Valuable Earned Secrets
Monday, August 7th, 2023
When something doesn't make sense, it's because your mental model of the world is wrong.
It's a source of identifying earned secrets. It takes effort to get to that secret.
"I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity." Oliver Wendell Holmes
The challenge, of course, with earned secrets is that they are easy to lose the advantage if you want to share it. The bigger challenge is whether it is valuable.
But to get there, what is an "earned secret"?
As the Holmes quote shows, the cruft one must work through to find it is the complexity. This is similar to the idea of schlepping[1] to then get to the other side.
Ways a secret can be earned:
- Massive research
- Talking to people
- Schlepping
- Questioning convention and proving a "what-if" thesis
The story of Sam Zell flying to Mongolia according to David Perell is a good one.[2] Flying to Mongolia is definitely a good way to earn a secret. So is doing lots of experiments, which Tim Ferris has made famous.
I think there are other ways, but what also matters is determining whether they are valuable.
In Sam Zell's case, investing is a great way to find value from ideas. In many ways, the best investors are those who can find the best ideas.
Ideas are valuable if they help the one who understands them to address a pain or goal in their own life; and far more valuable if the idea scales to reach millions of people.
A common example of these types of ideas are the "as-seen-on-TV" variety where someone has the idea for a better blanket to solve their own problem, and it happens to be a hit and millions buy it.
These can also be processes, such as the Five-Minute Journal,[3] which don't seem really like secrets since they are shared; but they are secrets in the sense that they weren't well-known or popular until someone actually did it and shared it.
The best kind of Earned Secret are the ones that many start-ups have leveraged to go big. Technically, the right word would be "insight" but it's sort of a secret in the sense not many people know it and, even if told about it, cannot see it or believe it.
In other words, the best kind of valuable earned secret is one where the value will be big, it's just not right now, because the secrecy is a form of blindness to competitors, and it's earned because of working deep in the industry or chasing a personal curiosity.
- Coinbase had the "secret" that crypto was going to be big
- Shopify had the "secret" that small online businesses were going to be as big as Amazon
- DoorDash had the "secret" that suburbs would want to order delivery and a better experience for restaurants
- eBay had the "secret" that people would be honest in paying in an auction experience
Each of these had detractors who didn't believe it would work.
After all, if something is so obvious, a first-order idea, then there will be lots of competition or there's something hidden that will make it fail; the second-order ideas can often be a source of these secrets, as well.
Of these, I find combining a deep interest with research, a thesis around "what-if", and talking to people / customers is a good way to do this. These all constitute "schlepping" of their own kind.