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Summary of Slavoj Žižek - “The Sublime Object of Ideology” , originally published in 1989.

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Summary of Jean Baudrillard - “For a Critique of the Political Economy of the Sign” originally published in 1972.

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Summary of Jacques Ellul's book “Propaganda: The Formation of Men's Attitudes” , originally published in 1962.

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The century of the Self - DeMark Cut:

1. Edward Bernays

This episode is about Freud's American nephew, Edward Bernays. Bernays is almost completely unknown today, but his influence on the 20th century was nearly as great as his uncle because Bernays was the first person to take Freud's ideas about human beings and use them to manipulate the masses.

He showed American corporations for the first time how they could make people want things they didn't need by linking mass-produced goods to their unconscious desires. Out of this would come a new political idea of how to control the masses by satisfying people's inner selfish desires and make them happy and thus docile; it was the start of the all consuming self which has come to dominate our world today.

Freud had devised a method he called psychoanalysis, by analyzing dreams and free association, he had unearthed powerful sexual and aggressive forces which were the remnants of our animal past feelings we repressed because they were too dangerous.

Freud's young nephew, Edward Bernays, was working as a press agent in America. His main client was the world-famous opera singer Caruso, who was touring the United States. Bernays parents had immigrated to America 20 years before, but he kept in touch with his uncle and joined him for holidays in the Alps, but Bernays was now about to return to Europe for a very different reason. On the night that Caruso opened in Toledo, Ohio, America announced it was entering the war against Germany and Austria.

As a part of the war effort, the US government set up a Committee on Public Information and Bernays was employed to promote America's war aims. In the press, the President Woodrow Wilson had announced that the United States would fight not to restore the old Empires, but to bring democracy to all of Europe.

Bernays proved extremely skillful in promoting this idea both at home and abroad. And at the end of the war he was asked to accompany the president to the Paris Peace Conference. Wilson's reception in Paris astounded Bernays and the other American propagandists. Their propaganda had portrayed Wilson as a liberator of the people, a man who would create a new world in which the individual would be free. They had made him a hero of the masses, and as he watched the crowd surge around Wilson, Bernays began to wonder whether it would be possible to do the same type of mass persuasion but in peace time.

— Bernays tells the story,
“When I came back to the United States, I decided that if you could use propaganda for war you could certainly use it for peace, and propaganda got to be a bad word because of the Germans using it so what I did was to try to find some other words, so we found the word Council on Public Relations.”

Bernays returned to New York and set up as a Public Relations Council in a small office off Broadway. It was the first time the term had ever been used since the end of the 19th century. America had become a mass industrial society, with millions clustered together in the cities. Bernays was determined to find a way to manage and alter the way these new crowds thought and felt, to do this, he turned to the writings of his uncle Sigmund. 

While in Paris, Bernays had sent his uncle a gift of some Havana cigars, in return, Freud had sent him a copy of his “General introduction to psychoanalysis.” Bernays read it, and the picture of hidden irrational forces inside human beings fascinated him. He wondered whether he might make money by manipulating the unconscious:

— Pat Jackson, Public Relations adviser and colleague of Bernays, recalls,
“What Eddie got from Freud was indeed this idea that there is a lot more going on in human decision-making not only among individuals but even more importantly among groups than this idea that information drives behavior, and so Eddie began to formulate this idea that you had to look at the things that would play to people's irrational emotions, and you see that moved Eddie immediately into a different category from other people in his field and most government officials and managers of the day who thought if you just hit people with all this factual information they would look at that and say “oh of course!” and Eddie knew that was not the way the world worked.”

Bernays set out to experiment with the minds of the popular classes. His most dramatic experiment was to persuade women to smoke. At that time, there was a taboo against women smoking, and one of his early clients, George Hill, the president of the American Tobacco Corporation, asked Bernays to find a way of breaking it. 

— Bernays relates,
“He said we're losing half of our market because men have invoked a taboo against women smoking in public. Can you do anything about that? (…) I called up Dr. Brill, who was the leading psychoanalyst in New York at that time.”

Dr. Brill was one of the first psychoanalysts in America, and for a large fee, he told Bernays that cigarettes were a symbol of the penis and of male sexual power. He told Bernays that if he could find a way to connect cigarettes with the idea of challenging male power, then women would smoke because then they would have their own penises.

Every year New York held an Easter Day Parade to which thousands came, and Bernays decided to stage an event there. He persuaded a group of debutants to hide cigarettes under their clothes. Then they should join the parade and at a given signal from him, they were to light up the cigarettes dramatically. Bernays then informed the press that he had heard that a group of suffragettes were preparing to protest by lighting up what they called “Torches of Freedom”.

— Pat Jackson, Bernays’ colleague, explains the situation,
“He knew this would be an outcry, and he knew that all the photographers would be there to capture this moment, and so he was ready with a phrase which was “torches of freedom”. So here you have a symbol: Women, young women, debutants, smoking a cigarette in public with a phrase that anybody who believes in this kind of equality, pretty much has to support them in the ensuing debate about this because “torches of freedom”.

I mean, what's on All American coins? It's liberty, she's holding up the torch, and so all of this is there together. There's emotion, there's memory, there's a rational phrase, even though it's using a lot of emotional elements, it's a phrase that works in a rational sense, all of these are together. And so the next day, this was not just in all of the New York papers, it was across the United States and around the world, and from that point forward, the sale of cigarettes to women began to rise. He had made them socially acceptable with a single symbolic act.”

What Bernays had created was the idea that if a woman smoked, it made her more powerful and independent. It made him realize that it was possible to persuade people to behave irrationally if you link products to their emotional desires and feelings. The idea that smoking actually made women freer was completely irrational, but it made them feel more independent; It meant that irrelevant objects could become powerful emotional symbols of how you wanted to be seen by others.

— Peter Strauss, employee of Edward Bernays in the 50s, comments,
“Eddie Bernays saw the way to sell a product was not to sell it to your intellect, that you ought to buy an automobile but that you will feel better about it if you have “this” automobile. I think he originated that idea, that they weren't just purchasing something, but that they were engaging themselves emotionally or personally in the product or service. There's not “you think you need a new piece of clothing” but “you will feel better with the piece of clothing.” That was his contribution in a very real sense, we see it all over the place today, but I think he originated the idea of the emotional connect to a product or service.”

2. From Functional Needs to Unconscious Desires

What Bernays was doing fascinated America's corporations. They had come out of the war rich and powerful, but they had a growing worry: The system of mass production had flourished during the war, and now millions of goods were pouring off production lines. What they were frightened of was the danger of overproduction, that there would come a point when people had enough goods and would simply stop buying up. 

Until that point, the majority of products were still sold to the masses on the basis of need, while the rich had long been used to luxury goods. For the millions of working-class Americans, most products were still advertised as necessities; Goods like shoes, stockings, even cars were promoted in functional terms for their durability. The aim of the advertisements was simply to show people the product's practical virtues, nothing more.

What the corporations realized they had to do was transform the way the majority of Americans thought about products.

— Paul Macer, leading Wall Street Banker of layman Brothers, was clear about what was necessary,
“We must shift America, from a needs to a desires culture. People must be trained to desire to want new things even before the old have been entirely consumed. We must shape a new mentality in America, man's desires must overshadow his needs.”

Beginning in the early 20s, the New York Banks funded the creation of chains of department stores. Across America, they were to be the outlets for the mass-produced goods, and Bernays job was to produce the new type of customer. Bernays began to create many of the techniques of mass consumer persuasion that we now live with.

He was employed by William Randolph Hurst to promote his new women's magazines, and Bernays glamorized them by placing articles and advertisements that link products made by others of his clients to famous film stars like Clara Bo, who was also his client. Bernays has also begun the practice of product placement in the movies, and he dressed the Stars at the film's premieres with clothes and jewelry from other firms he represented. 

He was, he claimed, the first person to tell car companies they could sell cars as symbols of male sexuality. He employed psychologists to issue reports that said products were good for you, and then pretended they were independent studies. He organized fashion shows in the department stores and paid celebrities to repeat the new and essential message: “You bought things, not just for need, but to express your inner sense of yourself to others”.

The growing wave of consumerism, helped in turn to create a stock market boom, and yet again, Edward Bernays became involved. Promoting the novel idea that ordinary people should buy shares by borrowing money from Banks, he also represented, and yet again, millions followed his advice.

— Peter Strauss, Bernays employee, continues
“He was uniquely knowledgeable about how people in large numbers of going to react to products and ideas and so on. But in political terms, if he were to go out, I can't imagine that he get three people to stand and listen. He wasn't particularly articulate, was kind of funny looking and didn't have any sense of reaching out to people one-on-one, none at all. He didn't talk about, didn't think about people, in groups of one. Thought about people in groups of thousands.”

In the 1920s he began to write a series of books which argued that he had developed the very techniques Lippmann was calling for. By stimulating people's inner desires and then sating them with consumer products, he was creating a new way to manage the irrational force of the masses. He called it the engineering of consent.

But Bernays power was about to be destroyed dramatically, and by a type of human irrationality he could do nothing to control. On the 29th of October 1929, the market collapsed. The effect of the crash on the American economy was disastrous, faced with recession and unemployment, millions of American workers stopped buying goods they didn't need. The consumer boom that Bernays had done so much to engineer, disappeared. And he and the profession of public relations fell from favor.

There was growing violence, as an angry population took out their frustration on the corporations who were seen to have caused this disaster. Then in 1932, a new president was elected who was also going to use the power of the state to control the free market. It was the start of what would become known as the New Deal. Roosevelt assembled a group of young technocrats and planners in Washington, he told them that their job was to plan and run giant new industrial projects for the good of the nation. Roosevelt was convinced that the stock market crash had shown that laissez-faire capitalism could no longer run modern industrial economies, it’s to become the job of the government.

— Stuart Ewen, Historian of Public Relations, details,
“Following that election, business people start to get together and start to carry on discussions, primarily in private, about the need to sort of carry on ideological warfare against the New Deal, to sort of reassert the sort of connectedness between the idea of democracy on the one hand and the idea of privately owned business on the other. And so, under the umbrella of an organization, which still exists, which is called the National Association of Manufacturers and whose membership included all of the major corporation operations of the United States, a campaign is launched explicitly designed to create emotional attachments between the public and big business. It's Bernays’ techniques being used on a grand scale.”

The campaign set out to show dramatically that it was business, not politicians, who had created modern America. Bernays was an adviser to General Motors, but he was no longer alone, the industry he had founded now flourished as hundreds of public relations advisers organized a vast campaign. They not only used advertisements and billboards but managed to insinuate their message into the editorial pages of the newspapers. 

It became a bitter fight. In response to the campaign, the government made films that warned of the unscrupulous manipulation of the press by big business, and the central villain was the new figure of the public relations man.

But now, a group of psychoanalysts were going to take what Bernays had begun, and invent a whole range of techniques to get inside, and manage, the unconscious mind of the consumer. They were led by Ernest Dichter. Dichter had practiced next door to Freud in Vienna, but he had come to America and set up “The institute for motivational research” in an old mansion north of New York.

— A promotional film detailed the purpose of the institute,
“This is the institute for motivational research, a place devoted to the Intriguing business of finding out why people behave as they do, why they buy as they do, why they respond to advertising as they do.”

— Ernest Dichter himself explains,
“We don't go out and ask directly why do you buy? Why don't you? What we try to do instead, is to understand the total personality, the self-image of the customer. We use all the resources of modern social sciences. It opens up some stimulating psychological techniques for selling any new product.”

— Fritz Gehagen, Psychologist and employee of Dichter, explains,
“And so he said, why can't we have a group therapy session about products? So Dichter built this room, up above his garage, and he said we can have psychoanalysis of products they can actually act out and verbalize their wants and needs.

And they could be observed and watched, and other people could comment, and they could talk about it, and everybody could join in. He was the first to do this, this was absolutely the first thing that was ever done. And he had a movie projector up there where you could show advertisements and things like that and people could react to them, and he invented the whole technique for mining the unconscious about the hidden psychological wants that people had about products. This became the focus group.”

Dichter's breakthrough came with a focus group study he did for Betty Crocker foods. Like many food manufacturers in the early 50s, they had invented a new range of instant convenience foods. But although consumers had told Market researchers they would welcome the idea, in fact, they were refusing to buy them. The worst problem was the Betty Crocker cake mix.

Dichter did a series of focus groups where housewives free-associated about the cake mix. He concluded that they felt unconscious guilt at the new image being promoted of ease and convenience.

— Bill Schlackman, another psychologist and employee of Dichter comments,
“In other words, he understood that the barrier to the consumption of the product was the housewife's feeling of guilt about using it. They basically, on one hand, wanted to make it easy for themselves, but they felt guilty about it. So what you've got to do in those circumstances is remove the barrier, the barrier being guilt. The way you do that, is to give the housewife a greater sense of participation. And how did you do that? By adding an egg.”

Dichter told Betty Crocker to put an instruction on the packet that the housewife should add an egg. It would be an unconscious symbol, he said, of the housewife mixing in her own eggs as a gift to her husband, and so would lessen the guilt. Betty Crocker did it and the sales soared.

— Schlackman continues,
“The consumer may have basic needs that the consumer himself or herself doesn't fully understand, you have to know what those needs are in order to fully explore the consumer. So, Is it wrong to give people what they want by taking away their defenses?”

Dichter success led to a rush by corporations and advertising agencies to employ psychoanalysts. They became known as “the depth boys”, and they promised to show companies how to make millions by connecting their products with people's hidden desires. 

Dichter himself became a millionaire famous for inventing slogans like “a tiger in your tank”, even the marketing of the Barbie Doll came from a children's focus group.

At the same time, an onslaught was launched on the way psychoanalysis was being used by business to control people. The first blow came with the bestseller “The Hidden Persuaders” written by Vance Packard. It accused psychoanalysts of reducing the American people to emotional puppets whose only function was to keep the mass production lines running. The second blow came from an influential philosopher and social critic, Herbert Marcuse, he had been trained in psychoanalysis.

— Herbert Marcuse explains his critique,
“This is a childish application of psychoanalysis which does not take at all to consideration the very real political systematic waste of resources, of technology, and of the productive process. For example, planned obsolescence, for example the production of innumerable brands and gadgets who are in the last analysis, always the same, the production of innumerable different marks of automobiles… and this prosperity at the same time, consciously or unconsciously leads to a kind of schizophrenic existence. I believe that, in this society, an incredible quantum of aggressiveness and destructiveness is accumulated precisely because of the empty prosperity which then, simply erupts.”

3. From Unconscious Desires to enabling Self-expression

By the late 60s, the idea of self-exploration was spreading rapidly in America. Encounter groups became the center of what was seen as a radical alternative culture, based on the development of the self, free of a corrupt capitalist culture, and it was beginning to have a serious effect on Corporate America because these new selves were not behaving as predictable consumers.

The life insurance industry in particular was concerned that fewer and fewer college students were buying life insurance when they left University. They asked Daniel Yankelovich, America's leading Market researcher, to investigate. He had studied psychoanalysis.

— Daniel Yankelovich explains,
“The life insurance business, more than any other business at the time, was built on the Protestant ethic; You only bought life insurance if you were a person who sacrificed for the future, if you lived in the present you had no need for life insurance. So they had some sense that may be the sort of core values of the Protestant ethic were being challenged by some of these new values that were beginning to appear.

And I was really astonished at what I found, the conventional interpretation, the dominant interpretation, was that it had to do with political radicalism. But you know, it was clear to us that that was a mask, a cover, the core of it had to do with self-expressiveness. That this preoccupation with the self and the inner self that was what was so important to people the ability to be self-expressive.”

Yankelovich began to track the growth and behavior of these new expressive selves. What he told the corporations was that these new beings were consumers, but they no longer wanted anything that would place them within the narrow strata of American society. Instead, what they wanted, were products that would express their individuality, their difference in a conformist world. The very things that US corporations did not make.

— Yankelovich continues,
“Products have always had an emotional meaning. What was new was individuality, the idea that this product expresses me, and whether it was a small European car, the particular music system, your presentation of self, your clothing. These become ways in which people can expend their money in order to say to the world who they are. But the manufacturers had no idea of what was going on really with consumers and in the Market at large.”

Major advertising companies set up what they called “operating groups” to try to work out how to appeal to these new individuals. The head of one agency sent a memo to all staff. We must conform, told them, to the new non-conformists we must listen to the music of Bobby Dylan and go to the theater more. But the problem was few of the self-expressive individuals would take part in focus groups; the advertisers were left to their own devices.

And there was an even more serious problem, making products for people who wanted to express themselves, would mean creating variety. But the systems of mass production that had been developed in America were only profitable if they made large numbers of the same objects. This had fitted perfectly with the limited range of desires of a conformist society. The expressive self, threatened this whole system of manufacture.

4. From Self-expression to defined Identity groups

And it was at this point that American capitalism decided it was going to step in and help these new individuals to express themselves, and in the process make a lot of money. 

The first thing they were going to do, was to find a way of getting inside their heads to discover what these new beings wanted in order to be themselves. To do this, SRI turned for help to those who had begun the liberation of the self, in particular one of the leaders of the human potential movement, a psychologist called Abraham Maslow.

Through observing the work at places like Excelon, Maslow had invented a new system of psychological types, he called it: “The hierarchy of Needs” and it described the different emotional stages that people went through as they liberated their feelings. At the top was self-actualization; this was the point at which individuals became completely self-directed and free of society.

— Amina Marie Spengler, the director of the Research Programme, remarks about the process,
“We were trying to find out what people really felt like. So we asked these really penetrating questions, and we hired a company that administers surveys; they said they've never seen anything like it.

Usually, you have to send out a postcard, 6 weeks and then another postcard, and then you got to call the people… to get the return rates up. We had an 86% return, and they only sent out one postcard. People loved filling out this questionnaire. We got several questionnaires back with a note attached saying: do you have any other questionnaires I could fill out? Because we were asking people to think about things that they had never thought about before, and they liked thinking about them. Question like what they felt inside, what motivated them, what was their life about, what was important to them.”

SRI created a simplified questionnaire with just 30 key questions, anyone who answered them could be immediately fitted into a dozen or so of these new groups. It allowed businesses to identify which groups were buying their products, and from that, how the goods could be marketed so they became powerful emblems of those group's inner values and Lifestyles. It was the beginning of Lifestyle Marketing.

In the wake of the invention of values in Lifestyles, a vast industry of psychological market research grew up, and the old technique of the focus group invented by the Freudian psychoanalysts in the 50s was used in a new and powerful way.

The original aim of the focus group had been to find ways to entice people to buy a limited range of mass-produced goods, but now focus groups were used in a different way: To explore the inner feelings of life lifestyle groups, and out of that, invent whole new ranges of products which would allow those groups to express what they felt was their individuality, and the generation who had once rebelled against the conformity imposed by Consumerism, now embraced it because it helped them to be themselves.

— Stew Albert, a founding member of Yippie Party, comments,
“What capitalism managed to do that was brilliant, was to actually create products that people like me would be interested in. Capitalism developed a whole industry at developing products that evoke a larger sense of self, that seemed to agree with us that the self was infinite, that you could be anything you wanted to be. The product sells you a way of life, a way of being, the product sells you values; hipness, coolness, … So the notion that you could buy an identity, replaced the original (Yippie) movement notion that you were perfectly free to create an identity.” 

5. The never-ending consumer boom

This vast range of new desires, fitted perfectly with changes in industrial production. Computers now allowed manufacturers to economically produce short runs of consumer goods; the old restrictions of mass production disappeared, as did the worry that had bedeviled corporate America ever since mass production had been invented; That they would produce too many goods. With the new self, consumer desire seemed to have no limit.

— Yankelovich explains,
“In the United States, the concern of companies was always that supply would outstrip demand, that we would, we were producing too much, and that there was not a market for it. You don't hear that kind of talk anymore because you've gone from a conception of a market of limited needs, and if you fill them, they're filled, to a market of unlimited, ever-changing needs, dominated by self-expressiveness, that products and services can satisfy in an endless variety of ways, ways that change all the time. And consequently, economies have unlimited Horizons.”

Out of this explosion of Desire came what seemed a never-ending consumer boom that regenerated the American economy. The original idea had been that the liberation of the self would create new kinds of people, free of social constraint. That radical change had happened, but while the new beings felt liberated, they had become increasingly dependent for their identity on business.

The corporations had realized that it was in their interests to encourage people to feel that they were unique Individuals, and then offer them ways to express that individuality. A world in which people felt they were rebelling against conformity was not a threat to business but its greatest opportunity.

— Robert Reich, economist and member of the Clinton Cabinet from 1993-1997, summarizes the situation up to the 2000s,
“It was, in a sense, the triumph of the self. It was the triumph of a certain self-indulgence, a view that everything in the world and all moral judgment was appropriately viewed through the lens of personal satisfaction. 

Indeed, the ultimate ending point of that logic is that there is no Society. There is only a bunch of individual people making individual choices to promote their own individual well-being.”

The Century of the Self by Adam Curtis.
Full documentary: https://www.youtube.com/@justadamcurtis9178

In the previous essay, Who to blame?, we discussed how, when a growth initiative fails, we usually blame three things as “not working”: Implementation, then plan, then external factors. 

These three causes are our first likely culprits because they are the most visible ones. But what if we are missing something, a fourth culprit that we don’t see? 

And even more worrying: What if that fourth invisible cause, one that is baked into the way we’re taught to think about growth in Startups, just gets us into a loop where it looks like we are making progress, but it’s just an illusion?

Let's start exploring that with a story.

1. Two ways to solve a Rubik's cube

I recently bought a Rubik’s cube for my son; I thought that it could be a fun challenge to solve together. Of course, he really enjoyed the part where all the perfectly aligned sides became a multicolor mosaic, and then he got bored and left the challenge to me.

So, I started to solve it in the way that looked more logical: one side at a time. The first side was tricky, but by trial and error, you start to learn some ways to make progress. The second side is, of course, harder because you have many limitations if you want to keep the first side in place. But it was doable. Great, just 4 more sides to go. 

By the third completed side, when trying to solve the fourth, it felt like I was not making progress anymore; every time I solved something, I was also breaking something else. It felt like running in circles. So, I started to suspect that I was using the wrong logic; I was following a rule that made logical sense to me (one side at a time), but maybe my logic was off.

After some research, I found out that you actually solve the cube by what the experts call “layers,” that is, by rows and not by sides. With that new logic and some instructions on how to align each layer, it just took an hour to get it solved.

What surprised me the most was the fact that when I was solving the cube by sides, it looked like I was getting closer to solving it. It felt like I was making progress until I was not. Then, once I understood the right logic to solve it, it became immediately obvious that my past progress was just a mirage, an illusion. I was just getting into a trap that was harder and harder to deal with.

2. Invisible models

As per Wikipedia, a mental model is “an internal representation (model) of external reality: that is, a way of representing reality within one's mind.”

What I called “my logic” to solve the cube is a mental model (just “model” from now on), one that turned out to be wrong. That model was not that important, it is just a game, but there are models that affect how we make much bigger decisions, like the models we have about “how startups grow”.

On the one hand, models are useful to help us deal with the complexity of the world; on the other hand, they are dangerous because we don’t see them; they are just “how things work,” facts of life, indisputable truths. 

You know, like the fact that the sun rises on the East, hides on the West, and flies underneath our beautiful flat earth until it rises on the East again. And that was the “truth” until it was not (well, for some, it’s still true, but that is a story for another day). Models are useful but invisible, so we don’t challenge them, and they could be wrong. 

3. The current model

If you remember from the previous essay, we had a team that made an assessment of the situation that we called the point “A”. That assessment is the byproduct of looking at some indicators and interpreting them based on their model about “how startups grow”:

Their product has many good reviews and a significant MRR (indicators), so they understood that they had a solid product, one that people prefer over competing alternatives (assessment). Now, they just have to show other people that they have a better product, and they will do that with Paid Ads (plan).

The previous paragraph makes total sense. Also, it totally omitted the model. That paragraph logic is built on top of a model that we don’t see anymore. So, let’s unearth it. It's simple; it just has 2 assumptions:

• People will switch to a “better” product (10x product)

  We know that there are many similar alternatives to choose from, so having a  “better” product is not enough. To make people switch to us, we have to be much better; “10x better”.

• Then, we have to persuade people to Try the product

  Some people will realize we are 10x better and will just switch to us, but a lot of other people are busy or distracted and need some “extra motivation”. We have to “persuade” them to Try the product so they realize what they are missing. Then, they will also switch to us.

This is it; “10x product + persuade to Try”.

4. How we use the model to make decisions

This deep belief about how things work, the current model, affects how we assess each situation and the plans we make to deal with it:

If we are not growing, we will think that this is either because we are not 10x enough; therefore we will add more features. Or because we are not persuading enough; therefore we will “increase persuasion” with better ads, timed trials, reminder emails, offers… And if after that, we are still not growing, we will repeat the process.

So, the company from our thought experiment decided to run ads as the way to persuade more people to try, but they didn’t work. If they believe the reason was the implementation, then they will try again to see if a different Paid Ads Expert is better at persuading. If that doesn’t work either, they will start looking into the funnel. Maybe they could gamify the onboarding to make it more persuasive. If that doesn’t work… 

With each one of these changes, it feels like we are making progress. We are replacing something that is not working with something else that could work, so we should be closer to a combination of elements that work in unison. But careful: We will be closer to a combination that works IF, AND ONLY IF, the model we are using is right. 

But, like with the Rubik's Cube, if we are “making progress” completing sides, then we are not really closer to that combination. We are just trapped in a loop where everything we add solves something only to break something else.

And based on experience, where we tend to see how an experiment improves a metric, but the revenue numbers remain flat, that could perfectly be the case.

5. The 4th culprit: The Model

So here we have our potential 4th culprit: The model. It’s an invisible culprit because it’s so ingrained in our minds that we don’t see it anymore; every assessment and every decision starts from it without mentioning it.

It’s so ingrained in our minds because this is how we were told things work. Nobody told us that “10x + persuade to Try” is one potential option out of many, a mere hypothesis to explain how the world works. Instead, we were told that this was the truth, and all of us believed it

And we believe it because it seems to make intuitive sense, so what evidence do we have to doubt it?

Well, consider that the model was not always like that. We went through several “truths,” like the Earth that was flat, until it was not. 

During the dot-com boom, the model was “build it, and they will come”: If the product was web-based, then it was assumed to be better than any offline alternative, until it was not.

After the crash and coinciding with a drastic reduction in the cost of releasing a new product online, the model evolved into “it’s not about being better, it’s about being faster” (Lean startup MVPs, Facebook “move fast and break things”) until breaking things stopped looking like a good idea and MVPs became less “minimum.”

Then, the new tracking capabilities, combined with the prevalence of the subscription business model, led to LTV>CAC as the formula to follow. The way to increase LTV: “10x product.” The way to reduce CAC: “Better persuasion.”

Also, during this time, consumer behavior also changed. From “how to discover new products” to the tiredness of the “persuasion everywhere” to trust issues towards tech Startups as a byproduct of continuous horror stories in the media.

That is more than enough evidence to force us to stop and challenge our models.

6. Challenge, not refine

On each iteration of the “replacing something that is not working with something else that could work” loop, we adopt the latest technique that seems to be working for others to maximize the chances that, this time, it works.

One of these new techniques is Product-Led Growth (PLG). So, could that be the way to make real progress?

If you look carefully at PLG, it is just a variation of the “persuade to Try” model. PLG is “persuade prospects through easy access to the product” instead of “persuade prospects with a salesperson before they even see the product” (Free trial vs. Book a demo).

Techniques like this are simply refinements over the same model. So if the model is wrong, or it has missing assumptions, then we will do an erroneous assessment, we will include the wrong technique in the plan, and when it doesn’t work, we will blame “implementation” or if we trust the person who did the implementation, then “prospects have now easy access to the product, but they are not buying it because it’s not 10x enough”, and back to the loop.

7. Looking forward

So we are trapped with all these new techniques that worked for somebody else, iterating implementation and planning until we give up and move on to the latest one. But we keep at it because it feels like progress. We keep replacing something that is not working for something that could work, all of it while maybe we are trying to solve the “startup cube” by sides instead of by layers…

So, let’s challenge the model. Look, the fact that things like PLG worked for some and not for many others is already telling us that there are other factors that we are not considering, other models about “why people choose one solution over another” and “how companies grow”. New models that will help us choose the right technique at the right time, and even create new techniques that make more sense under this new understanding of how things work.

We need a better map to guide us so we can escape this illusion of progress and, instead, see how all our hard work becomes real progress.

8. Key Insights

• When a growth initiative fails, we usually blame: Implementation, then plan, then external factors.

• There is a 4th potential cause: The mental models we were taught about “how companies grow”.

• The current model is: “10x product + persuade to Try”.

• There is enough evidence to think that the problem is the models we use, models that lead us to use the wrong technique at the wrong time.

• And remember, you solve a Rubik's Cube by layers, not by sides.

When something we do to grow our startup fails, we try to learn from that experience so we can correct course. In theory, that will get us closer to success. But what if, in practice, what we learn is not what will get us closer to success but something else instead?

To explore that hypothesis, we will do a thought experiment that will help us understand how we think/make decisions so we can see what we are really learning.

1. FROM A TO B

Imagine a company in the process of planning how to grow. They want to go from A to B.

“A” is their understanding of the current situation, in their case they know that they have lots of happy customers that left great reviews about their product. MRR is also significant, it feels too big to be just “luck.” So their understanding is that they have a solid product in the market, a product that people want to buy.

They also did some paid ads to accelerate their growth, and so far, it has been working well; CAC is $10, and LTV is $40, so it feels like there is an opportunity there.

But they want more, they want to get to “B”, and for that they need a plan.

Based on the current situation, they decided that paid ads are the most promising way to grow, but they know it will not be easy, so the plan is:

• Hire a Paid Ads Expert

• Increase Paid Ads Budget

They mapped everything in Excel. It looked doable, so they went for it. 3 months later, it was time to check on the progress made. They were not even close to B; the plan didn’t work at all.

2. WHO IS TO BLAME?

This is where the thought experiment starts. They had an understanding of the situation (A) that lead them to a carefully designed plan, but it didn’t work at all, why do you think it failed? Or, in less politically correct terms: Who is to blame? (think your answer before reading further).

Every single time I tell this story, the answer is always the same: The Paid Ads Expert.

“Maybe he looked like an expert, but he is not that good,” or “he is good but with other acquisition channels,” or “he didn’t work hard enough.”

The fact that, out of all the potential reasons why it could have failed, the very first one that comes to our minds is “another person” is pretty telling. Food for thought.

Now, when we find a likely cause of a problem, we get stuck on it. We will not look further; he is the culprit; let's replace him and try again. So if we want to learn more about "how we think," we need to discard him as a potential cause.

So let me tell you that the Paid Ads Expert was actually really good. He used sound tactics, and he did an outstanding implementation, so it was not him. 

Ok, so if it was not the Paid Ads Expert, why did it fail?

When I ask this, the answers focus on the details of the plan:

• “Maybe the budget increase was too small.”

• “Or maybe the CAC was low because the initial volume was small, but the moment you increase the budget, CAC skyrockets.”

• “Or…”

So the second potential culprit is the plan itself, a plan devised by the Marketing Manager or the CEO/Founder if the startup is still small.

Notice how, if we had not forced ourselves to discard the Paid Ads Expert as a culprit, we might not have looked into this second set of causes. So, let’s move on and find more potential causes of the failure.

So let me tell you that she is an exceptional Marketing manager who built a sound plan on paper. There was nothing that would make you doubt it was doable.

Ok, so it was not the Paid Ads Expert, and it was not the plan. Then what was it? Why did it fail?

Once the Expert and the plan are dismissed as potential causes, then the answers quickly move into “unforeseen external factors”:

• “Maybe the channels we tried are saturated, and there is no way to grow there.”

• “Or maybe it’s the whole market that is saturated, and we should look into new markets?”

I am not saying that these are not legitimate causes. I am just pointing out when, in our thinking sequence, we consider external factors the cause of the failure.

If we don’t trust the Paid ads Expert, then the conversation stops there; he is the culprit, and if he points out that channels are saturated, then we will consider that an excuse. If we trust him, and also trust the plan, then saturated channels will arise as a potential explanation.

3. WHAT THEY LEARNED

We have this mantra: “Failure is good if you learn from it.” Sure, but what did the team of our thought experiment learn?

The answer is: It Depends. Depending on who/what they thought the culprit was, the “learning” is different. And the course correction based on the learning is also different:

• If they didn’t trust the Paid Ads Expert, then they “learned” that “Hiring a good Paid Ads Expert is hard,” and the next step will be to find a new one and try again.

• If they trusted the Paid Ads Expert but didn’t trust the manager and/or the plan, then they “learned” that “they need to make a more sophisticated Paid Ads plan,” and the next step will be to change the plan and try again, for example allocating more budget.

• If they trusted both the Expert and the plan, then they “learned” that “something is saturated,” and the next step would be to move to a less saturated place (Marketing channel, Market, etc.).

So, one experiment (hire a Paid Ads Expert, increase budget), with one result (no growth), and one “type” of learning (something is not working). However, that learning can take three different shapes; three different failure levels (implementation, plan, or external factors). And the failure level chosen is defined by the amount of trust placed on each different person who participated in the process.

In other words, What a company “learns” after a failed experiment is more a reflection of the trust between members than of their strategic capabilities.

4. REFLECTIONS

Now, a pause. We all do this; I do this too. It's not our fault; it's how we were told to operate. It's also a characteristic of knowledge; it's not easy to learn from experience; there are dozens of potential causes, and it’s impossible to change something that big, try again, and compare results because external factors keep changing, and it's not fully comparable.

The goal of this essay is not to rub salt into the wound; the goal is to make us aware of how we think/make decisions. Now that we know what we learn and what we don’t, we will not stop at the first "likely culprit." Instead, we can now look further, consider other potential causes, and give our colleagues the benefit of the doubt more often.

Also, there is still something else that could be the main culprit, a 4th potential cause. It’s hard to see, it’s something that over time became invisible to us, but it’s still there. Think about it: If it’s not implementation, it’s not the plan, and it’s not an external factor, then What is it? Can you see it?

We will explore that 4th cause in depth in the next essay; until then, you have some time to reflect on what it could be; that exercise will help you see even further.

5. KEY INSIGHTS

• When an initiative fails, we just “learn” that “something is not working,” and then we take a corrective measure based on that.

• There are three things that we usually blame as “not working”, in order: Implementation, then plan, then external factors.

• What we choose as “not working” is a by-product of trust in the people involved in the process.

• There is a 4th potential cause that could also be blamed. A cause that could become the most likely culprit in most situations. We will explore it in the next essay.

This structural situation creates a big challenge: Most people will choose a solution that they have heard good things about (Default solution) before choosing one that they have never heard about before (our startup).

The way we try to deal with this situation is by doing advertisements, sales, or content so these potential users “hear about us.”

And if these growth strategies don’t work, then we believe the problem is that “we are not doing them right,” so we keep tweaking the sales pitch, ad copy, landing pages,… until they are “right.”

The problem is that all these strategies include us (the company) telling the user how good we are, and because we are an interested party (we want to sell), these messages have NO credibility.

So now the user knows we exist, but they don’t know if we are any good, and because they never heard about us FROM ANOTHER SOURCE before, then we are back to square one: They will choose a solution they have heard good things about.

So, as a startup, we should focus first on getting other people talking about us (Decentralized Marketing or DeMark) to build “Trust of the market in us” before we can really make our own ads, sales, or content work at scale (Centralized Marketing)

And no, DeMark is not Influencer Marketing or Referral marketing because even if influencers or existing users are a third party with credibility, the very moment the public realizes they are being incentivized to promote the product, the message also loses its credibility (so these two strategies can also work when you already have Trust but not before).

So join me in this session to learn how to make others talk about your product (without paying them) so we can build Trust:

If you want to learn or Implement the Pull framework, there are different subscription plans (free and paid) to help you do so. All the details in the ABOUT page.

In this session, we will explore 11 ways to deal with that.
And the top 3 are not the ones that you expect (no clickbait here, promise ;)

Now, it’s time to get a deeper understanding of the funnel so we can do a proper diagnosis of what we currently have before we start improving it.

This “a priori” harmless thought has massive implications on how we will be perceived by users and, therefore, who will end up choosing us (or not) versus the many alternatives they have.

If we end up being perceived as “another app that I could use to do the task,” we are doomed, and no additional features, no matter how cool they are, will get us out of that place.

If we want to have a chance as a company, we need to be perceived as “one of a kind,” so their decision doesn’t revolve around “which one of the five similar alternatives should I choose?” but “this one is completely different in a really interesting way, does it fit me or not?”.

So, join me in this session to learn:
- The dangers of not saying NO
- How customers perceive products so we can see the ways to affect that perception
- TAPS: The tools at our disposal to be perceived as one of a kind

Following that logic, if we are not growing as much as expected, then the most likely reason is that the product is not “10x enough,” so we will add more features to achieve that delta value against competitors.

But what if that is not true?

And even more worrisome: What if our focus on a “10x product" is actually harming growth?

So, join me in this session to learn:

- Is “10x product” a good mental model to help us define strategy?
- If not, what mental models should we use to inform our growth strategy?
- How to structure a proper growth strategy using these new mental models
- And how to do a diagnosis, the first step in the strategic process.

But depending on where they are in the Mindset funnel, their feedback will have different meanings, and if we are not aware of that, we can misinterpret what they said and make the wrong decisions based on it.

So, join me in this session to learn:

- Who to talk to. To learn the right things
- What to ask them. To go past the obvious and get powerful insights
- And different approaches to get them on a call

But what if the key to product-market fit is right in front of you, but you haven't noticed it yet? And if it's already there, how do I find it?

Join me to discover that in this 5th session of PBD (Pull by Design)

Learn a new way to think about the user journey so you can focus on solving the root cause of what gets users stuck: Blockers.

Target Conditions template: https://pull.tips/Adoption-TC-list
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Learn how to deal with that in today's PBD (Pull by Design) session.