👋 Hey there! My name is Abhishek. Welcome to a new edition of The Sunday Wisdom! This is the best way to learn new things with the least amount of effort.
It’s a collection of weekly explorations and inquiries into many curiosities, such as business, human nature, society, and life’s big questions. My primary goal is to give you some new perspective to think about things.
A request: If you like this essay, could you do me a favour and hit that 🤍 heart so that it becomes a ♥️ heart? This helps me understand what kind of topics I should write more about. This also signals Substack that more people should read this essay.
Q: Why do most companies innovate only when they’re on the verge of bankruptcy?
“How do you innovate? First, try to get in trouble. I mean serious, but not terminal, trouble.”
— Nassim Nicholas Taleb, Antifragile
Nobody wants to be stressed, but we generally do our best work under stress. It’s probably because nobody wants to remain stressed, so we try to fight our way out of it.
The same can be said about an economy as well. Nobody wants to admit it but people act smarter (they save more and make thoughtful investments) when the economy is weak, precisely because no one wants a weak economy and everyone is trying to get out of it.
The supermarket and laundromat were both created during the Great Depression as solutions to a weak economy.
Penicillin, credited with saving tens of millions of lives, didn’t go into widespread use until World War II stimulated frantic scientific development.
Around the time when the housing market crashed, leading to a global economic meltdown, a small Finnish company was struggling to make ends meet, forcing them to layoff employees, until lead game designer Jaakko Iisalo, as a last-ditch effort, began working on a crazy idea about a bunch of flightless birds seeking revenge upon a group of pigs.
The flip side is also true. Record shows that, as a society, the more comfortable and stress-free and rich we become, the harder it gets for us to live within our means. Abundance is harder for us to handle than scarcity.
Busts happen only when everything is going too well.
Like Angry Birds, another game became part of the global zeitgeist in 2009. FarmVille smashed records as it quickly reached ~84 million monthly active users by leveraging Facebook. In 2010, Zynga (the parent company of FarmVille) generated more than $36 million in revenue.
In 2011, Zynga launched its IPO and soon released CityVille, ChefVille, FrontierVille, and several more -Ville titles using familiar game mechanics. By March 2012 Zynga’s stock was flying high and the company was valued at over $10 billion.
They claimed to have a “psychometric engine” to gauge the appeal of new releases. But they ended up with the same problem as every Hollywood studio: How can you reliably produce a constant stream of popular entertainment for a fickle audience?
By November of that same year, Zynga’s stock was down by 80% as Zynga’s new games were not really new at all. The company had simply done retreads of FarmVille. Players had lost interest and investors followed suit.
Interestingly, when Zynga went public, they warned investors of a weird problem. “Many of our employees may be able to receive significant proceeds from sales of our equity in the public markets after our initial public offering, which may reduce their motivation to continue to work for us,” they wrote. This is what actually happened. Employees were so successful they lost motivation.
Innovation doesn’t happen with deep pockets. It happens at companies that will die unless they do something big, fast. Apple was nearly bankrupt and created the iPod. Microsoft had $60 billion in the bank and created the Zune.
Misery often leads to favourable outcomes. Even though we experience stress as undesirable, it’s a barometer for how engaged we are with the things that ultimately bring learning, growth, and some times the inception of a massively successful business.
The birth of Airbnb is the story of going from being powerless and obscure — racking up unpaid credit card bills to cover expenses, and then selling packaged cereals to get out of debt — to stumbling upon the idea of the core business by accident.
Innovation comes from scarcity. It happens only when your ass is on fire. Innovation doesn’t come from bureaucratic funding, meticulous planning, or by putting people through a Harvard Business School class by one Highly Decorated Professor of Innovation and Entrepreneurship (who never founded a company) or hiring a consultant (who never innovated anything).
If you notice the disproportionate contribution of college dropouts and misfits to various technological leaps in the world, you will understand what I mean.
Having said that, even though stress can be good, too much of it isn’t good. The point is to get into serious trouble, but not terminal trouble.
If you have a well-paying job yet you are stuck at the bottom of your career ladder such that you curse your life everyday on your way to work, but you cannot quit it because of numerous reasons (you are neck-deep in debt or you’ve got an ailing mother to support), it would be impossible for you to innovate your way out of it since you’re so worried about it all the time.
This is precisely one of the reasons why the working poor aren’t able “innovate.” They may not necessarily be short on ideas, but in the midst of so many stressors from so many different directions, they are left with no mindspace to think and try out different things.
What you need is acute stress, not chronic stress. What chronic stress takes away from you is optionality. Too much of chronic stress can also lead to depression. This is the last thing you want when it comes to innovation. A little stress sharpens your focus. Too much destroys it.
Innovation happens only in wartime. People are too less motivated to push hard during peacetime. (The corollary is that all disasters happen during peacetime, when people are too relaxed and not on edge.) Now, I’m not saying that we should cheer for stress. But, we must realise how necessary stress is to make progress.
Before You Go…
If you’re finding this newsletter valuable, share it with a friend. Also, consider subscribing. If you aren’t ready to become a paid subscriber yet, you can also buying me a cup of coffee.
I’ll see you next Sunday,
Abhishek 👋
This is the best way to learn new things with the least amount of effort.
effin malarky, dudelette. I actually learn best by playing trivia games, googling and remembering some.
jeepers, not being a privilged coprolith i find your twaddle incomprehensible. Pulling the solution out of your tuchus at the right moment is funsies.
partner and I manage on $20000/year for two alter-abled people. no health care, tv, car, or other bourgoise trappings.
i expect you consume three times the calories that I do and walk far fewer miles.
you have an exotic name but bourgoise Firstie values.
Soooooo, foad and have a nice day now.