The Anthology of Balaji by Eric Jorgenson

These are my notes from The Anthology of Balaji by Eric Jorgenson. Each one contains a core idea from the book that stood out. The goal of writing my notes this way is that each could be it's own independent idea with the need for the specific context within the book.

Meta-Algorithm to Solve Unstructured Problems

Balaji’s brother, Ramji, taught him an important skill—solving unstructured problems. Using the meta-algorithm Balaji calls "list, rank, iterate." Turn your problem into a "how or who" question. Make a list of ways to solve that problem. If you need to fundraise, then make a list of VCs. Develop a function to rank the list objectively. Once it’s ranked, iterate through the list until your problem is solved. Set a limit and if the outcome you wanted has not been achieved by the end of it, come up with a new strategy.

Science Is About Harnessing Complexity

Science is about making unpredictable phenomena and making it predictable. It gives us a window of understanding parts of the complex world around us. Before Louis Pasteur’s discovery of germ theory, it was believed that diseases spread through the air like pollution (which is partly true depending on the disease). Germ theory made transmission more predictable, leading to better medical technology and practices. Science progresses by taking non-repeatable things, isolating variables, and turning them into controllable systems based on our understanding of the variables involved. Often we know practice before we have the language to describe it. Having practical understanding of an unexplained phenomena always pushes theory forward.

Mental Data Compression

Your mission or vision determines the mental models you will have. They're what everything gets mapped to. Your vision gives you a worldview for how things will change and progress. You may jump around, but it's all tied together by the vision. Your vision makes it make sense. It provides the context. Balaji said, "I have this mental clothesline where I hang ideas among each other." He compares it to data compression. Having a broad vision allows you to store more information because you see how it can be useful into the future.

Linear Commerce

The commerce ecosystem is evolving. You must own your distribution by existing at the intersection of business and media. The internet rewards the people that go direct to audiences today. The line between media and commerce is fading. Elon and Zuckerberg own their own social media platforms. Kylie Jenner launched a billion-dollar brand with just 12 employees (all while outsourcing every aspect of her business). Owning distribution (and demand) turns you into a modern marketplace. Previously, founders had to go horizontally to reach their customers. Today, they go vertical, controlling the channels they reach people through.

Avoid Commodity Distribution

Marketing is an arbitrage on attention. Anyone can pay for Google ads or Facebook ads. They're only going to be so effective (even with an expert Media Buyer). Distribution requires forming connections. The art to effective marketing is to find some form of arbitrage to attention. Strong distribution comes from finding an inexpensive customer acquisition channel and piling up users through that underpriced edge. Nothing did this when they launched their new phone through YouTube tech review channels. They were the first to market a product seriously using this distributive channel to their ideal customers. It was a place people hadn't realized yet.

Be a Production Person

What is the goal of money? Is it for you to get a bigger house? A nicer car? A more expensive watch? These are the consumption people. Dependent on making more money to be able to consume more things and indulge in luxury. It's for people to be a production person. Funneling your money back into compounding outcomes. Using it as a tool to create a better quality of life when things don't yet exist here. Money to a production person is used to build better things for your life and others.

Anti To-Do List

Marc Andreessen has what he calls an anti to-do list. You write down what you just did. Immediately to be crossed off. Why? Because when you get off track this gives you a list of everything you were working on. It’s a log of your progress. Using the anti to-do list you get a snapshot of your momentum. It allows you to jump right back into your work.

Sit at the Intersection of Categories

Balaji has had about average success in many different domains, but he has never been the best at any of them. As a founder he had an exit but there were people who were better, like Brian Armstrong. There’s people much more focused on being a better investor than him like Naval Ravikant. He’s a good engineer, but Vitalik Buterin is still better. A scientist, but still behind Vijay Ponde. In his career, he’s been a good tech executive, but Ben Horowitz still does better. A best-selling author, but not close to Tim Ferriss. The point is that he’s proficient at a lot of skills. Balaji does not consider himself defined by one category. He is a generalist that sits at the intersection of many categories.

Minimum Idea Alignment

An idea doesn’t have to be adopted by the majority of people to be feasible. It just needs to have weak opposition against it. All new innovations (even low-tech) took a significant amount of effort to be adopted by the masses. When there is opposition or pushback, the idea must be stronger than the consensus against it. Minimum alignment is required, but mass acceptance is not.

Top 5 Test for Innovation

The innovation you're obsessed with is still new to 99% of the population. Balaji has an easy way you can test if you're still early to a space. Ask the average person what the top 5 companies are. "What are the top five 3D printers?" or "What are the top five drones?" will expose how much people know. Most people may name one or two but fail to tell you all that's happening in the space. It means you're early. The technology has not hit the mainstream adoption curve yet.

Personal Runway Formula

The basic calculation for reducing your expenses to become financially independent:

{current savings} / {yearly expenses} = {personal runway}

Unseen Value

Two outcomes exist for every decision: what is seen and what is unseen. Empathy and imagination are required to think about the unseen value. You can see a skyscraper easily, but what could have been built in its place you can’t. It’s the other side of opportunity cost. Outdated regulation held back a $100B+ industry. That’s why the combined valuation of Airbnb and Uber. The unseen value is money. It’s the money you saved on parking, the employees getting paid, the lives saved from drunk driving, etc. The real unseen value is our intuitions.

Where Information Arbitrage Exists

Information arbitrage exists where the least popular facts can become monetizable truths. This is the information VCs look for by becoming information bottlenecks. They're looking for the small pieces of wisdom that give them an edge on the competition. Josh Wolfe calls this getting to the edge of information. The best source of information arbitrage exists in the newest technical papers and the oldest books. This is where the truths lie that most people don't know about. Brian Chesky studied Airbnb's new trend of boarded-up homes from the 1800s on rooming houses. The popularity of room sharing declined during the 20th century. Chesky saw a solution in a share economy using modern technology. It was all because he read an article about societal arrangements at another time.

Find Signal Sources, Not Signal Repeaters

A few people become the source and inspiration for others' ideas. Scientists publish a study and others summarize that information. Downstream people read those summaries (more than who read the actual papers). Most of the information you consume comes from signal repeaters. These people are important to grow the scope of information you're aware of. Signal repeaters are top of funnel for knowledge. To get truth and the core of an idea, you want to go directly to the source. What acted as inspiration in the signal repeaters? What are your role models' role models? These are the people you want to go to as the source of truth.

Media Nutrition Facts

When you eat unhealthy food, you slowly become overweight. When you eat healthy, it's easier to get fit and stay in shape. Your media diet is no different. To figure out your media "nutrition facts," look at what concepts you're reinforcing through repetition. This is what you're putting in your brain. With social media, the algorithm may not always be the concepts you want to learn about. Like the food you eat, if you consume media that's poor in nutrition, your brain will slowly slip away from the information you need to execute on your vision.

The Idea Maze

The role of a founder is to make good decisions for their business. Balaji calls this navigating the idea maze. Balaji said, “good founders don’t just have ideas; they have a bird’s eye view of the idea maze.” A founder must choose what paths to take and which ones to avoid. There are paths you cannot make succeed. Places you can go only after making other progress first. Pitfalls to anticipate which turn away treasure and the ones that bring reward. The best way to prepare for the maze is understanding the industry history, the other players, past failures, and the way technology will move. The only way to make it out is to have a plan superior to the last 10 companies that found and failed. The best plan to navigate the maze comes from an obsession with the market and unique insights others don’t have.

Bounded Commitments

Sometimes you need to persist down a path before you will see results. Bounded commitments offer you the advantage of persistence with the flexibility to pivot. It’s very similar to a software sprint. List your options, choose the best one, and commit for a set period of time. At the end of the timeframe, recalculate then. Bounded commitments allow you to factor in your time as a resource. It keeps you from heading too far down the wrong direction but enables you to commit enough to collect more information to see the results (or potential future).

The Two Models of Innovation: The Paladin & The Dark Knight

Innovators fall into two categories at a huge scale. Balaji calls these two people The Paladin and The Dark Knight. The Paladin takes something popular and makes it profitable. They’re loved. The risk to them is making money before losing it all. Elon Musk has taken things like solar power and electric cars and made them feasible for millions of people to use. The other kind of innovator, The Dark Knight, annoys a group of people. Their idea is unpopular. The markets they operate in have potential and there’s a customer demand. But they run the risk of being regulated or banned. They struggle not with profitability but popularity. In the early days of Uber, they battled the taxi industry and local governments trying to step in to prevent them from having customers. It wasn’t the demand they had a problem with.