Pattern Breakers: How to find a breakthrough startup idea | Mike Maples, Jr. (Founding Partner at Floodgate, ex-Product at Silicon Graphics)

**Lenny Rachitsky** (0:00)
You found that there's basically three elements of most breakthrough startup ideas.

**Mike Maples, Jr.** (0:04)
The three are inflections, insights, and then founder-future fit. Business is never a fair fight. What inflections let the founder do is wage asymmetric warfare on the president.

**Lenny Rachitsky** (0:14)
You reference this term that you use occasionally, the earned secret.

**Mike Maples, Jr.** (0:17)
The way inventions happen is people get their hands dirty, being awake to the possibility that secrets are there. If you're living in the future and you notice what's missing, your intuition about what to build is far more likely to be right.

**Lenny Rachitsky** (0:30)
This connects with that stat that you shared, that 80% of your biggest returning investments came from a pivot.

**Mike Maples, Jr.** (0:34)
So startup never beats a big company by executing better. The way startups win is because it proposes a radically different future, disorients the incumbent, and chaotically moves people to that different future. The rock is the inflection, the slingshot is the insight that David shoots at Goliath. We're looking to create the conditions where we're gonna get to play an unfair game by unfair rules that favor us.

**Lenny Rachitsky** (1:00)
Today my guest is Mike Maples, Jr. Mike is a legendary early stage startup investor, and with his firm Floodgate, which was founded over 20 years ago, was one of the earliest pioneers of seed stage investing as a category. He's made early bets on transformative companies like Twitter, Lyft, Twitch, Okta, Rappi, and Applied Intuition, and has been on the Forbes Midas list eight times.
More recently, he's been spending a lot of his time researching where great startup ideas come from and what separates the startups and founders that break through and change the world from those that don't go anywhere.
After spending years reviewing his notes and decks from the thousands of startups that he's met with over the past two decades, he's uncovered three ways that breakthrough founders think differently and act differently. In our conversation, Mike shares what he's uncovered, along with the pitfalls that he's seen many founders and startups fall into, how to apply these pattern-breaking principles to large companies and so much more. I've never seen anything like this sort of research done before on early-stage investing and startups. And if you're a founder, a product builder or an investor, this will change the way that you think about building successful products. Also, as an added bonus, Mike has offered listeners of this podcast a very cool offer. If you pre-order the book at patternbreakers.com/lenny, you will receive a second signed copy of the book for free. There are a limited number of copies available of this offer, so if you're interested, I'd encourage you to place your order ASAP. The book is coming out July 9th. To take advantage of this offer, go to patternbreakers.com/lenny. With that, I bring you Mike Maples, Jr. Mike, thank you so much for being here and welcome to the podcast.

**Mike Maples, Jr.** (2:47)
Lenny, thanks for having me. It is absolutely an honor.

**Lenny Rachitsky** (2:50)
It's my honor. What we're going to be talking about in our conversation today is how to come up with a startup idea and how to take the first few steps to make that idea real. You have a book coming out that is exactly this, helping people understand how to do this. It's called Pattern Breakers, Why Some Start-Ups Change the Future.
Let me just ask kind of a broad question. You're very busy, very successful investor. Why did you decide to write a book?

**Mike Maples, Jr.** (3:19)
Yeah, and like a lot of things in life, it was kind of an outgrowth of an accident and an outgrowth of being down a certain rabbit hole. So you know, about 10 years ago, Twitch was acquired by Amazon for 970 million and we made something like 85 times our money. And normally you'd think that's a really good thing. It was a good thing, but I had forgotten that I was even a shareholder at Twitch.
So I had to go to my LPs and I had to explain to them, hey, I'm sorry, I don't have this in my financial statements, but do you want me to restate them? And they were all like, nope, we're good. Just send us the money. And some of them even sent me like bottles of champagne and stuff and the good kind. Then I started to kind of feel a little bit unsettled because so how was I shareholder at Twitch? I'd invested in a company called Justin TV that had morphed into two companies, Social Cam and Twitch, and then Social Cam got bought. And so I just thought that was the company. So then I looked at, I'd been investing for about 10 years and I noticed that like 80% of my exit profits had come from Pivot.