Set Unreasonable Expectations

Since listening to Tim Ferriss’ 2020 interview with Richard Koch, one topic continues to rattle around in my head: the Star Principle.

Simply put, a company is considered a Star if:

1. It’s the leader in a market niche, which has unique products or services compared to a traditional market’s; and

2. That market niche is growing by at least 10% in sales annually.

Koch is all in on this Principle as an investment tool, declaring that it has never failed him in his effort to identify promising companies and is more impactful than any complex investigation of a company’s technology, management, or market.

He also encourages people to do everything they can to invest in or work for a Star, because:

• Delivering an innovative thing to eager customers is, well, exciting!

• Your day-to-day role, plus the ability to impact the firm’s culture, expands rapidly when the company is growing fast;

• Meaningful relationships are forged in hectic, intense environments; and

• A huge portion of publicly-traded companies have been or still are Stars, thus there’s serious financial upside.

Moreover, Koch emphasizes that you must have unreasonable expectations when it comes to finding and helping Star businesses.

After all, they’re rare: perhaps 5% of startups have the combination of niche leadership and growth rate to quality them as such.

And since founders are busy and inundated with interest, you must pound down the door, working out any way to add value.

(I had a boss who preached that pursuing companies must be “a full on assault” … which is a maxim that fits well for Stars.)

But even if you get in the door, the Star could struggle if timing turns out to be wrong, or a competitor assumes leadership of the niche, or turning a profit proves untenable despite a very real gap in the market, or insert a million other reasons.

So, amidst niche leadership, high growth, and extreme uncertainty, you’ve got to be insanely ambitious to make the most of your opportunity:

• Aim to grow the Star by at least 20-30% … or even 50-100% … per year during the first decade;

• Add one or two zeros to how people talk about the firm’s potential;

• Ensure that each new hire is in the top 10% of existing employees.

This is beyond what most people think or expect to be possible; it’s a set of unreasonable expectations, to which playwright George Bernard Shaw attributes all progress.

…

Regardless of whether you’re interested in a Star business, unreasonable expectations can (and should) be applied to every part of your life.

For example:

Legendary music producer Rick Rubin recently discussed his “Way of Being”:

• No matter what’s going on in his life, the most important thing in the world is whatever he’s doing in that moment (e.g. a podcast interview). He gives a task his full attention and is happy to dedicate his entire day to it if that’s what’s required to produce something of the highest quality.

Rubin clearly understands that we become whatever we think is possible, we shouldn’t settle for anything other than the best, and meeting unreasonable expectations enables us to do the work that we’re meant to be doing and to spend the time with the people who we’re meant to be with.