Dalton & Michael: Silicon Valley's cargo culting problem

is Michael Seibel with Dalton Caldwell, and today we're gonna talk about cargo culting. Oh. We encountered this way too much in our life. So, there's classic variety, and then there's new age, modern, calgriculting.

Let's start with classic. What's classic Yeah. Calgricult? Well, let's start with what is calgriculty? What are we even what are these guys talking Alright. So, the history of the term as I understand it is when you superficially copy something without understanding why you're copying it. Yes. That is cargo culting.

I think the history if someone looks this up in Wikipedia is like folks would create a fake airfield so that the planes came back. And so it was something that looks like a landing strip Yes. Because they wanted the airplanes to come back. Yes. They didn't really understand why the planes were coming. They're like, oh, if we make a fake landing strip Yes. Then the airplanes will come back. Yes.

Okay? And so in this classic cargo culting mentality, it's just, I'm gonna copy something. I don't know why. Yep. I'm gonna copy it, and then I will be as successful as the thing I'm copying. Right? Yes. Anything to add there?

Well, I think in the classic variety,.

what's essential is the thing that you're copying is good. Yeah. It's No one would debate whether it's good or not. Right? And and so, we're just debating how you copy it. Yeah. I think what's funny about this modern new age cognitive thing that we'll get to later is that like, we could even just debate whether the thing you're copying is worth copying at all. Fair?

And so then it becomes this like kind of double sided, you're screwing yourself. But let's just go with classic. In the classic variety, what goes wrong in cog consulting is because you don't understand, really deeply understand the product that you're copying, you miss some like obvious things. Yeah. And I like your like, you know, airport example. Right?

Where it's kind of like, yeah, if you make a landing strip in the middle of the jungle,.

airplanes won't land there. You're missing the There's hard unbeat, kind of. There's something larger going on. Yeah. So system.

And I think founders did this. I think we have been doing made this. Of this. And so let's talk about kind of the companies that were classically covered cult in our era. Well.

the first and most obvious one was Google. Yes. Everyone in the two thousands was obsessed with Google. Yes. It was the best startup. Yes. And so, you know, everyone you talk to was like, well Google did this or are you the next Google? Or well this is how Google did it.

Yes. And so all these ideas that may or may not have been good ideas, we were kind of trained Were obviously the right ideas. Were things to copy. So the most obvious one is just like the office culture of having an open office and like Yes. Bright colors and like free snacks and like all this super Google y stuff. Yep.

That was considered, like you had, if you wanted to do a real startup, you had to be like Google, right man? Not only that, that's what made Google great. Was the lack of offices. Was Yeah, you're right. No cube farms. That's why Cube was considered to be their culture.

Like this is actually, there was arguments that copying down to the tee every aspect of the Google office culture was key to building a successful startup. Exactly. Exactly. I think the other thing was this kind of flat org. Yeah. No managers. Need management and da da da da.

Another classic one that I loved was just they like hire as many smart engineers as possible. If you ever come across a smart engineer, no matter what Yep. Give them a job offer, you'll find a way to use them. And I think it's funny because like,.

this is what we came up with. This was Well, and it was wisdom. There was either examples more silly than that. It was like the name of your startup needed to be cute. Yes. Or like drop vowels. Remember Flickr started this? Where there was no e in it?

And so it would be, you need a Google like logo Yes. That looked like primary colors and had like a shiny, remember what was the term? Like you would put like a lens flare on your logo? Oh my god. Do you remember this? Yeah. Everyone did this. Go look at logos.

Was back in like 02/2006. Yes. And that was because Google and these other startups Yes. Had lens flare on their logos and they had cute names. Yes. So you had to do it. Well, I love it because it's like obvious in the pursuit of building the world's best search engine,.

the logo styling was essential. Mean, it really was a vital So number two, of course Facebook, even closer to kind of Yes. Our generation. They're the ones that brought you the going viral. Oh yeah. How is your thing gonna go viral, Dalton? How's it gonna go viral? They're the ones who brought you the where's the share button?

Yeah. You have to have a share button on everything. What else did what else was the Uber? I mean, the Facebook.

classics? I think just trying to not make any money directly from users Yep. And build up as big of a user base you can. Yep. And then build an ads business. Obviously, everyone was trying to do this. But Facebook really, we were constantly told by everyone we knew and Yes.

Again, we believed it that following the Facebook playbook was what was right for every business no matter what type of business it was. No matter what. Charging users was against the rules. Yeah. Because you wanted to get the most user data possible. You wanted to get the biggest database of users. All this And.

then the.

nobody cares about privacy. What was the, there was this that quote where it was like privacy is Doesn't matter. I forget. They were like, anyway, everyone that was blindly following what they did was trained to ignore all of those.

matters. Yes. Then maybe the last one, even more modern. Uber. Yeah. This was the fun one. I think it started with spend as much money as possible.

Which I love because like Uber was a successful company. It's great. And the idea that we could boil down a key strategy is spend as much money as possible, but that was the takeaway. They wrote a book about it. Called Blitzscaling.

Spend all the money. As fast as it comes in. What's funny about maybe these Uber ones that are slightly different from the Facebook.

and and Google ones is like, I don't think Uber even did these things. Yeah. Like, cargo culting kinda took on its mind of its Exactly. And again, to be really clear on the point, Uber did a great job of what they did. Nailed it and Yes. It's the folks that were like, well, did x, so we should do this. Yes. Without really understanding why Uber did the things they did.

No. They would superficially scale the way they scaled, burn the way they burned. Yes. Ignore laws the way they ignore laws. Yes. Ignore unit economics. Go to as many cities as possible as possible. Yeah.

And so it was the wannabe Ubers Yes. That did the silliest stuff versus Uber itself where, you know, that worked pretty well. Right? Now, let's be clear. All these businesses worked. Yeah. So let's talk about it. Right?

Like like for Google,.

this was great advice. Yeah. Right? For Google, hiring as many really smart people was essential because they were trying to do something really hard.

Yeah. I think the the conventional wisdom pre Google was that search was a commodity Yes. And that Yahoo was good enough Yes. And that incremental engineering breakthroughs in search wouldn't matter. Yes. And Google disproved that where it was actually a hard technical problem Yes. And they were able to put those engineers to work. Also, this was right after the .

com bubble crashed. So they were able to hire some great talent Amazing. For, that was available because the . com bubble just crashed. Yep. And so if you really look at the decisions they made in context of history, made a ton of sense. Made a perfect sense. But how many people did we know that blindly copied the Google Playbook and it did not, they did not replicate Google's success, did they?

No. No. They weren't even trying to do anything near as hard. I think in Facebook's case, another perfect example of like, not.

charging users was really smart. Right? They understood they could build an amazing ad business. Yep. They understood that scale was the only path to it. And like Facebook is an amazing ads business. Right? Like that was really smart for them.

Not.

clear that every business should be an ads business. Yeah. And when you think about it, how many Facebooks are there? And how many people that were blindly copying the Facebook cargo you know, how many people that were cargo culting Facebook succeeded? Yes. Not many. Again, maybe there's maybe it's more than zero, but wow.

That was more of like a one shot epic company than something that people could just blindly copy and be just as successful as Facebook. Right? The second Facebook style profile you had was delivering.

infinitely less value Yeah. Than the first one you had. I would also argue that people, you know, Facebook and this whole going viral, it's a lot easy to try to make your product go viral if users spend two hours a day using it. Right? Yes. That day.

one Facebook, people were spending two hours a day using it. If people use your product five minutes a month, it's a lot harder to go viral. Like Yes. You're you need some different tactics. Yeah. You can't just copy Facebook blindly and hope it So.

it's like going viral was a great strategy for Facebook. Is it a great strategy for you? And then last with Uber. I think like the hilarious thing about Uber is that most of the common beliefs about Uber just weren't true. People who were investing in Uber were looking at markets where Uber was doing very well in unit economics and purposely funding them to expand quickly.

It wasn't people looking at Uber serving no markets well, burning money left and right, and saying, oh, let's just throw more of our money on the fire. And it was weird to watch founders just be like, well, you know, we should expand our business to 17 cities when it's not working in one. Yep. When like, you remember the first time you took Uber?

Like I do. It was a huge moment in my like it literally was Pretty good. So valuable.

Like it was immediately successful in San Francisco. And so this idea that like,.

oh, Uber just like, nobody liked it and like they just burned a bunch of money and somehow got successful. It's like, doesn't make any The idea that superficially copying Uber Yeah. And copying the things that they said in interviews Yes. Pretending that you're Travis, whatever Yes. Doesn't work. It's just like wearing a black turtleneck does not make you Steve Jobs. Yeah. Does not make you apple.

Yes. It's cargo quilting. Yes.

Whereas like if you built a thing that people would use multiple times a week to get to the most important things in their life like work or their loved ones. That's pretty good. That's good idea. A.

hard to replicate this stuff, right man? Like, is. Copying is hard. You have to be really smart to copy well. So,.

we talked about this classic cargo culting. And at least with the classic cargo culting, you're copying successful companies. What concerns me more and more nowadays with the explosion of valuations is that we see a lot of founders copying companies that haven't succeeded yet.

And this is what's really scary to me is that like some founder will be like, well, we have to do it this way because so and so coming to this. And I'm like, oh, why are they good? It's like, well, they're a billion dollar company.

They just raised a series b. They just did this. Like they heard, they read some fundraising announcement. And then I asked them, well, how much revenue are they making? And the most common answer is, I have no idea. And it's like, so you're basing, like, a huge chunk of your company's strategy. Yeah. Your strategy.

You're the CEO of the company. Let me get this straight. You're the CEO of the company. Yes. You're telling me the strategy you're betting the farm on. Yes. Is based on you read a fundraising announcement. And you have no other context.

Oh. But like a podcast interview with a founder. And it has a lot of GitHub stars. It's one thing to try to copy something that's working. Like you might get lucky in when, like, right? Like, if you copy something that's not working, I don't even know what are we doing here?

And I think that unfortunately these valuations have gotten people all messed up in the head. Like, they think that if investor thinks it's worth a billion dollars,.

it's working. Well, again, just to be super concrete, how many people do we see that were influenced by WeWork and building WeWork for x? Oh my god. And their entire strategy was based on WeWork. Yeah. We saw the same thing, Zoom Pizza. Yeah. Like robotic pizza making.

And so you'd see these things where it eventually turns into like, you know, sadly a flame out for the founders. But there were a lot of people that were copying these companies blindly. Because they raised a bunch of money. Yeah. And I think this is part of this kind of certainly.

weirdly bigger trend of like people doing the modern cogurculting amongst startups. Where they're like, oh, if my startup looks, is gonna is gonna be real, it has to look like other startups. Yeah. It's like the superficial.

They're really focused on how people will perceive the startup superficially. Yes. Like the logos thing we were talking about. Yes. Yes. Like what are some examples of the superficial things that you want to do to pretend to be a startup? Well,.

have to raise money. Right? I have to have good advisors. Maybe someone, God forbid, told me I should have a patent. Right? I have to have an amazing pitch deck. I gotta be able to pitch my company anywhere. Maybe a couple conferences I get invited to, some press.

And these are things that founders do to impress themselves,.

to impress other founders. Yep. The user is not essential. Yeah. People has nothing do with the product or solving the cause for users. No. It's all the superficial Yes. Facade Yes.

Of this looks like a startup that looks like other startups that raise money. So.

let's think about it. Because we're talking about cargo hunting on three levels. Right? We're like, okay. Garden variety cargo culting that's still really bad as you cargo cult Google. Then we're like, okay, the modern thing is to cargo cult the modern unicorn that has very little revenue. And now the super super modern is just to cargo cult the other struggling startup.

What? I love when someone references a startup that we know and we're like No! And we're like No! Yes.

And I think that like maybe the base conclusion here is that you have to do some copying. You cannot innovate everything. But I think that like I like when founders start with what does the user want. Starts with who are the companies the user's paying for, paying today to provide this service and what can we learn from those companies?

And then like what can we learn from those companies writing the service who are successful? Okay. Now let's think through it. And I think once you think through it through the user's eyes you can tell which things are essential. Do people care about the Google logo or do they care that they get search results that are good? Hey, how about that? Right?

Do they care about the Facebook, I don't know, or do they care that their friends are on there and they get updates quickly? Like, do they care about, you know, what city Uber just expanded to? Or do they care that like Uber shows up in five minutes in their city? So I think when founders start with the user, they won't go into this cargo cult thing.

I think when they start with the, like you said, fundraising announcement.

It's almost impossible. Look, the metaphor I use for this is think about the difference between plagiarizing a paper that you read. Imagine you're like, hey, gotta turn in a report. Yes. And what you do is you go and Google for things and copy and paste blindly all the stuff. You copy and paste three different things, just put it in your paper and submit it. Yes.

That is not evidence of original thinking? No. No. Versus, you go read a bunch of places. Yes. You digest the information. You synthesize it into your own original work. Yes.

You maybe cite the sources of what you're learning from. Yes. But, you actually took the time to digest and process these things. Same thing with the the music industry, where if you plagiarize a song, that's a problem. Yeah. Like, if you just rip off someone's music, you will get sued. You will sued. Right?

But, if you listen to a lot of music and you get influenced Yes. By some of the sounds you hear and you integrate these new sounds into the new music that you wanna put out. Yes. Totally cool. That's how that's literally That's the game. That's music. That's the music business. Is that everyone's being influenced by everyone else.

Yeah. And so, the really important thing to tease apart is copying completely without thought or any original thinking or original work versus being influenced Yes. And borrowing good ideas.

to integrate into your own thing. Right? Doesn't the thing that suck about startups is that you do have to think about a lot of things. There isn't just You can't just copy and paste. There's a checklist.

Well, you do have to think carefully.

But I think that's why really smart people are attracted to it. Yeah. Because like, you have to think really carefully. Yeah. It's an amazing test of your skills. Alright. Great chat. Great.

Thanks.