Super Thinking: The Big Book of Mental Models

by Gabriel Weinberg

If you have no bright spots after some time, it is likely you do need to pivot. It’s like the old phrase “You don’t have to go home, but you can’t stay here.” If you do have some bright spots, you can try to figure out why things are working there and focus on growing out from that base. This is actually a useful strategy for advancing any idea, struggling or otherwise, drawing on the military concept of the beachhead. That’s where a military offense takes and defends a beach so that more of their force can move through the beachhead onto the greater landmass.

Once you achieve product/market fit or whatever type of fit you are trying to achieve, it is time to protect your position. Warren Buffett popularized the term moat, making an analogy to the deep ditch of water surrounding a castle to describe how to shield yourself from the competition, thereby creating a sustainable competitive advantage.

Organizations and individuals that control working moats create lock-in when customers are locked in to their services because perceived switching costs are so high. There are many ways to create switching costs, such as cancellation fees, trusted relationships, new equipment costs, learning curves, network effects (see Chapter 4), brand affinity, etc.

A related pair of concepts resulting from moats are barriers to entry and barriers to exit, which prevent people or companies from either entering or exiting a situation or market. A new mobile operating system wanting to compete with Apple’s iOS or Google’s Android would need to re-create an app store populated with thousands of useful apps, a large barrier to entry. Some careers have high barriers to entry, such as expensive years of schooling required. Similarly, some personal contracts, such as noncompetes, partnership agreements, or even marriage, create significant barriers to exit.

Strong moats, including those built upon regulatory capture and especially those built on network effects, can also lead to winner-take-most markets. This is where one company, once it reaches critical mass (see Chapter 4) through its network or dominant position based on another sustainable competitive advantage, effectively wins the market by taking most of the customers within it. For example, with more than two billion people on Facebook, a competitor won’t find it easy to re-create that network and compete with Facebook’s core offerings.

There have been many instances where pivots have been advisable at the height of market dominance or earning potential. Unfortunately, market dominance can correspond with complacency. That’s why only the paranoid survive—you have to be paranoid to perceive the threat of something so small or far off in the future when you are in such good shape. When you embrace this model, you must therefore pay attention to a lot of small threats, most of which will turn out to be harmless. How do you distinguish the signal from the noise?

Business strategist Geoffrey Moore named this jump crossing the chasm in a book by the same name. The chasm here refers to the fact that many ideas, companies, and technologies fail to make it from one side to the other. That’s because there is a huge gulf in expectations between early adopters and the early majority, which most things fail to meet. Early adopters like to tinker with things or are a small subset of people who really need something, but to cross the chasm into the early majority, a product has to solve a real ongoing need for a lot more people. And most products just aren’t compelling enough to cross this gulf and truly spread into the mainstream.

Over time, your efforts will expand what Warren Buffett calls your circle of competence. The inside of the circle covers areas where you have knowledge or experience—where you are competent—and in those areas, you can think effectively. In areas outside the circle, you cannot. The most dangerous zone is just outside your circle of competence, where you might think