers, researchers, and writers on business strategy. He is the Co-Creator of Product Hunt, which secured $6.1 million in funding and earned the Crunchie Award of “Best New Startup of 2014.” He spent time at General Assembly and Substack before launching Hardbound, a visual storytelling platform. Nathan now spends his days analyzing businesses and sharing his findings in the newsletter Divinations, which is part of Everything, a paid newsletter bundle he’s building with Dan Shipper.

Topics Discussed

• 00:01:47 – Nathan’s early career, including co-creating Product Hunt
• 00:07:04 – Creating Hardbound
• 00:19:51 – Nonfiction books as a form of secondary education
• 00:22:12 – Learning from losses and changes at Hardbound and Substack
• 00:26:52 – How Nathan became interested in and focused on business strategy
• 00:31:30 – Applying business strategy to personal life
• 00:35:19 – Feedback loops in business growth
• 00:37:55 – Models for thinking about business strategy
• 00:49:40 – Nathan’s research and writing routines
• 00:58:05 – Mental models and frameworks Nathan refers to most when writing about a company or industry
• 00:59:49 – Advice for young people aspiring to be strategic leaders

‍SCROLL BELOW FOR LINKS AND SHOW NOTES…

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Links from the Episode

• Connect with Nathan: Twitter | Podcast | LinkedIn
• Divinations
• Everything, a newsletter bundle on business strategy and productivity
• ‍Hardbound
• Ryan Hoover, co-founder of Product Hunt
• Dash by General Assembly, a course on coding basics
• Hacker News
• Tweet about the “Product Hunt mafia”
• Chris Messina, a top hunter on Product Hunt
• The Peter Principle
• betaworks, a New York City-based accelerator
• Techstars
• The New York Review of Books
• The Paris Review
• Master of Scale, a podcast hosted by Reid Hoffman
• Chompers
• Y Combinator
• Stratechery, technology and media strategy analysis by Ben Thompson
• Michael Porter
• Clay Christensen
• Feedback loops
• Finding Power
• The Flywheel Effect
• Charli D’Amelio
• Porter’s Five Forces
• Hunter S. Thompson’s daily routine
• Finding Power, a framework based on Clay Christensen’s “The Conservation of Modularity”
• Invisible Asymptotes
• Superorganizers
• Means of Creation, a talk show about the passion economy
• Building a Second Brain, a course by Tiago Forte
  

Recommended Reading

• Sourdough by Robin Sloan, creator of the Fish app
• A Short History of Nearly Everything by Bill Bryson
• 7 Powers: The Foundations of Business Strategy by Hamilton Helmer
• Why Figma Wins by Kevin Kwok
• So Good They Can’t Ignore You by Cal Newport
• Aggregation Theory by Ben Thompson
• Talk Therapy by Li Jin
• The War of Art by Steven Pressfield

Key Insight

Business strategy, or as Nathan describes it, “the art of making decisions,” is of ultimate importance when launching and building a business. It’s important to understand the business landscape around you, much like how teams prepare in football—watching replays, knowing the coaches and players, and understanding the team’s strengths and weaknesses.

Actionable Ideas

• “I think there are a lot of startup founders who don't pay very much attention to the strategy frameworks. They have a pretty simple view of, ‘OK, cool. I just need to solve a problem.’… I think you have a greater chance of success if you understand: ‘OK, how is this going to work as it scales? What are the advantages we really have? What are the accumulating advantages we have?’… These are the kinds of things that are really important to pay attention to and to be searching for.”
• “Be more indulgent than you think you should be. I think people have a mindset of being really diligent where they're like, ‘I need to do this, so I should do it…’ And you definitely need a lot of that—you need a lot of discipline… But at the same time, you need to balance it with, ‘This is a little different than what we were originally thinking, but this could be really good.’ Allow yourself to go there and maybe just give yourself permission to try it and think, ‘I'm just going to spend an hour on this, and we'll see.’ That’s where all the good stuff comes from.”
• “Create your own stuff, because it's a way to jump the line. It's really hard when you've not created a lot of stuff of your own that's become successful independently for people to look at you and want to take a bet on you. But if you've done that before, then people are like, ‘Oh, this person can make things that turn out to be really good, so I trust them.’ That's a permissionless way to demonstrate you're worthy of responsibility.”
  

On Outliers, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today. 

Explore all episodes of Outliers, be the first to hear about new episodes, and subscribe on your favorite podcast platform.

Daniel Scrivner (00:00:05):

Welcome to another episode of Outliers. I'm your host Daniel Scrivner. And we have another incredible show for you today, on Outliers ID code what the top 1% of performers have mastered and what they've learned along the way. In each episode, I dive deep to uncover the tools, habits, and ideas that we can all apply in our own lives.

Daniel Scrivner (00:00:27):

Today I'm talking to Nathan Baschez. And we go deep on business strategy, including what founders get wrong, seeing trade offs as opportunities, businesses as interdependent systems, and balancing deep work with business building. In the area of business and product strategy, Nathan is clearly an expert. He helped create and launch Product Hunt. He served as the head of product at Gimlet Media, which was acquired by Spotify in 2019 for $230 million. He then joined Substack as VP of product. And now he writes and publishes a paid newsletter that's all about business strategy called Divinations.

Daniel Scrivner (00:01:04):

But there's more to the story. Divinations is part of a subscription bundle that Nathan and his co founder, Dan Shipper are building called Everything. They describe Everything as a bundle of the best modern business writing. And as a subscriber, I can tell you that Everything is incredible. To learn more, just visit everything.substack.com. And with that, please enjoy this business strategy masterclass with Nathan Baschez.

Daniel Scrivner (00:01:30):

I am so excited for today's show. I've been thinking about this for the last handful of weeks. I just furiously took a bunch of notes and tried to make sure that I could get in everything that I think we can cover. Super excited to have you on the show. Welcome to Outliers, Nathan Baschez.

Nathan Baschez (00:01:47):

Thank you for having me. I'm so excited to be here too.

Daniel Scrivner (00:01:49):

So I wanted to start a little bit by going back and kind of covering your origin story as it were in a couple of leaps, because I think that a lot of people aren't aware of all you've done before founding Everything and starting to write Divinations. So if we kind of rewind a little bit, can you set up what it was like to help found Product Hunt, then your journey to Hardbound and then how that took you to Everything.

Nathan Baschez (00:02:15):

Yeah, totally. Product Hunt was crazy. It was one of those things in life that when it's happening at the time, you're just like, "Oh, it's like a fun side project." And then it turns into this thing that is totally different from just a fun side project. And I feel completely lucky to have stumbled into that situation. But the story is basically I met Ryan Hoover, I think like most of us through the internet. And so we became friends. This is like before he had started Product Hunt. So I guess it was a little easier just to email him for coffee. And we met up a couple of times, and we had actually also worked on another project. It's funny because it's actually similar to what I'm working on now. It's like it was writing related. It was called Question Club.

Nathan Baschez (00:02:57):

But anyway, the basic idea of it is we would ask a question and then a whole bunch of different people would write a blog post about the same question, basically answering the same question. So we did that for a little while, then a little bit later, Ryan had this idea for Product Hunt and he set up another kind of like email list for it. And that was going really well. And I was one of the people on the email list. And so we were just like, "Hey, this is cool. What if we turned it into a website? I could design and code the first version of it." So I did. So we worked together. This was like Thanksgiving, 2013. I was at my parents' house. I was working at General Assembly at the time.

Nathan Baschez (00:03:30):

And so it was just a side project. I had asked my boss there. I was like, "Hey, is it cool if I do a side project?" And he was like, "Yeah, that's fine. As long as it's not taking up too much of your time or whatever." [crosstalk 00:03:38]. Yeah, exactly. So we launched the first version. I think it was like five days after I started writing code, because it's a pretty simple site and we wanted to make sure we really kept the scope light. It's like, "Okay, you can post a link. People can have vote products. People can comment on product." I don't even know if we actually had comments in the very first version, but it was like one of those things where we added it like three days after launch. And then we added paginations, that we don't load every product, ever submit it into the database on every page, like four days after launch.

Nathan Baschez (00:04:04):

It was one of those kind of situations, but yeah, it kept doing really well. And I was like the main designer developer working on it with Ryan for, I don't know, maybe about a month or two. And as it kept gaining steam, Ryan was like, "I think I want to go full time on this and make it a business." It made total sense because it was really starting to work. But my thought was I had already made plans to move to New York for my job at General Assembly. And I thought Product Hunt was awesome, but I just didn't know if I could put in the energy to be the best co-founder for it. And I felt like if I did that without having the energy, that that would go really wrong. And it seems like a little bit too... maybe just risky or something. I don't know. I think a big part of it honestly was just our plan was in motion to go to New York.

Nathan Baschez (00:04:46):

But my wife now, then girlfriend, and I, we moved to New York for General Assembly, Product Hunt kept pulling up, and it was just amazing to watch it and cheer it on and see all the other really amazing people join the team. There's a tweet recently that the Product Hunt Mafia from those days is pretty stacked. You've got a lot of people, too many to name, but there are people who've gone on to do really amazing things from then. I think it gave me some confidence. Like you can build things and they'll work sometimes. And so like maybe not every time, but there's not anything like there's no inherent secret brilliance or something like that to coming up with stuff, you just have to pay attention and notice what you like and try and build more things like what you like. And some of them will probably work out better than others.

Nathan Baschez (00:05:26):

The other thing that really it taught me, it was like just the importance of relentlessness and community building and just people. And Ryan did an amazing job of that. And different products grow in different ways, but that was one of those moments that taught me like, "Okay, this isn't the only move, but if you want to do this move, here's how you do it." With like what Ryan did. And so that was just so cool. And it was just really lucky. It was really Ryan's community building and envision for the thing that made it what it is. There's lots of, I think, people who could've coded and designed the web app, and I think I did a pretty good job at that part. So it was worth something. But man, what it became is really a function of the vision and the community building stuff that Ryan was doing.

Daniel Scrivner (00:06:04):

Yeah. It really feels like the community there is ultimately the product. Because it's such a vibrant community the people that... I know Chris Messina, who's one of the number one, I think, product hunter or hunters on the website. And here it's like the perfect platform for someone like him who's always looking for something that's interesting, super excited to share it. And it's like the internet finally had a place where if you were a founder starting something, you knew that you could at least get people who were close to as excited as you were and were willing to be kind of gracious with you. And if you were someone who's just excited about new stuff, it's like, nothing could be better.

Nathan Baschez (00:06:37):

Totally. And the vision has always been to create a more welcoming place on the internet for people to try new things, which is just so good and needed. And it's crazy to imagine how many people built their first thing because they thought, "Well, I could launch it on Product Hunt. I'm curious how it would do there." I know that's how I felt before Product Hunt about Hacker News. Of course, Hacker News is notoriously much less supportive, [inaudible 00:07:00]. But yeah, it's been amazing to see what it became.

Daniel Scrivner (00:07:04):

So you have that experience at Product Hunt. Maybe fast forward a little bit, when did you have the idea for Hardbound ? How did you get that rolling? And what did you learn building that during the time that you were there?

Nathan Baschez (00:07:16):

The reason I was moving to New York and didn't join Product Hunt was for General Assembly, which I had already been working there for awhile, but it was going well and they were based in New York and they were like, "Hey, you could come here." And New York is pretty cool. So my wife and I moved from San Francisco to New York. And the thing I was working on there, that was going well, was this thing called Dash. And it was a way... Basically, General Assembly is a company that has these, well, now they're all online. But at the time they were all in person courses that are like really intensive. It's like a bootcamp. And they needed something that was easy and sort of free for you to do online, to kind of see, "Hey, is this kind of thing for me? What kind of qualities does General Assembly teach, generally? Does this give me confidence so I feel like I'm getting it?"

Nathan Baschez (00:07:57):

The idea is that it would help people get comfortable with the idea of making this huge jump in their career. And there were products that existed like Codecademy, like a bunch of other stuff like that books. But none of it felt like what we needed. We had a specific way of teaching new people, okay, what's the first lesson you would give someone if you wanted them to come into it and come out of it actually with the maximum amount of energy, and what's the right order to teach things then? It felt like a lot of the existing pedagogy was like, if you can imagine there's a friend of mine who actually was the co-founder of Dev Bootcamp who compares it to drop parachuting into like desert island or something like where you're stranded.

Nathan Baschez (00:08:35):

It's like, okay, imagine you have this giant manual. That's like an index of all the possible things you may want to know. Where do you start? Do you start at just the very top on page one? I don't know. Maybe. But that thing is just ordered in alphabetical order or something like that. That's not the most important thing to tell someone immediately. Immediately, you would want to be like, when you land, the first thing you need to do is find a source of water. And it's like you give people this strategy for dealing with the environment. And that's what we wanted to do with Dash was like sort of skip over the stuff. That's like, a lot of things when you learn HTML are like, "Okay, let's start with the head tag, and the body tag, or whatever."

Nathan Baschez (00:09:11):

And in the head, you've got the title. And it's like you're going straight down to the HTML blind byline. And it's like just because that's the order that it goes in doesn't mean that's the order that it should grow in, in terms of how you develop it, what's the starting point. It's like, let's make some text show up on the screen. Let's make input show up on the screen. So we can from the very first lesson make it feel like, "Okay, this is interactive. And in the future, we'll tell you how to do something with the stuff people type in this input or whatever."

Daniel Scrivner (00:09:35):

Yeah. Just get some traction and build confidence.

Nathan Baschez (00:09:38):

Totally. So that's a long winded way of saying that I was really interested in how people learn things on the internet. The thing I was most sensitive to is people getting bored and quitting. And I thought if we had this big intimidating wall of texts for some dense technical topics that a lot of people would just leave. And they'd feel like, "And this thing isn't for me." And I thought if we could obviously get a lot of that complexity and present each moment that you're learning as like a simple visual thing that contains just what you need to know right at the end and we pace it in a good way and really manage the sort of cognitive load that people have to face when they're doing this thing, that a lot more people would complete it.

Nathan Baschez (00:10:11):

And so part of that is the way you write the content. But another big part of it is the format. We were experimenting with this kind of like slideshow format. And I did some early sort of like prototype versions of it and showed it to people. And they were like, "Oh, this is really cool." This was just other employees at General Assembly. They were like, "Okay." I still remember actually sitting on the couch with the very first prototype and showing it to one of my coworkers who wasn't technical and she was like, "This just makes sense. Why didn't anyone show it to me this way before?"

Nathan Baschez (00:10:37):

And so that was like the one where I was like, "Okay, cool." There's something to this format that basically became Dash, a much more elaborate version of that. And I was working on it for awhile and really pumped about it. And honestly, when I left in 2015, that was like two years into Dash and probably like, I think 300,000 ish people had used it. And so now I don't know what it is, but they're still using it. It's still active.

Nathan Baschez (00:10:59):

I hope it's taught maybe like half a million or a million people the basics of how to code, at least introduce them to it. And it was just such a fun experience working on it. And it felt like I was doing kind of like a mini startup within General Assembly. It's this new product that's like modularly connected to the rest of the company. And I was itching for something like that again, because my role after that kind of shifted towards more broad, I was a product manager in charge of a couple of different products that... where I was responsible for. And it was a lot less that kind of startup feel almost of like you're in the weeds building a new thing. I guess it was like the Peter Principle or whatever you like rise to your level of incompetence.

Nathan Baschez (00:11:35):

I don't think I was super competent at that job at that time. And so the boss who recruited me and who was one of the co-founders of the company, he laughed. It was like starting a new company. I was just thinking about what I wanted to do next. The thing I kept coming back to is this slideshow format that we had for the lessons in Dash. And I really wanted to make something kind of like that, but just not limited to learning how to code and not like a slideshow that's on your desktop computer where you're writing code and all this kind of stuff. What if you just took the slide part and you made that really amazing and you used it as more of like a general storytelling device?

Nathan Baschez (00:12:07):

And I had seen this other thing that made me really think that this could be good called Fish, which is an app by a guy named Robinson who is an author of several really awesome books, including Sourdough and Mr. Penumbra's 24-Hour Bookstore. He's a great author and a guy that I had gotten to meet a couple of times. And I don't know, maybe I would call him a friend. I don't know if you'd call him a friend. But I admire his work for sure. And anyway Fish's a huge inspiration because it was a whole app that was basically like a slideshow and it had this really cool sort of like tappable storytelling format.

Nathan Baschez (00:12:34):

And I thought this is a lot like the format for Dash. And that was just one app, one story. He was kind of done with it. He was working on other things. There was a company in New York that was incubated by Betaworks, which is a startup incubator accelerator investor in New York, that was called Tapestry. And they basically took Fish and they were like, "Let's make a platform where anyone can create this kind of content."

Nathan Baschez (00:12:55):

And some people did. And some of them were amazing. But it didn't take off because it was really hard to create in that format. And I thought, "Well, okay, it's hard to create in that format. It's also hard to make movies and books and stuff and podcasts. But people dedicate a lot of energy to it if they feel like it's worth it and they don't feel like this is worth it because they haven't seen anyone do it successfully before, but I think it can be done successfully. So what if we created like a studio that created this app and we created the stories that go in the app and then we're sort of like a Pixar, or like a book publisher, or something, or a media company really."

Nathan Baschez (00:13:25):

At first, I really conflated like how much people loving a story as like a virality of a story could be like a one to one relationship with just how much people loved it or like quality or something like that. But I think I pretty quickly realized when we were doing it that our stories were the kinds of things that there were definitely some people that really loved it, like it was impossible to ignore the feedback we were getting from people and to know that there were some people who just deeply loved what we were making, but like they also weren't going viral. And so that was a weird thing to wrap my head around, but it kind of makes sense, like books don't go viral, autumn movies don't even really go viral. Sometimes things become pop culture phenomenon, but that's a little bit different from a viral Buzzfeed article. Just the mechanics of how it grows and how it spreads.

Nathan Baschez (00:14:09):

It was a little bit stressful because we needed our stories to grow and get a lot more traffic. And on the one hand people were telling us, "We love them," and on the other hand... And a lot of them did. They got 30, 40, 50,000 views or something. And those are pretty big. Even for mainstream publications, there's a lot of articles that get a lot less views than that. So you need something to have a spark for it to reach that amount of viewership. But still it was just really hard, basically. And it wasn't very understood by venture capitalists. And also at that time, we were an app and the narrative was like, there's no apps. Like apps were done kind of... This was the beginning of crypto kind of mania and chatbot mania.

Nathan Baschez (00:14:44):

And it was just like... Definitely it taught me how important narratives are to what gets funded. So it was very hard. It was very hard to raise money. We had several strikes against us, I would say. We raised over the course of like two years about $420,000, which... I say about, it was exactly $420,000. And the reason why it was not because of like 420, it's just like we raised an initial 200,000 and then we raised another a hundred thousand, and then we got into Techstars and they invested 120,000. And that was just like what they invested. So we ended up with 420,000, which is fine.

Daniel Scrivner (00:15:16):

It's a good number. [crosstalk 00:15:17].

Nathan Baschez (00:15:17):

Why not? So the app was pretty simple. You open it up and there's a list of stories. And the vision was more about the format then what kind of content we would have. So in the beginning it was a little bit unfocused. It was just like stuff that I thought was cool. It was all really nonfiction and tended towards like sciencey or history kind of explainers, or like businessy kind of explainers. So one that we did that was one of our best ones and one of my favorite ones is called What is Fire? And it was just literally like, yeah, fire, what actually is happening there? And it's cool because there's like all sorts of stuff when you really zoom in the principles, like laws of nature and the universe that you can learn just through the lens of something really simple. Like when you're looking at a candle and you're just wondering what's going on now, you can learn about it.

Nathan Baschez (00:16:02):

That was still when we were thinking maybe we'd be some sort of platform and we'd have like multiple channels and other media companies might create channels or other people might create channels on this kind of stuff. But then what we ended up settling in on was, "Okay, now there's no channels. It's not going to be this broad platform. We're going to be very focused on this specific type of content." So we had to develop an editorial vision in addition to a format vision. So we decided to really focus on nonfiction books summaries. Because we thought, "Okay, there's all this demand for like... there's lots of books that you've heard of that you're kind of interested in that you're not sure if you want to read or not. Why don't we give you something to do that teaches you something from the book and gives you a taste for whether or not that is going to be the right book for you, and then we can align ourselves with authors in the publishing industry."

Nathan Baschez (00:16:41):

The same reason why if you have a new movie coming out you may go on a talk show. Maybe if you have a new book coming out, you'll do a hardbound. It's like the idea we were thinking. And that that may help with some of our economics in terms of like covering costs of getting these things created. But they will still be really editorially focused and like good, and like it's not just like an ad for a book. We wanted it to be something that people could genuinely just love and consume on their own kind of like a book review. And there's publications like that, like The New York Review of Books, Paris Review of Books. They are sort of serving the exact same function. And so that was the vision for how the content evolved.

Nathan Baschez (00:17:14):

And then the format just to give kind of... I sort of alluded to like, it was sort of a slideshowy thing. The way it worked is, when you tap into a story, it opens up, it's like full screen vertical kind of like an Instagram story, except it doesn't auto advance. So when you tap, it goes to the next thing, but then it just waits on you because it's reading and we want to give you space to read. And every screen was visual. So there was some sort of background photo or illustration. Oftentimes, it felt kind of like a comic book where there was characters in a scene, characters that have speech bubbles and stuff like that. Sometimes it would be a little bit more like abstract than that.

Nathan Baschez (00:17:47):

There's other companies adjacent to us that did incredibly well off a very similar model, like Pocket Gems is the one that comes to mind, or Episode. These are more like fiction oriented that... but like younger readers, those did really, really well. I think they're still doing really well as businesses too. We sort of had this little corner of it that felt kind of like... One way to compare it is it's like a really nice coffee table book with beautiful visuals, except this is one that you also are like engrossed in as a story. Oftentimes coffee table books are more for like perusing than for like getting sucked into it. But yeah, that was the format. The only other cool thing about it is, when you tap and it goes to the next slide, basically, it animates into the next slide, which you can do a lot of really cool stuff with. It feels very smooth when there's a smooth animation between one thing to the next.

Nathan Baschez (00:18:32):

And we could do a lot of cool storytelling techniques. So it's like, you can tap and then it zooms into the character's face, and then another speech roll pops up or something. And that's the kind of stuff that... Or it could pan to another scene or like you could juxtapose one thing to another in a way that, because of the transition, it makes sense that you're creating a connection between those two things.

Nathan Baschez (00:18:51):

It was a lot of fun. I learned a ton about visual storytelling. It was like watching a lot of Every Frame a Painting about cinematography is a great YouTube channel about cinematography, reading Understanding Comics by Scott McCloud. These things aren't really like writing. They involve written words, but it's more than that. In order to make it feel really great, you've got to master these other parts of storytelling.

Nathan Baschez (00:19:11):

And the team that we were working on it together, we were all learning these things together. So I still think some format like that could be popular eventually. It's a very long and slow process to make new storytelling formats become popular, because there's this huge network effect of like, people are used to it, there's distribution channels for it. So there's like a market for it. So you want to create for it because that's a place you can go where there's audience and attention and money as a creator. And so it's been interesting to watch. It's taking podcasts a long time to become a thing. And now it's to the point where people are willing to invest a lot of energy and money into it. And I feel like maybe a similar thing could emerge with this other visual tappable form of storytelling.

Daniel Scrivner (00:19:51):

It definitely feels inevitable. And even thinking about podcasts, it's like at its root, it's pretty esoteric. And you have people that are experimenting with the format of the podcast and how do you stitch together multiple interviews into one episode. There are podcasts like Reid Hoffman's Masters of Scale, that it does like a lot with sound effects. So it totally feels like something like that has to happen in the future. And even just thinking like, I think nonfiction books in my mind. I thought that idea was really remarkable because nonfiction books have a ton to teach people generally. I'm pretty biased in that I think if you were to cobble together a list of the 50 best nonfiction books, I think that would be a better education than most people get in four years of university. But it's something that, it takes a lot and it's not appealing just to sit down and read generally. And so it feels like, yeah, the experimenting with the format that has to evolve eventually.

Nathan Baschez (00:20:42):

The thing you said about the nonfiction books being better than education, I connected in my mind to the pedagogy almost of Dash where it's like the traditional university education you get is like that big book with the index of all the things you need to know and you just start at the top and then you're just sort of throwing people into it and it feels kind of boring because you're not sure, how do I connect this to what I actually need in order to provide, whereas nonfiction books, which evolved because of market pressures to like be interesting are kind of like a great starting point. And then I wonder what the world would look like if it started at the most interesting stuff and got people engaged in like on a path and then rocketed them past what's just easy, popular stuff to read into this deeper nerdier territory.

Nathan Baschez (00:21:23):

So it's like, imagine if we gave every seventh grader the, A Short History of Nearly Everything by Bill Bryson, amazing book, covers all sorts of different branches of science. And then you're like, "Okay, cool. What was most interesting to you? What questions do you have? Oh, like the stuff about light. Cool. Let's go do all these experiments and then you can read the textbook about it and then... Oh no, actually you want to learn about biology. Okay, cool. We're going to go on this field trip or whatever, we'll dissect a frog and..." At that point you care about it.

Nathan Baschez (00:21:46):

So it's like there's motivation to continue. But when you're just like, "Okay, let's crack open the dictionary and start at the first word," it's like that's not how you learn language, but that's sort of like what pedagogy is based on in schools. And it's really sad. To me, there seems to be no because main purpose it really serves in a lot of cases is like babysitting for a really long time that that's like good enough basically for parents and for society. But like, I don't know. It's like, it doesn't feel like it's good enough anymore. Anyway, that's my rant about schooling.

Daniel Scrivner (00:22:12):

Yeah. Everybody has different learning styles, we're all wired differently. And so it definitely seems incredibly backwards that everyone learns the same way, the same content, regardless of whether they're interested or not. My understanding is you started writing Divinations and that has evolved into Everything. What was the process to getting to Everything which you're building now, and can you just quickly set up what that is for people?

Nathan Baschez (00:22:36):

I guess I could really quickly connect the dots of like Hardbound didn't work out. We basically ran out of money. It cost a lot of money to create those stories and we were generating some subscription revenue, but not enough. And investors just didn't want to invest. So ran out of cash. So after that I joined Gimlet Media and I was there for a little while as their head of product. The plan was to make other stuff. And we did. We made a really cool Alexa skill called Chompers. That's like a toothbrush timer basically for kids. But it's like two minutes. Instead of like a timer, it's like Gimlet quality storytelling and content and songs, all those kind of stuff. And it's like a really awesome product that continues to do really well and when to can line, which is cool.

Nathan Baschez (00:23:13):

I guess technically I am a can line Ord winner or at least an associate of people [crosstalk 00:23:16]. I don't know exactly what I deserve for like product managing, but like tech side of it. But like whatever. It was fun, it was really cool to work on. And then basically Gimlet was like, we started doing a lot of this tech stuff, but like now that we're down the road a little bit, we can kind of see how much it costs and like what kind of scale we need to get to in order to pay off all these investments, how confident are we that like, that's really the path for us. And so they decided to refocus on the core of creating amazing podcasts, getting a lot of people to listen to them and having the best ads in podcasting, embedded in those podcasts.

Nathan Baschez (00:23:46):

And I think that was the right decision for them, honestly. That was kind of the conclusion I was coming to too. And eventually, as we all know now, they got acquired by Spotify. And so we sort of had this amicable parting of ways. And then I had a similar thing happen basically next when... So after Gimlet, I joined Substack, which at the time nobody had heard of. It was pretty small and they had just finished Y Combinator. I think they originally set out to hire an engineer and then they just got excited by me because I'm like an engineer, but also like product and design and all that. I was just extremely excited about their vision, and still am, learning to operate as a member of a small team where there's no side projects, you're just going with the group on things.

Nathan Baschez (00:24:24):

And there's a lot of my own ego, I think, that got in my way there of just learning how to be a supportive team member and like learning how to listen better and not have all the ideas come from me. It's one of those things where I'm really glad that I had some opportunities right now in my career to force me to realize where I could be a better communicator and a better listener. And so I was there for about a year. And then I was just figuring out, I was in the wilderness figuring out what I wanted to do next. I thought like, "Should I start a newsletter?" That was actually, my first thought was like, I could start some sort of like solo thing, whether on Substack or not, maybe that would be just easier.

Nathan Baschez (00:24:59):

My experience with VCs has been mixed, or joining another company, or something like that. It just felt like maybe that would be like the easiest and best thing for me. It would be like do something on my own. And then I just kept getting the urge of like, "I want to build a company." And so did the kind of like San Francisco co-founder dating circuit thing, which is like its own very specific universe. And there's a lot of really amazing people that I met and worked on some cool projects with people that I will remain friends with for life through that process. That's actually the best thing about co-founder dating is like in romantic dating when you break up maybe you're friends, but usually not in co-founder dating. It's like you become really great friends and then like fast forward at the time when you break up, it's not because you don't like each other, it's just because it's incredibly rare to have the right timing, have the same passion for the exact same idea. There's all these factors that go into it.

Nathan Baschez (00:25:46):

And so I've got a couple of new, really great friends out of the deal. But then eventually, basically, Dan called me and Dan's been a guy that I've known for a really long time and wanted to work with for seven years or something like that. For quite a long time, he was thinking about doing something in paid newsletters. And I'm like, "Well, duh, that's the thing that I'm into." And so we started working together then and haven't looked back. But that was a fun... it was like a walk in the wilderness, a veer for me, between Hardbound not working out and being at Gimlet and having that... the strategy of the company changed and that was tough. Nothing I really could have done about that. I think it was the right decision.

Nathan Baschez (00:26:19):

And then at Substack a little bit more for my own stuff, I think, got in the way to some extent, and also just the skill set of the rule of not being right. And then now it finally feels like, "Okay, I've got this thing that basically works. And like I plug in, and I'm happy with the way that I plug in. And it feels like it could go on for a long time."

Daniel Scrivner (00:26:36):

Sounds like it was really an amazing growth curve for you. And I'm sure at tons of points in time along that journey, and I'm sure you probably yell in your own head about like, "What am I doing? What is this leading towards? Am I ever going to be able to found this company?" But obviously it makes a ton of sense in hindsight.

Daniel Scrivner (00:26:52):

I wanted to ask one question just specifically around Divinations, because I think anyone who is interested in business or is interested in either founding or running a business or even being part of an executive team knows that strategy is something that they need to, maybe at worst, be aware of and a best have a really good grasp for like, what is it, how do I use it and employ it at this company. But it's also one of those things that is just really amorphous. And I feel like if you were to ask 10 people what strategy is, they would not even be at all close in terms of what it is. When did you become interested in it? And what made you say yes to wanting to write about it day in and day out?

Nathan Baschez (00:27:30):

The origin of it really came from when I was working on Hardbound. And I think my implicit assumption going into Hardbound was, if you make a product experience that's amazing enough, then the business and everything else will work. And I think for certain kinds of products, that's like basically almost true. Like if you're building a SAS product, that's like it's a piece of software that's like basically infinitely scalable, and you've got this really great product market fit, and it's growing organically, and people love it, then you're fine. But for other kinds of businesses that have more real costs, you have to figure out, how do we manage these costs? Where are we investing or not investing? There's more difficult decisions that come along. And media is one of those businesses that has a lot of real costs.

Nathan Baschez (00:28:14):

And there's also stuff like just managing your... for where you are and like what's the best next step to take being in sort of like survival mode. Like, do we make one story that we invest a hundred thousand dollars in or do we make 10 stories that we invest $10,000 in? There's a lot of real constraints and choices you have to make. And those crop up to some extent in just like regular SAS software, but to a much greater extent, again, like kind of when you have real costs, other than just like you're developing an app, basically. That people are using the software.

Nathan Baschez (00:28:43):

So I basically just was searching for the thing that would be like a discipline, basically, that would help have answers to some of these questions. And I was doing it a little bit before Hardbound and a lot after Hardbound. It didn't work out ultimately. I think that it's possible to get way too far in the weeds and stuff. It's not as if like the point is to read strategy nonstop and then you'll be prepared to start a company and you'll have no chance of failing or whatever.

Nathan Baschez (00:29:09):

But I do think that there's a lot of really helpful stuff to have in mind, just basic principles and mental models that help you navigate the decisions you're making. I think that there's an under appreciation of it in the startup world. There's a huge appreciation for listening to wisdom from people who have successfully started something before. There's a lot less appreciation for almost like academia, like business school strategy theory kind of stuff. Like people don't nerd out about it as much. They're starting to, I think a little bit more now, I don't know how much of it is like just in the air or like because of like [inaudible 00:29:41] is like a good source of water, that kind of stuff.

Nathan Baschez (00:29:43):

But that wasn't really a thing. No one really talks about like Michael Porter's ideas or whatever on a day to day basis, and like Clay Christiansen. Definitely to a much greater extent people heard about disruption, but like half the time, it's just like it's a bastardized version of disruption that just, when they say disruption, they just mean a successful startup that displaced an incumbent, which is like... Disruption has more to it than that.

Nathan Baschez (00:30:05):

So anyway, I think that it's really helpful to define it, because like it's the discipline that could solve all my problems and start finding like, "No, okay, let's narrow it down." The way I define strategy is, and this is based on like Michael Porter and Clay Christensen, as best I understand the way that they define strategy, the generic version of strategy, if you just look it up in the dictionary, it's like a plan of action in order to achieve a goal. It's roughly what it means.

Nathan Baschez (00:30:30):

And so, okay, what's the goal of a business? And we're talking about business strategy, then what's the goal of business? It's to make money for a really long time. It's to stick around. It's to grow, to be really large. It's to be profitable, to be defensible so that it's this safe kind of cash flowing thing. And so, okay, how do you do that? Well, that's a really big question. That's what the field of business strategy is really focused on. It's starting from this assumption that you want to build a business that's defensible and profitable. And somewhat in a third place, I would say really, really large. Tech really focuses on largeness rather than profitability or defensibility.

Nathan Baschez (00:31:05):

But those are kind of the three things, it's sort of like, is it vulnerable to competitors, do you make a lot more than you spend, and how much do you make overall, basically? Those are the kind of implied goals of business strategy. And so then from there you derive all these principles, or frameworks, or different things to kind of analyze what kinds of businesses tend to be really big, be really profitable, and stick around for a long time and resistant to competition.

Daniel Scrivner (00:31:30):

So you shared your working definition of strategy for a business. Do you have one similar for individuals and, I guess, do you have a sense for what that looks like? Like what is the goal? How does that kind of break down and how does that inform how we all might think about those same trade offs we have to face in our own personal life? Because we face that all the time, whether it's buying a home, moving to this city or that city, getting married. It seems like life is full of trade offs. But how do you think about it at the individual kind of more personal level?

Nathan Baschez (00:31:58):

That's really fascinating. Honestly, I don't very often. So this is sort of like just on the fly. But I think there's a few really important things which is like, one, just know your goal. On the other hand, I don't know, it's kind of like... I think it's good to have general broad goals and like to... but just to follow the thing you have energy for and not to overthink it over a questionnaire or to try and set a goal that you don't really have, it ends up not working usually. And the goal you really have may be so like just implicit and behind the scenes in your consciousness that like it's animating a lot of your behavior even if you haven't really articulated or you don't think about it a lot.

Nathan Baschez (00:32:32):

In terms of someone's career, the company of you, the business of you, what value proposition do you bring in? What are your marketing channels? And what's your defensibility, and all that stuff? There's a lot of good stuff on that. My favorite is probably Cal Newport's So Good They Can't Ignore You, and his friend is just focused on doing something that's like hard and valuable and rare. And the passion will probably come and do something roughly in the domain of things you're interested in, but passion is more of a symptom than a cause of success. And that the best spot to be in is when you're in the intersection of things that are like individually hard. And there's very few people in the world who kind of have both domains mastered and you can sit at that intersection and really leverage it to be like super performer or whatever.

Nathan Baschez (00:33:16):

Maybe it's the intersection of some like domain expertise, like for some specific vertical, like I know I'm a great computer programmer or like I'm an AI expert and I know everything about real estate. Like what can you do with that? That's, whether you're starting a company or going to work at a company, those are the kinds of employees that tend to create a lot of value and are able to capture a lot of the value too.

Daniel Scrivner (00:33:35):

It seems like at the personal level, just to maybe articulate what you just said in a slightly different way, it sounds very similar to Scott Adams' concept of a skill stack, and as individuals it's knowing what your skill stack is, which could be as simple as knowing the things that fascinate you and leaning into those. It definitely resonates with me just the idea that passion is a symptom and not a cause. And I feel like I've always been rewarded in life just by embracing this stuff I'm fascinated in without worrying at all about how that will apply in the future because at least in the course of my life so far, it feels like anything I've learned has ultimately helped inform Everything else that I do in some unexpected way in the future, but maybe it's just that yeah, that concept of a skill stack.

Daniel Scrivner (00:34:16):

And maybe to help frame it at both the kind of business and personal level, how do you think about how strategy fits in, take the broader dimensionality of like a strategy, mostly about planning and goal setting, and then execution is more about tactics, and that's kind of a very crude way to frame it. But how do you think about where strategies sits, where it's most helpful and where it's most useful?

Nathan Baschez (00:34:39):

The thing I'm most interested in is, for businesses, what are the dynamics of competition and how do things tend to work out? Like how can we match patterns in our head of like, if we do X, then Y will probably happen. It's almost like business strategy is less about like a planning process. And it's more about what you're talking about during the planning process. It's like planning process is like a management technique, more than a strategy technique, almost. Then the actual strategy comes out of like, okay, cool. There's this thing called a network effect. Does that apply here? There's this thing called bundling. Does that apply here? What are the economic realities that could cause us to succeed or fail in our goal?

Daniel Scrivner (00:35:19):

Yeah. It's almost thinking about it in terms of like feedback loops or reciprocal loops and understanding yours as it applies to your business, which is something I've been fascinated on. It feels like every business that's been successful has been able to clearly articulate what that feedback loop is. We acquire customers because of X, that then helps us more customers because of Y which helps us achieve this profitability and scale because of Z. And if you can figure that out for your business, I think that's a great exercise. And really understanding and chewing on the uncomfortable questions of like, what are we doing and what aren't we doing? Why are we doing that? And why should we have the confidence and approach this as if this is the right approach? And what are we hoping to get out of the other side of that?

Nathan Baschez (00:36:02):

I think a good analogy for this. Because I'm realizing it's kind of fuzzy in my own head. I need to figure out a better way of articulating it. It would be like, let's say like in football or something like that. There's an overall planning process of like, oh, the coaches have a meaning. And then the coach calls the play, and the quarterback executes the play, and like... that's sort of like a management thing. But then the reality is of like, what is the defense? What are their strengths and weaknesses? How fast are their players? What alignment are they set up in? What is their expectation of us? Probably based on history, we can assume maybe they've watched some of our film. All of those dimensions are what people are thinking about in the moment when they're deciding on what play to call or how to execute a play or how to plan.

Nathan Baschez (00:36:40):

And it's all that that's like the content of strategy rather than the process of strategy that's the stuff that I'm interested in. It's just that instead of like, for football, you're like, "Oh, their safety are really fast. So we need to be careful when we throw out there," it's like, "This business is hard to compete with because they have a network effect." And so we need to understand that. But it's more about the causality of success and failure for businesses than it is about like strategy per se. And the strategy is just like, it's almost like a red herring where it's like, what I'm really interested in is less of strategy and most of business. It's just like business strategy is the art of making decisions, I guess, in business. And if you make them well, then the business succeeds. And of course it's more complicated than that. You have to execute them well, and all this... people management is a huge thing and there's a huge creative component and all this stuff, but at some level there is like the company chooses what to do. And if you choose well, then you'll do well.

Daniel Scrivner (00:37:30):

Yeah. And it seems like an exercise, honestly, at the end of the day of getting to know yourself. So what are you building? Why is that the right thing to build? What are the things that you have to be especially good in? Why should you have confidence that those are the right things to be spending energy and effort on? And then it really is being able to then look out and I guess have that same sense of what each competitor is doing and how you can compete with them. And then it's kind of the intersection of those two things.

Daniel Scrivner (00:37:55):

So maybe going just a little bit deeper, you talked about some of the principles, some of the mental models that you lean on when it comes to thinking about strategy. Like, if you wanted to help somebody understand quickly the kind of 80-20, the handful of big ideas that if you were to understand them well, if you were to be able to have a firm grasp on them, everything else would just kind of be great to add on top, but it might not be necessary. What is that? 80-20 kind of set of big, important ideas that you lean on or think about often?

Nathan Baschez (00:38:26):

I just want to caveat this with like, I don't think I've nailed this, but I think probably the best place to start is just by understanding a business as a system of like inputs and outputs and feedback loops. It's really important to look at every piece of the system rather than just the product or like... Basically everything is interdependent. The way that you decide who to hire, and how to train those people, and how to divide up responsibilities, and what cadence of meetings to have, that all is related to and connected to the brand of your product and how much you invest in a visual identity or a marketing page and where you choose to promote that stuff, and what features you choose to build into your... let's say it's a software company. These are all interconnected.

Nathan Baschez (00:39:07):

And I think that in software, because so much of the strategy is just embodied in the software, it's very software centric and we almost think that nothing else matters. And I think it's really helpful to think about ways of leveraging the whole buffalo in order to compete and just to think of a business as a holistic system where it's like, okay, what are we like? What's the DNA of our company? It's the activities we choose to perform.

Nathan Baschez (00:39:28):

So like, okay, what activities do we choose to perform? Well, in a software business, most of the activities are being performed by your software for your customers. That's why they're so powerful is because they scale really nicely. In a lot of other businesses, there's other types of activities that are more important. Like if you're a retail operation, the way that you hire, the way that your employees... like how people decide what to buy or whatever, this is all... Maybe if you have a low cost strategy, then you've got to hire people who are willing to take a lower wage and they won't be able to have as much training and maybe you should expect higher turnover, but you should also take care about other sets of things like access to like educational opportunities or whatever, versus if you're a really fancy fashion boutique or whatever, you're going to make totally different decisions on almost every one of those folks on the road.

Nathan Baschez (00:40:09):

So the first thing is thinking about it as a system. And then the second thing I'll borrow from Kevin Kwok, which is like, it's a recursive system. There should be some core loop. Another way to put it is a flywheel, it's an idea from Jim Collins. These are basically the same thing, loops and firewalls. It's just basically like, okay, how does your system feed back into itself? Because only if you can have some sort of positive feedback loop where the thing accelerates over time, will you achieve this sort of velocity you need to be a really large business. And maybe that goal doesn't apply to you if you don't want to be a really large business. Like if you're a freelancer, maybe you don't want to be really large. But there's other ways in which you have positive feedback loops too.

Nathan Baschez (00:40:43):

So like two examples, let's start with the freelancer example because it's kind of interesting. Maybe your positive feedback loop is like you get a client, you do work, the client's really happy, and so they introduce you to other clients. All those other clients, you don't want to take them on, but maybe you're going to skim the top 15% of those clients and only take those on. And so you're rapidly getting more prestigious work that gives you an opportunity to do more interesting stuff, meet more interesting people, and get paid even more for each of your jobs you're taking on. So your business is growing in a certain sense and there's a loop. There's that positive feedback loop that connects to itself. But it's not necessarily that you want to create some giant corporation or whatever.

Daniel Scrivner (00:41:17):

Yeah. To distill down what's happening there, it's like you're landing clients, which help you do good work, which will help you get more clients. And so what's happening over time is, not only is your work quality getting better because you're working with better clients and hopefully you're getting better budgets and you're getting better opportunities, which is going to help you compete and win and would be more defensible, be able to earn more per hour, hopefully at the end of the day be able to make more in terms of profit, but then obviously that then starts to produce some network effects even at that level. So it's like, even in that example, I feel like there's so much you can pull from it.

Nathan Baschez (00:41:48):

Totally. It's the same basic thing that applies even with the world's largest companies like Apple. They sell more iPhones that gets more people using iMessage, that gets more people using the features of iMessage with their friends and family, that gets you more likely to not want to be a green bubble. They have more data so they can make things like touch ID work or face ID work. Or that require large amounts of user data in order to get right that makes Siri better. There's all sorts of things feeding back. And the most basic form of the feedback loop, it's like they get more money so they can reinvest that money in the business to have R&D that makes the chips running the phone even better, or the camera quality even better.

Nathan Baschez (00:42:26):

Those are the way that loops work. And it's cool because it kind of encapsulates network effects, it encapsulates economies of scale, which is like, okay, like Netflix has economies of scale because they have a huge amount of subscribers. So they get a huge amount of revenue so they can invest more of that revenue than their competitors can into creating more shows, which gives them even more of an advantage because you have more and better content than your competitors. So anyway, there's lots of different things. But I think a lot of it really does connect back to loops or firewalls or whatever you want to call them recursive components of the system. I think that's the 80-20 is like it's a holistic system. Everything you do is connected and interdependent and it's a recursive system.

Nathan Baschez (00:43:02):

Maybe the other thing I would add is, it's a system full of trade offs. A lot of the trade offs we talked about before, like the really fancy fashion boutique versus the low cost kind of competitor, it's pretty easy to make the trade offs in those examples because you're pretty clear on what your strategy is. But most businesses don't think clearly enough about trade offs. And they don't see trade offs as an opportunity because the cool thing about trade offs is, they create defensibility because if you have a system and you're perfectly dug in to navigating the trade offs in the way that works best for the thing that you're trying to create, the unique value you're trying to create for your customers, then it becomes harder and harder for people to copy you without copying you wholesale. And that's never a good idea.

Nathan Baschez (00:43:41):

Like for instance, it was relatively easy for Facebook to copy Snapchat because Snapchat had a very similar kind of network of like, I'm sharing this with my close friends as Instagram did for most people, some celebrities it's like a little bit of a different thing, but most people it's like they're kind of communicating with their friends on Instagram. And so the stories format just plugs right in. There wasn't a lot of trade offs there for Facebook. They didn't have to copy Snapchat wholesale in order to get the value of that innovation.

Nathan Baschez (00:44:04):

But for TikTok, the network structure is totally different. So I think Reels is going to have a much harder time succeeding because the purpose of the network in TikTok is really different than the purpose of the network in Instagram. In Instagram, I'm following people I know and some celebrities. In TikTok, I'm only following random people that came across my For You page or whatever that I just thought were funny, or smart, or pretty, or whatever, and I liked something about them. And it's almost like there's a really interesting quote from Charli D'Amelio the biggest TikTok star. When she first started using TikTok, she was like, "Oh, this is sort of a weird thing. If my friends saw that I was on TikTok, then that would be embarrassing. Because people who like dancing and stuff, they're being weird." But it's like people love that because just people aren't weird.

Nathan Baschez (00:44:43):

And so there's sort of like an anti. It's a network built around a totally different purpose and it trades off with the thing that Instagram is good at, which is sharing with friends and family. Maybe Reels will work. I don't know. I'm not bullish on it right now, based on what I've seen, because of this sort of trade off thing where Instagram can't copy TikTok enough. They would have to create a wholesale clan. And so they can't just integrate that feature. It's not just a format, basically.

Daniel Scrivner (00:45:05):

I love that idea and I love that you're already framing up how to think about strategy from an incumbent's point of view, from someone that's kind of new to the space and kind of both sides of that table. It seems like this is happening right now in a ton of different industries where there's kind of a small upstart that has to obviously have a very crisp idea of what their strategy is and how they're going to be able to compete and win and grab market share and then be able to expand over time competing against really large established players. Some examples that come to mind is like Opendoor versus Zillow, totally different model, totally different value proposition, or even something where maybe it's a little bit blurrier. And I don't feel like I have a good grasp on the strategies each player's employing.

Daniel Scrivner (00:45:46):

So maybe an example of that would be something like DoorDash versus Grubhub where it's very clear that they're both playing very different games. They're obviously competing for the same market. How do you suggest, or maybe how do you think about how disruptive players that are coming into a market should be thinking about strategy? Is it really just all about almost like what's the spear tip, like what's this kind of narrow window of opportunity, or what is the thing that's very different that we feel like we can compete in wind? Is it that spear tip approach or is it something else? And then if you were the large established, incumbent, what is the successful strategy to employ there, and how do you not get tripped up focusing on competitors? Or should you be focusing on them more?

Nathan Baschez (00:46:24):

These are really hard questions to answer in the abstract because it sort of depends on the specific situation of the incumbent and what specific threat they're facing, or it depends on... Some startups it's like, they're actually focusing too narrow and there'd be a better opportunity if they thought about it more horizontally, and others are being way too scattered and they just really need to focus in on something more narrow. And it's all very situation dependent. So maybe the meta thing I would have as advice here, I think of it like a function with inputs and outputs, and the inputs are observations about the market, customer conversations you've had, or data you've seen, or just observations about your own experience using things.

Nathan Baschez (00:47:01):

And then the function itself, the operations inside the function that help you parse all of these inputs and make something useful out of it, these are the ideas from strategy. These are frameworks like Porter's Five Forces, or the idea of disruptive innovations, or 7 Powers by Hamilton Helmer. He's got a lot of really interesting frameworks in that book. And then the output is what your strategy is. You have your input of specific observations about your environment, the function, which is the strategy frameworks, and then the output, which is what strategy frameworks tell you to do, given your observations about the market.

Nathan Baschez (00:47:30):

This is something I learned from [Heaton Shop 00:47:31] in an interview I did with him. I think that a lot of people focus too much on the strategy frameworks and not enough on the quality of the inputs, because with programming, there's this classic idea of garbage in garbage out. So if you have very weak and scattered and non systematic observations about the market sort of driving your decision making process, you can make some pretty bad decisions even if you have all the strategy concepts right.

Nathan Baschez (00:47:52):

I think that's an important, just sort of like meta observation is like paying more attention to your inputs. But then also I think that there's a lot of startup founders who don't pay very much attention to the strategy frameworks either. They have kind of a pretty simple view of like, "Okay, cool. You just need to solve a problem. I see a problem and then I'll solve it." And it's like, "Okay, that can work. That definitely can work." There's a lot of companies that have been created from just that sort of thing. But I think you have a greater chance of success if you understand sort of like, "Okay, how is this going to work as it scales? What are the advantages we really have? What are the accumulating advantages we have, which is another way of saying, what's our loop, which is another way of saying what's our flywheel?

Nathan Baschez (00:48:29):

These are the kind of things that are really important to pay attention to and to kind of be searching for. And it's kind of fine if you're floundering for a little while figuring it out and you have something in the market that's basically working. But what you're searching for is really important. You need to be searching for like, "Oh, cool. Here's a loop that scales."

Nathan Baschez (00:48:44):

And then you'll find one. And this is another really interesting idea from Kevin Kwok and also Eugene Wei is like a company is not just like one loop that took them all the way. It's like, you find a string of loops. Like there's some initial thing that kind of works and then it sort of tapers off and then you have to like find another thing and you have to have the idea of like, "Okay, here's a loop. Here's what I can expect it to do for us. Okay. We're focusing on this one now, but then it looks like it's slowing down. So we've got to find another one that kind of like could scale even more. And maybe that's unlocked now because of the new position we're in." Those are the sort of mental models that I think enable someone to much more successfully build a large company than people who are just like, "Oh, you just need to solve a problem."

Daniel Scrivner (00:49:19):

Yeah. And those are super helpful concepts. It's almost like rather than focusing on just being off the charts on kind of one axis, like not to say don't go off the charts on that axis, but also remember that there's a bunch of other axes that you need to be thinking about. And ultimately if you're good and better than your competition, or more unique than your competition, or more differentiated than your competition across many of them, you're going to fucking have better odds of success there.

Daniel Scrivner (00:49:40):

Okay. So now I want to transition to talk a little bit about one thing that I want to make sure to dig in with you is obviously you have a ton of experience on the operational side. You've got a pretty big data set, just talking about all the things you've done so far in your career. Clearly you love learning and you've learned a ton from nonfiction books. You've delved super deep into strategy, but you also... one thing you've had to be really great at to get to where you are is just to be a really good writer.

Daniel Scrivner (00:50:06):

So I want to explore that generally. But one thing that I wanted to start with is, in the role you're in now, where you have some portion of, I'm guessing your day and your week that you need to spend in deep uninterrupted work just to do all the research and writing and synthesis and editing and everything you need to do there, how do you make time for that? How do you make sure that you set that up for success while at the same time being able to toggle to all the reactive interruptive type of work that it takes to build a business? Because I just think that's a fascinating challenge.

Nathan Baschez (00:50:38):

Yeah. Oh man. I'm the worst at this. You're going to make me cry. You're going to make me cry for asking this question. I have no useful things to share here. I'm currently massively struggling with this. I'm exaggerating a little bit, but like, no, it is really, really, really hard. I know how to have a week where I have got zero on my calendar and I just have to write something, and I know how to have a week where I'm stacked with a bunch of meetings and I just need to like get through those and like get through my email and like do the shorter tasks that I need to do. Like, "Oh, I'm going to write up a partnership proposal for this person or whatever." I don't know how to balance them.

Nathan Baschez (00:51:12):

We're currently figuring out how to do that. The experiment that Dan and I started a couple of weeks ago was to actually... at first we were thinking like, "Okay, well, it cuts off like maker days or like maker mornings or something." And that just wasn't enough because to complete a post is hard. It takes a lot of work and time.

Daniel Scrivner (00:51:30):

Yeah. How many hours does the average one take?

Nathan Baschez (00:51:32):

It ranges... Hours is tough because there's like, you could be done in any one... any day you're done and more hours won't help. But then you have to let like a day pass or a night pass, and you sleep on it, and then you wake up in the morning and you're like, "Oh yeah, that was the thing." And then you can write it. Or maybe that doesn't happen and you kind of struggle along for like another day and...

Nathan Baschez (00:51:50):

It's sort of unpredictable and we try and make it as predictable as possible. But I think there's just something about this kind of work that's like high risk basically of like, will you come up with the thing that's great? Is there even a great thing to be had here, the way that you're currently approaching it? All that stuff's tough. But usually it takes about like anywhere from a couple of days to a week to do the kinds of posts that we're doing.

Nathan Baschez (00:52:10):

And we've been told that the thing we're aiming for is the kind of thing that like, if you're publishing that kind of thing like in The New Yorker, that's a level we really want to get to. It's like the, "Oh, they spend months on that." [inaudible 00:52:20]. And ours doesn't reach that level. We're also not spending that much time, but yeah it's, we're trying to get there and we're trying to figure out how to make it work.

Nathan Baschez (00:52:27):

And part of it is, I think, just sort of like at some level Dan and I have to build a business and have other great people that are doing that side of it more so than us. Right now, what we're still writing contributes for a huge amount of the growth of the thing and the retention of users. We need to figure that out. And so we're trying. My current best solution is, have you ever read the, I don't know if this is apocryphal or fictional or whatever, but there's like a funny like Hunter S. Thompson's writing schedule?

Daniel Scrivner (00:52:55):

No. What is that?

Nathan Baschez (00:52:57):

So it's like, okay, 3:00 PM, he wakes up and he has some like Chivas and coke. And then he this really huge meal, and then take some acid, and he drinks a lot more, and he has some champagne, and he's smoking several packs of cigarettes. And then at midnight, he's ready to write. And he writes until like 4:00 AM or whatever, and he sleeps.

Nathan Baschez (00:53:17):

So I don't actually obviously do that, but what I do, actually really do these days is, I'll wake up around 9:00 and 10:00 and have my meeting portion of my day. And then I'll have a nap around 5:00 and eat some dinner and take a walk. And then around 9:00 or 10:00, I'll start writing and I'll keep doing that until about 2:00.

Nathan Baschez (00:53:38):

And so I kind of have like two days or whatever. This is part of the reason why I have such a grizzled appearance right now. I'm a little bit in insane mode, I think, some of these days. And it's certainly not sustainable. It's also quarantine mode is maybe another way of putting it. I'm like, there's nothing else to do. It's definitely taken a toll on my TV watching. I'll put it that way. I wish I could say that I was like, oh, I get up, and I work out, and then I've got like when I get up at 4:00 AM I'm like the kind of like Navy SEAL thing. And like, I'm just not that way at all. And I don't think I ever will be.

Daniel Scrivner (00:54:13):

Well, and I also find too that if we're all being honest, there's a lot more ebbing and flowing. There's times where things are clicking into place, there's times where, like you described, it feels like an absolute struggle. One of the best books I've ever read on the struggle to create something that is unique and hopefully iconic or like that's the kind of... I don't know, the pinnacle you're always going for, there's a book I love called The War of Art written by Steven Pressfield, and he's written a lot of other historical works that are incredible, but he has a whole book dedicated to what he thinks about is like, what is that struggle that we're all going through and-

Nathan Baschez (00:54:48):

The resistance.

Daniel Scrivner (00:54:49):

Yeah, exactly. The resistance that we're all up against, and how do we kind of surmount that. You kind of alluded to it there, but I feel like one thing I'd love to just go in a little bit further on, I guess, get your thoughts on is, I've never met anyone that's able to do really remarkable work again and again and again, where it's always like, "Oh yeah, I can do that in four hours. And I just follow these steps and I always get there every single time." Anyone I know that's always done something really remarkable and is able to do that knows that the process is very unpredictable. It's not something that can be time boxed. You can't even, I think, even really approach it from like an efficiency standpoint.

Daniel Scrivner (00:55:23):

And I guess in my mind, the way I've always thought about it is, it's a lot more like alchemy where you're trying to combine these elements and just try to get the right amount of these different things. What do you do to make sure you always have interesting ideas that are kind of bubbling up or fresh takes on things? Or how are you taking in information? How are you kind of synthesizing this stuff that you're reading and researching? And then how does that make its way into the writing that you do?

Nathan Baschez (00:55:46):

I think my most generalizable advice that's also maybe the most interesting and surprising is to be more indulgent than you think you should be. I think people have a mindset of being really diligent where they're like, "Oh, I need to do this. So I should do it. I was just signed do this. It doesn't matter if I'm not feeling it. I need to do it." And you definitely need a lot of that. You need a lot of discipline and sort of like, there's going to be moments when you feel like quitting and like you shouldn't quit.

Nathan Baschez (00:56:11):

But at the same time, you need to balance it with, "Okay, this is a little different than what we were originally thinking. But this could be really great." And to sort of allow yourself to go there and maybe just give yourself permission to try it and be like, "Yeah, I'm just going to spend like an hour on this." And like, "We'll see. Maybe it's nothing. Whatever." That is where all the good stuff comes from, in my opinion. And people will shut it off because they're like, "Ah, no, that's not on task."

Nathan Baschez (00:56:33):

And so the big difference is, if it feels like you're being indulgent in a sort of distracted way where you're not actually even working on anything in this zone at all, or you're just fiddling around with stuff, like I'm just setting up my tools or whatever, then that's not good. But if you're exploring in a direction that's genuine progress, but maybe there's some expectations in your head from a client, or a friend, or a colleague, or an editor, or whatever that like-

Daniel Scrivner (00:56:56):

For yourself.

Nathan Baschez (00:56:57):

Yeah. For yourself is the most important one. But it's like often I think, the version of ourself that is going to come up with a great thing, it's already there inside our heads. It's these voices that we've internalized that are telling us to like do something else. A lot of it's like, honestly our teachers back to my school thing. But that is, I think, really important. And I think most great stuff ends up being kind of unexpected, but it's like when you're in the thick of it, when you're in the details of it, you could see a thing that you couldn't see from the outside. Sometimes when you're in the thick of it, you see why the thing you thought originally wouldn't work and you don't know something better. Other times when you're in the thick of it, you see a new thing. That's like building could be kind of good too, but this new thing may be even better.

Nathan Baschez (00:57:36):

And I think just being able to follow those things and knowing the difference between doing that and like just basically procrastinating is a really, really important and useful skill. And I think it's applicable pretty broadly across writing or developing software, whatever. The reason why it's rare is because school beats it out. But yeah, that's, I think, changing the task when you're in the middle of it is the secret. It's not the secret, but whatever. It's like one trick that has worked well for me. Because I'm naturally very ADDA indulgent. I have unusual advantages in this regard.

Daniel Scrivner (00:58:05):

That works well for you anyway, it's just personal. So I wanted to ask, I have a couple closing questions I'll get to in a second, but I just want to quickly ask two questions that came in from people on Twitter. One's from [Kinjal Shah 00:58:17] who asked an amazing question. So well written. What mental models and frameworks do you refer to most when you're writing about a company or an industry? [crosstalk 00:58:26]. I know we've covered this a little bit but...

Nathan Baschez (00:58:30):

The one that I haven't talked about is I call it framework finding power. And it's based on an idea called the Law of Conservation of Modularity by Clay Christensen. It's how to say, okay, what is the value chain that this company exists in? What are the activities that precede it that form this sort of inputs that the company uses? Then what are the activities that the company itself does? And then what are the downstream uses of their thing? How does it end up getting stuff they create getting used in the world?

Nathan Baschez (00:58:53):

It's actually a really good framework for understanding where the power is going to sit at any value chain, because most value chains, there's like a critical choke point where there's some really powerful profitable company that's like in a super defensible position. And there's a post that I wrote about it. The short version of it is, at any given moment, the thing that's most broken that people most want improved, that's like the most important thing for this thing to get better at, the company that controls the layers of the value chain, the activities that determine the performance of that thing, power tends to accumulate there. And when something else becomes more important, power tends to accumulate at some other place.

Nathan Baschez (00:59:27):

There's ideas like, "Oh, here's our core competency. We should just stick to it." And it's like, "Well, just because it's core to you doesn't mean it's most important to customers." And that can [inaudible 00:59:35] that stuff can shift over time. And so there's a lot of really interesting examples of how that happens and why it's true and whatever. But that's one that I keep coming back to and I find to be the most useful and underrated framework. And there's also lots of explanation in the post, like justification why that's true and examples on this kind of stuff.

Daniel Scrivner (00:59:49):

We'll definitely link to that in the show notes. Okay. One other question. This one's from [Eric Berg 00:59:53], biggest piece of advice for young people aspiring to be strategic leaders. And I'm guessing that just the idea is like, it's somebody who probably is in business, they might be a founder or a CEO or someone who wants to... who maybe, especially after hearing that is still like, "Okay, I want to learn more about strategy. I feel like it's important." What are the things that you would recommend they go to first? What might be the books that they read, or the writers that they look up?

Nathan Baschez (01:00:14):

It's really hard to give general advice. So I'll just give the advice that worked for me, which is to create your own stuff, because it's a way to jump the line. It's really hard when you've not created a lot of stuff of your own. That's, become successful independently for people to look at you and want to take a bet on you. But if you've done that before, they'll feel like, "Oh, this person can make things that turn out to be really good. So I trust them," that's an easy way to... I mean, it's not easy. It's really hard. But that's like a permissionless way to demonstrate that you're worthy of responsibility.

Daniel Scrivner (01:00:42):

Sure. Just by having put some skin in the game previously and I guess had some successes.

Nathan Baschez (01:00:47):

Yes.

Daniel Scrivner (01:00:48):

Yeah. Okay. So to wrap up, we've covered a lot of stuff, a lot of high level concepts, you referenced a ton of books and authors and people's ideas. All that will be in the show notes. But maybe just to put a tip on it, for someone that's listening to this that's super interested in learning more about strategy, obviously they can subscribe to Divinations and they should, [crosstalk 01:01:09] but where [crosstalk 01:01:10]. That's it. That's it.

Daniel Scrivner (01:01:13):

Well, I am just to be a subscriber to the Everything bundle that's growing and getting better. But what are the starting points? If someone is starting from a literal basis of, they think the subject is interesting, but they really just don't know anything. Where would you suggest that they start?

Nathan Baschez (01:01:26):

There's a few posts that are probably the easiest starting points because they're recent and they're blog posts, so they're not full books. But then you should go from there to books and even like case studies that they teach in business school and stuff like that. One post that's great to start with is Invisible Asymptotes by Eugene Wei. There's a post, I forget exactly what it's titled, but it's about Figma by Kevin Kwok. And it talks about that, where they start together, different loops kind of to grow.

Nathan Baschez (01:01:49):

Ben Thompson Aggregation Theory, I think, can get a little confusing, maybe it's slightly overrated in some ways. I don't know. It's a very interesting one, but I don't think it's like up there with like loops or Invisible Asymptotes, but it's something that certainly a lot of people reference. And then I would go just like dig way into like Clay Christiansen and Michael Porter and Hamilton Helmer, most of their work. And that's like, basically what I'm doing on Divinations is exploring all of those thinkers. I think that's a really great foundation and starting point.

Daniel Scrivner (01:02:15):

That's amazing. Thank you so much. We've covered a ton of super interesting stuff about a topic that I feel like is... you alluded to and we talked about is not well understood, is really hard for a lot of people to grasp onto. Where can people subscribe? Where can people find you online?

Nathan Baschez (01:02:31):

So divinations.substack.com is where I write everything. And then also, if you just want to keep up with me and hang out on the world's chat room, that is Twitter. Twitter is great. I'm Nathan Baschez, my handle is N-B-A-S-H-A-W on Twitter.

Daniel Scrivner (01:02:45):

So obviously people can go and look up your writing. Where can people go to find out more about Everything? And can you maybe just share a little bit about all that people will get if they subscribe to Everything?

Nathan Baschez (01:02:54):

Yeah, absolutely. So the company I've alluded to that I'm building with Dan is this bundle of newsletters. So Divinations is one of them. That's the strategy focused one that I write. But also we've got a talk show with Legion, formerly of Andreessen Horowitz, who kind of coined the term passion economy called Means of Creation. Dan writes a really awesome one called Super Organizers that's about productivity. I don't know if you've heard of Tiago Forte, but he's amazing. He has a course called Building a Second Brain. His blog practice, which is a paid newsletter is also bundled in with us. We've got another one called Napkin Math that's on investing in treasury.

Nathan Baschez (01:03:22):

Anyway, there's a lot of great stuff. More is getting out all the time. We got a bunch of really amazing stuff in our pipeline, and you can get it all for $20 a month or $200 a year. If you want to subscribe to Divinations, you subscribe to Everything and you get access to whatever you want. You can choose your email settings for each newsletter individually. But yeah, that's the company that we're building. We hope it becomes a really awesome institution, almost of like helping practitioners with stuff that's useful for their jobs, but it's also sort of beautifully written.

Daniel Scrivner (01:03:46):

And helping us have one subscription instead of 10, which sounds good.

Nathan Baschez (01:03:49):

That's true.

Daniel Scrivner (01:03:51):

Thank you so much for the time. It was amazing to catch up and amazing to have you on. So thank you so much, Nathan.

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On Outliers, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge — in business, investing, science, and so much more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today. Listen to past episodes for free, be the first to hear about new episodes, and subscribe to Outliers on your favorite podcast platform.

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