Summit | Dave Bailey (Founder Coach): Creating simplicity

0:00Dave Bailey:When the cost of writing code goes to zero, it means that creating a new feature is as simple as a voice command. And the tendency will be to add more and more and more. Today I'm going to share with you a very simple model that is about how to create simplicity. And if you have simplicity, you can create better products, you can scale businesses faster, and you can get better returns for your LPs. And the first is to make the goal bigger. And the reason is bigger goals beat smaller ones because as the goal increases, the number of ways to achieve it decreases. So the question is, why do we hold on to goals and plans that we know won't get us where we want to go?

0:41Dave Bailey:So what I would like to share today is what I call the hidden goal iceberg. Motivating these goals are emotions. And probably the biggest culprit of hidden goals is fear. Recently, I showed a room full of CEOs this image. It's the high jump. And I said, what does it mean to raise the bar? Someone puts their hand up and says, increasing quality standards. And everyone seemed to agree with that. But that is not what raising the bar means. We are live. We are live. And five. We are live. Four. We are live. Three. We are live. Two. We are live. One.

1:26Dave Bailey:It's complicated. These are the words you say when you're feeling stuck. Well, when a founder comes to you and says it's complicated, you know that they are stuck in some way. Maybe they're pursuing a plan that isn't working. Maybe they're dealing with competing goals. Or maybe their business just refuses to grow. It's complicated speaks to one of the biggest challenges in scaling businesses, which is complexity. And that's because simple scales and complex fails. So why is achieving simplicity so difficult? Well, in this talk, I'm going to give you a very simple process you can use that forces simplicity.

2:07Dave Bailey:And if you have simplicity, you can create better products, you can scale businesses faster, and you can get better returns for your LPs. My name is Dave Bailey, and after co-founding and scaling three venture-backed businesses, I now help tech CEOs deliver massive returns for themselves and their shareholders. And I have seen my fair share of complex situations. Just last week, a CEO came to me and said, Dave, I've been playing with Claude Cowork, and while it's clear we have a couple of years of growth ahead, I think my business is toast. So I turned to him and I said, well, what are you going to do about it?

2:47Dave Bailey:And he said, Dave, it's complicated. Many of us in the room are invested in companies that are on the precipice of being disrupted. And knowing what to do about it is, well, complicated. And so what I wanted to do is to share with you some news. It's only going to get worse in the age of AI. Because when the cost of writing code goes to zero, it means that creating a new feature is as simple as a voice command. And the tendency will be to add more and more and more.

3:23Dave Bailey:So I spend most of my time building simple mental models that take the complex challenges of scale and turn them into something simple to allow my CEOs to move forward faster. And today I'm going to share with you a very simple model that is about how to create simplicity. So think about that challenge that you're facing that's complicated, and then apply these two very simple steps. The first is you need to make your goal bigger. And that's because the complexity of all systems can be measured by the number of goals that system serves. So if you take all of the goals your systems are trying to achieve and you order them by impact, you will find the Pareto distribution.

4:13Dave Bailey:The Pareto distribution simply means that some of the goals have very little impact and some of them have a lot of impact. And with every new goal, you will increase complexity because a new goal will create trade-offs and edge cases and conflicts. And that's because at the limit, all goals are in conflict. And therefore, the only way to simplify your systems is to find out your most important goal. I call this your simplifying goal. Elon Musk says the most common error of a smart engineer is to optimize something that doesn't exist. And a lot of our goals should not exist. There are two things you can do when you've found your most important goal to increase its power of simplification.

5:06Dave Bailey:And the first is to make the goal bigger. And the reason is bigger goals beat smaller ones because as the goal increases, the number of ways to achieve it decreases. And so if you consider there are a thousand ways to increase profits by 10%, very few of those ways can actually increase profits by 10x. They simply can't do it. there are very few things that can actually move the needle. And having a bigger goal helps you find that out. The second thing you can do is you can compress the timeline. And that's because nearer deadlines are far more effective than longer ones are driving simplicity.

5:46Dave Bailey:Now, each of you has in your life a now list and a later list. But if I told you you have one year left to live, what would happen? Well, you take some of the stuff from your later list and you'd move it into the now list, and some of the stuff in your now list would cease to be important at all. That's the power of a stringent deadline. And all of the top tiers I know always employ deadlines that seem crazy because fast deadlines are the best tool for creating clarity and simplicity. So once you have a massive goal and a hard deadline, all those other goals start to become less relevant. So if the goal is I need to generate a billion in revenue, well then it's very clear that a lot of those other goals were simply requirements or often false requirements, as Elon Musk would say, to achieve that goal, or simply less important goals that you can cut.

6:50Next, once you've got a simplifying goal,

6:53Dave Bailey:you need to clean up your thinking. So one of the masters of simplicity was Steve Jobs. And Steve Jobs said, simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it's worth it in the end, because when you do, you can move mountains. So what did Steve Jobs mean when he said clean thinking? Well, clean thinking depends on what's motivating your thinking. Now in dirty thinking, you start with a plan, maybe your existing plan, and maybe you find this familiar. You start with the plan you want, then you justify that plan, and then once the plan has already been justified, you simply add more to achieve the goal.

7:40And

7:41Dave Bailey:adding requirements is exactly how to create complexity. In clean thinking, we're doing something different. We're starting from the goal. So in clean thinking, we start with the goal we want, the bigger goal, and then we challenge the plan from first principles. And that's when we can subtract anything that isn't contributing to the main goal. And subtracting is the essence of simplicity. That's what simplicity really is. It's removing everything that shouldn't be there. That's why we call it clean thinking. We're tidying up stuff that just shouldn't be there in the first place. So the question is, why do we hold on to goals and plans that we know won't get us where we want to go?

8:28Dave Bailey:So what I would like to share today is what I call the hidden goal iceberg. And as I mentioned, dirty thinking starts with a justification. Now, if you want to do something, it's quite easy to find a justification, right? We know that. And you might hear words like synergistic or it's additive. Or my personal favorite, it doesn't hurt. It doesn't hurt. But I think this is really the surface level. We need to go deeper. Now, underneath that justification is what I call the hidden goal. And the hidden goal might be simply, I want to complete something that I've started, or I want to do this exciting new thing.

9:09Dave Bailey:It could be trying to optimize your valuation, even when it's not the right thing for the business, or the goal of keeping your friends in the company, even when they're not adding value. And so given the presence of these hidden goals, clean thinking requires us to identify them and then identify the inherent conflict in that goal. Because as I said earlier, all goals are ultimately in conflict. But that is not the end of the story. motivating these goals are emotions. And probably the biggest culprit of hidden goals is fear. Now, it might be fear of disappointing customers, or it might be fear of disappointing a teammate or your investors.

9:54Dave Bailey:It could be the fear of missing out on an exciting new opportunity, or it could be the fear of failure and having to say, I'm giving up. All of these will drive us to pursue goals and plans that won't work, and the only way to deal with fear is to face it. Clean thinking requires facing your fears and removing the goals that shouldn't have been there in the first place. So hidden goals, the presence of a hidden goal doesn't necessarily mean that the thinking is dirty, but it does mean you're going to have to work a lot harder to clean your thinking and make sure you're working backwards from the goal and not forwards from the thing that you want to do.

10:39Dave Bailey:Recently, I showed a room full of COs this image. It's the high jump. And I said, what does it mean to raise the bar? Someone puts their hand up and says, increasing quality standards. And everyone seemed to agree with that. But that is not what raising the bar means. Raising the bar is a subtraction tool. Raising the bar doesn't allow someone who can jump 10 meters to suddenly jump 10 meters and not 10 meters. That would be very impressive. of two meters to suddenly jump two meters and 10. What it does, by increasing the bar, you subtract all of the players who can't meet the bar until you're left with the one that can.

11:17Dave Bailey:That's what raising the bar means. It's a tool for subtraction, and therefore, it's a tool for simplicity. That's what we've been doing in both steps. In step one, by making the goal bigger, we made all those other goals seem irrelevant in comparison. And in step two, we cleaned up your thinking, which allowed you to say goodbye to goals and plans that are no longer relevant as well. So the next time you hear it's complicated, it's time to clarify your most important goal and make it so big that it makes everything else irrelevant. And clean up your thinking so that you can remove all the plans that will not get you there.

11:57Dave Bailey:And if you do that, you'll find it's actually simple. But as Steve Jobs said, simple is hard. So the path to simplicity is to raise the bar, have big goals, and subtract everything that shouldn't be there. And if you can do that, you can create a simple company that scales and avoid creating a complex one that just won't.