Business strategy with Hamilton Helmer (author of 7 Powers)

1. 0:00 – 4:08

   Hamilton’s background

   1. LRLenny Rachitsky0:00

      (instrumental music) ... Warren Buffett famously said in business...

   2. HHHamilton Helmer0:01

      "I look for economic castles protected by unbreachable moats."

   3. LRLenny Rachitsky0:04

      Power requires a benefit and a barrier, so he's taking care of the benefit part by saying a castle. You have to have a pretty good understanding of why it's a castle and not a shack. In a lot of decks it's like, "Oh, we have the most amazing team. We move the fastest." You mentioned how rarely is that actually a power.

   4. HHHamilton Helmer0:20

      You're on a treadmill, and if you stop running that treadmill, you get creamed, but it's not power. The things that drive operational excellence can be mimicked.

   5. LRLenny Rachitsky0:30

      Let's actually talk about achieving these powers.

   6. HHHamilton Helmer0:32

      There's this thing called power progression. There are times when certain types of power are available. The path to power is where the rubber meets the road.

   7. LRLenny Rachitsky0:42

      (instrumental music) Today my guest is Hamilton Helmer. Hamilton is a legend in the world of strategy. He's the author of Seven Powers, which outlines a framework for identifying and developing sustainable competitive advantage. It is widely considered to be the best book on strategy, and people like Patrick Collison, Peter Thiel, Reed Hastings, Daniel Ek, and so many more leaders credit the book and Hamilton's teachings for helping them build durable, lasting companies. In our conversation, Hamilton shares what sources of power startups can start developing early, which types of power companies often think they have but they don't, how power relates to strategy and moats, when to start thinking about power as a startup, and also what individual product managers and non-leaders can do about these insights about power, also how Hamilton sees AI impacting barriers to entry and the sources of power. He also gives a preview of his new book that he is working on currently and so much more. With that, I bring you Hamilton Helmer after a short word from our sponsors. And if you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube. It's the best way to avoid missing future episodes, and it helps the podcast tremendously. This episode is brought to you by WorkOS. If you're building a SaaS app, at some point, your customers will start asking for enterprise features like SAML authentication and SCIM provisioning. That's where WorkOS comes in, making it fast and painless to add enterprise features to your app. Their APIs are easy to understand so that you can ship quickly and get back to building other features. Today, hundreds of companies are already powered by WorkOS, including ones you probably know like Vercel, Webflow, and Loom. WorkOS also recently acquired Warrant, the fine-grained authorization service. Warrant's product is based on a groundbreaking authorization system called Zanzibar, which was originally designed for Google to power Google Docs and YouTube. This enables fast authorization checks at enormous scale while maintaining a flexible model that can be adapted to even the most complex use cases. If you're currently looking to build role-based access control or other enterprise features like single sign-on, SCIM, or user management, you should consider WorkOS. It's a drop-in replacement for Auth0 and supports up to one million monthly active users for free. Check it out at workos.com to learn more. That's workos.com. This episode is brought to you by Vanta. When it comes to ensuring your company has top-notch security practices, things get complicated fast. Now you can assess risk, secure the trust of your customers, and automate compliance for SOC 2, ISO 27001, HIPAA, and more with a single platform, Vanta. Vanta's market-leading trust management platform helps you continuously monitor compliance alongside reporting and tracking risks. Plus, you can save hours by completing security questionnaires with Vanta AI. Join thousands of global companies that use Vanta to automate evidence collection, unify risk management, and streamline security reviews. Get $1,000 off Vanta when you go to vanta.com/lenny. That's vanta.com/lenny.

2. 4:08 – 8:24

   When power becomes important

   1. LRLenny Rachitsky4:08

      Hamilton Helmer, thank you so much for being here. Welcome to the podcast.

   2. HHHamilton Helmer4:12

      Hi, Lenny. A pleasure to be here.

   3. LRLenny Rachitsky4:14

      It's even more my pleasure. I want to start by talking about when power becomes important. When do you recommend founders start thinking about power in terms of pre-product market fit, post-product market fit? Is it worth spending time thinking about power early? Obviously, it's good to think about a little bit, but how much and how seriously should founders be thinking about it before they found something that people actually want?

   4. HHHamilton Helmer4:38

      One of the things that has really surprised me in the last five years has been that my understanding of the answer to that question has changed. And before, I thought it was you do product market fit and then, and then, and then you do strategy, and, and if you try and put strategy before product market fit, it, uh, it doesn't... there... i- there's not much you can do with it. That's wrong. Uh, actually, one of the, I mentioned before, one of the great pleasures for me in my work is being able to talk to company founders. Um, and, and one of the things that has surprised me is that conversations with them, even at an early stage, about strategic matters have a, a richness and relevance to me that was unexpected. And, uh, and, and founders are practical people, right? I mean, they, they're... it's very hard to do what they're doing, and they have to be extremely focused and choose what, what's worthwhile spending time on. And so in observing their reactions and the dialogue, I, I could see that there was something going on that was meaningful to them.And, uh, the... Uh, this second book we're working on will tease out why that's so more. But, but, but the answer to your question is when should you thinking about... Uh, thinking about this? Uh, the answer is always.

   5. LRLenny Rachitsky6:20

      Mm-hmm.

   6. HHHamilton Helmer6:21

      And that's an... That's an... Th- that's an odd answer, right? And so even before you have product market fit, it's worth thinking about strategy. Now, it's not strategy in the sense of sort of this fully articulated s- strategic planning, "We're gonna do this. These are gonna be the competitors. This is gonna... How we're gonna answer them. This is how we'll price." N- n- not like that at all. At the earlier stage, you can imagine, you have wildly more degrees of freedom. And the questions are, of the business propositions that you're thinking of in trying to get to product market fit, what are the underlying characteristics that might tilt them towards the availability of power or not? Uh, and, and, uh, um... And those actually, uh, are meaningful conversations. Uh, and certainly by no means certain, right? You're, you're tilting probabilities. You're not... You're not creating, uh, uh, determinative things. And then later on once you've already as- have product market fit, then there's... Then you have to understand your source of power if you're... If... To understand what competitive position is, because then you have to establish that. And then later on in a, a more stable phase, when you're in a stability phase of business, you have to know what your... What your, uh, source of power is, if you have one. Because you have to know how to defend it. And then also, it is also the foundational knowledge that you need for if there's another step. Because another thing that's quite surprising about iconic businesses is they often have a, a second act or third act or fourth act.

   7. LRLenny Rachitsky8:09

      Mm-hmm.

   8. HHHamilton Helmer8:09

      I mean, think of AWS or Intel going into CPUs or Apple going into iPhones. Uh, all, all not the origin of business, right? And that's... And that's actually common, not unusual. And that's starting the process all

3. 8:24 – 12:09

   How strategy relates to power

   1. HHHamilton Helmer8:24

      over again.

   2. LRLenny Rachitsky8:24

      Awesome. You mentioned this word strategy. I wanna set a little foundation here. How does strategy relate to power when people are thinking about these two concepts? And then do you have just like a, a nice definition of what strategy is? Everyone's always just like, "What the heck do you mean when you're talking about the strategy?"

   3. HHHamilton Helmer8:41

      Well, you know, as I said, I'm... I'm sort of a concept person, right? And so when you develop concepts, you have to be, uh, very highly constrained by their usefulness. Uh, and you know, I'm a great fan of the great mathematician John von Neumann, and, and he had... He had a view which really irritated a lot of mathematicians, which is that if, um, if mathematics wasn't guided by what was useful, it would become, I think... I think the word he used was aesthetic, too aesthetic. Um, and, and this... And so any concept developments like that, it needs to be guided by usefulness. And so in, in dealing with strategy, the question is, what domain of things do you want to include in that conversation? Because the term is ubiquitous in business. I mean, uh, do a Google search sometime. I've done one recently on Google Scholar for the word strategy, and you'll get, you know, a million... Uh, I'm n- not exaggerating, a million hits, right? And, and so strategy for some people might mean everything that gets to the pile... Uh, gets to the top of a pile in terms of what you have to do that year. Everything is... And that's a perfectly legitimate, uh, definition, you know. Uh, but, but what, what I have found is that there is a very important narrowing that makes it much more useful. So that's coming back to what I was saying about John von Neumann, makes it much more useful to business ver-... So, uh, my view is that you, you want to focus... Uh, uh, it's very useful for a business to focus on the fundamental determinants of val-... Of business value. And it... And that's, uh, that's an arbitrary choice. It could be something else, but, but I can tell you from decades of business experience that that narrowing is very useful. And then so, so once you make that, that un... Once you reach that understanding, it tells you some important things. So if you understand what drives business value, I mean, if you do the math of it, right? It's NPV of cashflow, right? Expected cashflow. And, and what that, that tells you is that strategy is a lo- longtime concept You, you're looking far out in the future. So think of Pearl Harbor. Pearl Harbor for the Japanese was this enormous tactical conce- uh, success. They just destroyed the US, uh, uh, ability, naval ability in, in the, uh, Pacific Ocean. A- and the worst possible strategic move, because it completely solved Franklin Delano Roosevelt's problem of how he could get the e- US citizens on board to, uh, uh, attacking Hitler. The strategy of it was, was US' industrial might would eventually win the war, and, and population. And the difference there is time constant. Tactical short, strategy long. And so, so if you focus on value, uh, that, that narrows what you think about and allows you to get rather concise and offer up advice to founders about what they need to pay attention to.

4. 12:09 – 14:46

   How power informs strategy

   1. LRLenny Rachitsky12:09

      So then how specifically is power informing strategies? Like the way you think about it, focus on your power, and that will inform your strategy?

   2. HHHamilton Helmer12:17

      Earlier, I talked about these economic structures that provide durability of return, uh, in, in terms of, uh, refuge from withering arbitrage of everybody who wants to eat your lunch, right? And so, that's what power is. So you have to understand what is an economic... um, I'm, I'm, I'm get... you're asking me questions that get pretty deep into theory here. I hope you don't... this isn't too conceptual, but you have to say... you have to understand how competition takes place and say, what is it that creates, uh, uh, some kind of refuge? And what it is, is there's something in what you do that, uh, gives you either a cost or price advantage over, uh, others. So let's say you're lower cost. And that's, that's, that's the benefit. And the barrier side is that there's something that is durable about that, that makes it over time that you can't, um, you, uh, that competitors can't take away from you. So benefit and a barrier, we call it the to be or not to be test, right? And if you have that, you can think of that immediately translating into value, because that will give you good margins out into the foreseeable future, uh, which is what you're after. Um, and so I, I don't know if that, that, so that's, we're getting into the weeds here, but that's, that's what it's about. And so power is those structures. Uh, let me give you a quick example. So one I use in the book, so, so, uh, Netflix with scale economies, right? They have more subscribers. Uh, the cost of their content is a very large fixed cost, about 50% of their cost structure every year. Uh, they can take that fixed cost and spread it over more subscribers. So their cost per subscriber is less, so, uh, versus somebody with fewer subscribers. So if they were, if, if, uh, um, if they face the same prices as their, uh, for, uh, subscriptions as their competitors, they will be more profitable. So that, that's, that... and, and that's a scale economy, and that, that's an example of a type of power, um, and, uh, a, a common one, I'd say. But these things are hard to achieve, right? 'Cause there's kind of the holy grail.

5. 14:46 – 21:13

   The sequence of powers

   1. LRLenny Rachitsky14:47

      Let's actually talk about achieving these powers. Essentially, the argument here is your power informs everything you do, because this is the thing that'll allow you to stay durable and competitive and last. There's seven powers. We're not gonna talk about all of them. If you wanna go understand each of them-

   2. HHHamilton Helmer15:04

      Yeah.

   3. LRLenny Rachitsky15:04

      ... go read the book.

   4. HHHamilton Helmer15:05

      Let's not. (laughs)

   5. LRLenny Rachitsky15:05

      Yeah. I think-

   6. HHHamilton Helmer15:06

      That conversation always goes too long.

   7. LRLenny Rachitsky15:08

      Yeah, exactly. So what I'm wondering is, okay, so say you're looking at this list of seven powers and you're a specific type of startup. Do you have kind of a heuristic that tells you, here's most likely the power and set a subset that will most likely be of, be an option for you? Like B2B SaaS companies, is there like a smaller subset, like probably one of these has to be one of your options, versus B2C?

   8. HHHamilton Helmer15:32

      That's a, a great question, Lenny. Um, uh, and because I think the, the path to power is, is, you know, is where the rubber meets the road, and it's, and it's very complicated, uh, and nuanced. But, uh, I'll give you a few, uh, few thoughts along it.

   9. LRLenny Rachitsky15:49

      Sure.

   10. HHHamilton Helmer15:49

       And, and frankly that, the, our next book, The Second Invention, that's what it's about.

   11. LRLenny Rachitsky15:54

       Yeah.

   12. HHHamilton Helmer15:54

       It's about the path to power.

   13. LRLenny Rachitsky15:55

       Oh, man.

   14. HHHamilton Helmer15:56

       The entire book.

   15. LRLenny Rachitsky15:57

       Can't wait to read it.

   16. HHHamilton Helmer15:58

       So, uh, in, in, in the book, there's a thing called power progression, which, which says there are... it, it tells over the cycle of a business, there are times when certain types of power are available. Um, and, and, and, or the, uh, converse of that is times when they're not available. And so there are some that only are really available in the f- in the al- uh, when you reach a stability phase of a business, pretty far out there. And so if you're s- if you're starting a company, take those off the table. So the, those two are branding and process power. So, so, so, uh, often, uh, you know, I find that there's a confusion about this because brand recognition for a startup may be incredibly important, but you can get brand re- recognition by buying an ad in the Super Bowl. That's not power, but you paid for it. And so, so take, take branding and, and, uh, um, and process power off-... and process power is really sort of operational excellence on steroids kind of, um, and usually is imitable, so it's u- it's, so it's, it's usually not. So take those off the table. And then a c- kind of resource, uh, type of power, which is you have something that is of value that if you transferred it to somebody else, it would be of value to them, but you own the rights. So the, the barrier is law, for example. Um, like my, or, or, or lack of knowledge from others. So and, and there are classes of businesses that are like that. So prescription pharmaceuticals, right? If you have, if y- if you're the first person to come up with Viagra, that's worth a lot of money. If you took that license and gave it to somebody else, it'd be worth a lot of money to them. But that's a different class, and it's usually not the types of things that, um, that either I'm, I'm dealing with. And it's, and it, and it's, and it's kind of obvious to everybody. So the key challenge there is can you invent a pharmaceutical that, uh, that's, that's effective for, uh, for a large market? And so, so, um, so you can take those three off the table, and that then leaves counter positioning, scale economies, uh, uh, switching costs, and network economies. And the important thing to keep about, uh, in mind there is that they're sequenced. So...Almost every startup that you wanna deal with starts with, uh, counter positioning because remember what mar- product market fit is primarily is, uh, substitution. It's you are coming up with a way to satisfy a more or less existing need in a novel way that creates more value. Now, there are sometimes you in- cr- you tap into entirely new needs, but it's not so often. I mean, you know, Amazon was up against brick and mortar stores, you know, uh, Google was- was- was up against, uh, um, Yahoo!, um, uh, you know, um, and so on, uh, y- uh... And- and so you're usually substituting, and that's, and that substitution, uh, is so yo- so your competition at that point is functional competition. And- and if you don't have counter positioning at that point, you're pretty high risk from an incumbent who already has the capabilities necessary to do that, they just have to extend their product or, you know, do this or that. And- and so- so it... But counter positioning is the refuge from that, and then you go into the other three types of power. Uh, scale economy, switching costs and- and, uh, count- and, uh, network economies, and those depend on- on your- your scale relative to competitors. Um, th- this is pretty cursory, uh, you know, but- but that- but that's what I'd say. Uh, focus on those four. And- and I would- I would recommend that you think pretty hard about whether you think there's- you have counter positioning to start.

   17. LRLenny Rachitsky20:08

       Awesome. I actually wanna double down on that thread, but just to summarize, I have the list here. Basically you're saying if you're an early stage startup before to really, that are actually potential powers for you, at least early on are counter positioning, which your point is you could just start with that. That's essentially positioning and business model design, which happens at the beginning. And then you can start to think about network economy, scale economy, switching costs as powers.

   18. HHHamilton Helmer20:33

       Right. And- and- and I... Uh, you've done the right thing by not having me go through and define each of those, but- but we'll, but your listeners will- will need to sort of go back to my book and see what those things are to get, you know, we're- we're going through the shorthand as we should, but- but, uh, but all of what we've said won't be completely obvious to them.

   19. LRLenny Rachitsky20:54

       Yeah. I think a- a simple Google search I find just gives you a very simple definition of these powers.

   20. HHHamilton Helmer20:58

       Yeah. That's right. There- there's some people have done some really good summaries of this stuff.

   21. LRLenny Rachitsky21:02

       Or- or ChatGPT even better in a lot of cases.

   22. HHHamilton Helmer21:05

       Right. Right. ChatGPT, if they- if they get it right, sometimes I find they get there.

   23. LRLenny Rachitsky21:09

       That's right. (laughs)

   24. HHHamilton Helmer21:10

       They're- they hallucinate the... (laughs)

   25. LRLenny Rachitsky21:11

       Hallucinate an eighth power.

6. 21:13 – 24:39

   Common misconceptions

   1. LRLenny Rachitsky21:14

      You mentioned how some companies think they have a certain power or they, or it's common to think you have a certain power. If you look at every startup deck, there's always like, here's our moat, here's the way we're gonna have barriers to entry. I'm guessing in almost every case they're delusional about the power that they actually have and the power they think they'll have. Do you also find that to be true that often founders are com- like wrong about how much barrier they've actually created, and is there a power you often find most wrong and mistaken?

   2. HHHamilton Helmer21:43

      Yeah. So I- I- I agree with your observation, but I don't wanna be unkind.

   3. LRLenny Rachitsky21:48

      (laughs)

   4. HHHamilton Helmer21:48

      So, I mean, there- there are two things to keep in mind here in terms of making people feel better about that- that, uh, that incorrect slide in the deck. One is that founders have to be optimistic, right? Uh, I think it's an important quality that they- they maybe understate the risks a little bit, you know, but- but they're so committed to, "I'm gonna do this thing," that they- they- they go through that, and that may give them an advantage over a large corporation trying to do the same thing. The other is that, um, despite the name Seven Powers, which makes it sound like, oh, you can kind of sort this out, actually understanding whether or not there is a type of power in place is hard. Um, uh, I mean, if I've, I did it with my colleagues here at Strategy Capital and we're looking at a well-known company, it might take us weeks to answer that question for a single company. Uh, and it- it comes down to the hard part is industry economics is what really are the economic relationships, and it's very hard. So- so with- with those caveats that sort of, uh, uh, give them some courtesy, uh, I'll say some- some of the obvious ones are, I mentioned before, people sometimes think they have branding power, which that... But- but another one that I think I've heard you mention is- is, uh, people often think that they get, uh, scale economies through data. And I'd say that that's, uh, possible, but it's rare. And- and the reason it's rare is not because there aren't scale economies in data, but rather that the range of, uh, scale that the existing competitors have are often large enough to be able to put them in- in a, in, uh, shouting distance of each other so that the- the differences in their cost per unit is not that great.

   5. LRLenny Rachitsky23:49

      Mm-hmm.

   6. HHHamilton Helmer23:50

      The curve flattens, in other words, which is typical of any... 'Cause the most common scale economy is you've got a big fixed cost and then you, and you prorate that and, uh, and as you get more and more scale, the, uh, the percentage cost advantage of a fixed cost advantage like that goes down, and that- that often... So that's- that's- that's a pretty frequent one that we see. We- we sort of laugh whenever we say, we hear somebody say they have a flywheel, which kind of gives you the idea of network economies. There are often flywheels, the ones that really are material are-... rare. The key thing here is materiality, not whether the flywheel exists, but whether the effect is strong enough to really tilt returns.

   7. LRLenny Rachitsky24:38

      Hmm.

7. 24:39 – 26:58

   Network effects vs. network economies

   1. LRLenny Rachitsky24:39

      I was actually gonna ask about that one 'cause in software and social consumer products, network effect is always the pitch. Once we get big enough, we create this huge barrier. You mentioned just now you often find that's not actually true, it's rarely something that'll be a, become a barrier. Is there anything else you find with network? And I know, uh, your power is called network economies, not network effect. I guess just to be clear, do you, are these kind of the same thing in your mind but different words or-

   2. HHHamilton Helmer25:02

      Yeah, kind of.

   3. LRLenny Rachitsky25:03

      Okay.

   4. HHHamilton Helmer25:03

      I mean, I, I, I mean, I, I have called it a type of power, so I, so, so for me, it's only those things which clear the significance barrier.

   5. LRLenny Rachitsky25:15

      Hmm.

   6. HHHamilton Helmer25:15

      Uh, a hurdle rather, um, that they're a large material, right? And so, uh, there, there are lots of things that I would say have network effects but not network economies.

   7. LRLenny Rachitsky25:26

      Oh, interesting. Wait, can you speak to that? So there is a difference between these terms network economies ?

   8. HHHamilton Helmer25:29

      Yeah. So for me, the difference is materiality, you know, is that, that, uh, whether, whether it's the, uh, the, the value benefit is large enough-

   9. LRLenny Rachitsky25:41

      Wow.

   10. HHHamilton Helmer25:41

       ... to engender a, a price delta significant enough to, to give you materially different margins into the future.

   11. LRLenny Rachitsky25:50

       Basically, like, does that network effect have an actual impact on your business and your ability to price (overlapping speech) -

   12. HHHamilton Helmer25:55

       Yeah, uh, it's not an impact, it's a material impact.

   13. LRLenny Rachitsky25:58

       Yeah.

   14. HHHamilton Helmer25:58

       So it, it could have, if it's a penny to your bottom line, that's one thing. If it's, if it's a billion dollars, it's something else.

   15. LRLenny Rachitsky26:05

       Wow, that's actually really interesting. Is there an example of a company that comes to mind, like they had network effects but not network economies as a power?

   16. HHHamilton Helmer26:13

       Oh, I, I think you could turn almost anywhere and get some-

   17. LRLenny Rachitsky26:17

       Mm.

   18. HHHamilton Helmer26:17

       ... some modest network effects. In, you know, any, any platform business would probably likely have some modest network effects. Uh, you, you asked me earl- or in the material you sent me about Uber and Lyft, I'd say that, you know, they probably have, uh, network effects involved, but, but, uh, not network economies.

   19. LRLenny Rachitsky26:40

       Wow, that's interesting. And the reason you're saying they don't have network economies is because they're still so competitive, they're still have to spend so much money to stay ahead and so the network effect is not as-

   20. HHHamilton Helmer26:51

       Yeah, the, um, right, the, the advantage that they get is not, uh, uh, not

8. 26:58 – 29:16

   Uber’s success

   1. HHHamilton Helmer26:58

      material, right?

   2. LRLenny Rachitsky26:59

      Wow, that's so interesting. Kind of along those lines, it's so interesting to see Uber and Lyft these days. In theory, they both had some sort of strong network effect. I was just looking, so Lyft is, uh, five percent the market cap of Uber. Is there a lesson from just what it is that allowed Uber to just win and kind of run away with the market essentially?

   3. HHHamilton Helmer27:25

      I'm not entirely sure. I'll, I'll take a guess, but I, I'll cons- but take it as sort of a uninformed guess. I haven't really studied it carefully. Um, uh, I think that over time they're, they're... Uh, if I had to guess, I'd say they're probably modest scale economies in the business, and over time, Uber has just, uh, very successfully played a war of attrition, and that's both been in how they run their busi- they, they, they made one sort of initial misstep, which is they misdefined their business. They said it was international transportation and it's not. That business is extremely geographically specific, you know, if you're, if you have a, a, you know, a, a great position in the Bay Area, it doesn't help you in London, right? And so, so their forays into China and everything really didn't make... But, but I, but they pulled back on that, focused down on, on understand, uh, understanding their source of power which was a geographically specific scale economy. And then they've done interesting things like Uber Eats where they've tried to, you know, utilize the platform that they have to, uh, get other opportunities for the, the one side of their platform, the drivers. And so, so I, I, I, you know, if, if I had to, if I had to guess, I'd say it was a well-played war of attrition with modest scale economies.

   4. LRLenny Rachitsky29:02

      And is that attrition coming from a source of power or is that just like a broader, more strategic ?

   5. HHHamilton Helmer29:06

      Yeah, it, it, it only works because they, there are modest scale economies. If there weren't any, then they-

   6. LRLenny Rachitsky29:12

      Right.

   7. HHHamilton Helmer29:12

      ... if they did all this stuff, they're still have equivalency.

9. 29:16 – 31:12

   Moats vs. powers

   1. HHHamilton Helmer29:16

   2. LRLenny Rachitsky29:16

      Got it. Let me go in a slightly different direction. Uh, we've talked about power, we've talked about strategy. There's also, there's this word moat that comes up a lot. Everyone's always trying to build a moat. In your mind, is a moat equivalent to a power? Is there a difference when people talk about these two?

   3. HHHamilton Helmer29:30

      Power requires a benefit and a barrier, right? You have to, you have to have something that you do that, that, uh, that, that gives you a better outcome than your competitors, lower cost or higher price. And then something that, uh, makes it impossible for somebody else to mimic that. So moat is the second. So it's, it's not, uh, it's not synonymous with power because you can have a, you could have a moat around a very undesirable piece of property (laughs) and, uh, wouldn't get you far. So, so but, uh, and, and but I think it is pretty synonymous with barrier. I, I, you know, I think, uh, Warren Buffett sort of, or Charlie Munger, who I admire enormously, I think, uh, get credit for sort of popularizing those concepts and, and, and I think the way they think about it is, is, is good. I'd say that, that, um, seven powers is, uh, probably more systematic and comprehensive in saying that. I don't think there's this wonderful... I, I don't know if you read any of the Microsoft antitrust literature that came out of the, the-

   4. LRLenny Rachitsky30:41

      Nope.

   5. HHHamilton Helmer30:42

      ... their, their lawsuit, but, but-Uh, there was a, a communication between Bill Gates and, and Warren Buffett, where Warren Buffett was saying why he couldn't invest in Microsoft, 'cause he just didn't understand it, right? And so that meant he didn't, you know, the idea of network economies and what the moat was there, he didn't understand. So I, I think, but, uh, but I, but, but I think the, uh, concept of a moat is a good one, the idea that you have something that gives you a refuge from, from, uh,

10. 31:12 – 37:51

    Strategies for non-leaders to leverage power and strategy

    1. HHHamilton Helmer31:12

       uh, competing forces.

    2. LRLenny Rachitsky31:14

       In terms of Warren Buffett, I found the quote about moats. Warren Buffett famously said, "In business, I look for economic castles protected by unreachable moats."

    3. HHHamilton Helmer31:22

       Right. And so, he's, he's... So he's taking care of the benefit part by saying a castle, right?

    4. LRLenny Rachitsky31:27

       Mm-hmm. Right, he's got it covered. (laughs)

    5. HHHamilton Helmer31:28

       And, but, but, but one of the tricks to understanding power is you have to have a pretty good understanding of why it's a castle and not a shack.

    6. LRLenny Rachitsky31:38

       Mmm.

    7. HHHamilton Helmer31:39

       So give- I'll give you a Netflix example. So, so a company I, I admire a lot, you know, and I, I think if... Some of the things that they had to do to develop their business were so important for their business, uh, that aren't, uh, that don't guarantee a castle. So, so for example, UI development there, that, that, uh, they spent an enormous amount of resources on trying to get just the very best UI, I mean, a zillion A-B tests, all kinds of things. Their recommendation engine, everybody's kind of knows the story about how that, that went on, you know, their interface with the content world and all this. So those things, uh, those things are important, they are things they have to spend a lot of time and resources on, but they can largely be mimicked. So when, when Netflix in an earlier phase was fighting Blockbuster, when Blockbuster finally threw in the towel and said, "Well, we, we darn well better do a mail-order DVD business," if you looked at the Blockbuster site, their UI site, you couldn't tell it different from Netflix's, they just copied it. And so all that thoughtfulness about which things you put first and how you structure it and all that to make this suitable was mimicable. And so that's an understanding of looking at the properties you have and trying to figure out if they're a castle or a shack.

    8. LRLenny Rachitsky33:05

       Mm-hmm. I love that. This episode is brought to you by Paragon, the embedded integration platform for B2B SaaS product development teams. Are your users constantly requesting new integrations with other SaaS platforms that they use? Unfortunately, native product integrations take months of engineering to build and the maintenance never ends. Paragon enables your engineering team to ship integrations seven times faster than building in-house by removing the complexities around authentication, messy third-party APIs, and debugging integration errors. Engineering teams at companies like Copy.ai, Cinch, tl;dv, and over 100 other SaaS companies are using Paragon so they can focus their efforts on core product features, not integrations. The result? They're shipping integrations on demand, which has led to higher product usage, better retention, and more customer upsells. Visit useparagon.com/lenny to see how Paragon can help you go to market faster with integrations today. That's use, P-A-R-A-G-O-N, .com/lenny. So let's take this concept of seven powers. A lot of people listening to this are just like individual contributor product managers on teams building new products or iterating on products they already have. What do you suggest they do with this knowledge of there exists these ways to build benefits and barriers? I'm working on, say, a new product. What do you recommend they do? What's like something they could do this week, next month, to infuse these lessons into the products they're building?

    9. HHHamilton Helmer34:41

       I'd say there are a few, and it's a little bit different. You know, I- I- I, I'm not a great fan of the strategically driven organization because it, it... That idea, uh, because it fuzzes over, uh, how this knowledge is useful at different stages in the business. And so for somebody in that position, say a product manager in an existing successful business, so, uh, it's important in terms of just understanding their business to know what their source of power is because they... And, and that can inform them about, you know, what it is that they're working for, and also they may see things. Since they're down in the weeds, they may see things that, that are important to that, that they need to bring to other people's attentions, 'cause they're the ones that really have the knowledge of what the heck is going on. There's another aspect. I mentioned before this idea of transforming, of starting up entirely new things. And usually, uh, not... I wouldn't say usually, I'd say, uh, it's not uncommon for ideas about that to bubble up from, from, uh, down below, you know? And so, so that's, that's, that's another source. If you're... So let- let's separate a business into three phases. Uh, you know, origination, takeoff, and stability. So the answers I've given are more in the stability phase. In the, uh, in the takeoff phase, let's say you've launched a product, you've gotten customer traction. Now you're in a phase where there's just very rapid growth, probably other entrants like you. What are you facing? What you're facing is... Remember that underneath all of this is, uh, changing technology, that's what, that's what made the product market fit possible in the first place. But that doesn't just stop.... that key, if you're, if you're in a technology wave, often there are all kinds of offshoots, both for you and the complements to your business and everything else going on at the same time. And, and, uh, to, to win at that stability phase, which is really a market share win, you ha- you have to be aware of those and understand, okay, we have to incorporate this new ph- new feature. Or maybe now things have gotten to the point where this new market segment is... our product is attractive for it, whereas be- before it wasn't. This is meat and potatoes stuff for somebody at that level. And, and it may well be the decisive element in terms of whether you win that market share battle with the other contenders. Um, and so you're, you're, you have a very, very important role at that point. And so, so I'd say, I'd say the first thing to do i- with your question is to make sure you think about the different phases of this and then, and then ask what those responsibilities are.

11. 37:51 – 39:27

    Advice on how to become a strategic thinker

    1. HHHamilton Helmer37:51

    2. LRLenny Rachitsky37:51

       What about for people that are just trying to get better at being strategic, thinking strategically, something every product leader is always encouraged to do, become a better strategic thinker, get b- build this muscle of strategy. What do you often advise to people to just get better at this stuff? Obviously read your book.

    3. HHHamilton Helmer38:08

       Ah. Rea- read the book and then have conversations with your colleagues-

    4. LRLenny Rachitsky38:12

       Mm-hmm.

    5. HHHamilton Helmer38:13

       ... about the topic. 'Cause it, as you sort of, you know, internalize what that means and how... You know, just have conversations with them about do we really have this kind of power? What's going on here? What's important? What isn't? You know, i- it, those conversations tend to, to al- allow you to sort of get a better grip on things. I mean, at, in, in the case of Netflix, uh, Reid actually had me come in and train the top 100 people in Netflix in strategy. We actually ra- I actually ran classes in the company. But that's unusual, I'd say. Um, and I didn't, and I didn't have the book yet. And so, so I think the book, uh, gets people, you know, pretty far down that path already.

    6. LRLenny Rachitsky38:55

       And you don't do that anymore? Imagine if someone wanted to do that today, not an option.

    7. HHHamilton Helmer38:59

       I sadly don't have-

    8. LRLenny Rachitsky39:00

       (laughs)

    9. HHHamilton Helmer39:00

       ... time. I, I do, I mean, I do often do, you know, fireside chats at company meetings and that kind of thing, but not a full, full-blown course. And I'm not teaching at Stanford anymore either, um, and so, so, uh, I, I, I don't. I, I'm, I enjoyed that, um, immensely, wonderful people to work with, but, but, uh, but, um, sadly I don't have the time.

    10. LRLenny Rachitsky39:23

        You're about to get a lot of requests for fireside chats, I hope you're ready.

12. 39:27 – 45:43

    AI’s impact on the seven powers

    1. HHHamilton Helmer39:27

       (laughs)

    2. LRLenny Rachitsky39:28

       You mentioned AI at some point in our chat. I'm curious how you think AI is gonna change your seven powers framework. Do you think defensibility goes down in general? Will certain forms of power become more important or harder to achieve? How do you think about AI?

    3. HHHamilton Helmer39:44

       Yeah, it's a great question. I mean, we're all in this phase of wondering exactly how generative AI is gonna play out. Um, my own view, uh, currently, I, I don't see any change in seven powers from it, um, in terms of, uh, an eighth power or something it... But, but the issues that it brings up, like scale economies, uh... I mean, think of scale economies, you know, if, if you have to, if you have a fixed cost of, of, of, uh, trying to develop a model of a billion dollars or something, you know, or, you know, or, a- and network effects, you know, will, will, uh, AI models develop so that they learn, uh, in a way that for one user's interaction helps another user's interaction? That would be a, a powerful network economy. Or if it learns, if you think of, um, uh, (clears throat) you know, if, if it learns about you and, and becomes a better psychiatrist or something, then that's, that's a switching cost, right? So all these things are relevant to which business models will work and, and I find that useful. But I think in general, the way I think about it is it's a, it's sort of a standard form of, of potentially very powerful technology that is being introduced into the business world and just asking how that plays out. And I, you know, I, I currently tend to think of that there's sort of three w- three types of plays. There's the, there's the company that's the technology play itself, so if you think of microprocessors, that would be Intel. If you... there's the companies that wouldn't exist without the technology, so for mi- for, for, uh, sem- semiconductors, that would be Microsoft, and then there are the companies that, that, uh, utilize the technology but have existed before and after. So for semiconductors, it would be automobiles. They use a ton of chips, but there were still cars before, after. And so, so I'm, I'm kind of of the view, I'm very much uncertain at this point, that, that generative AI will... its biggest impact will be that tertiary class. It will be used in a lot of things that, um, uh, that existed before and exist after but are made better by it, like semiconductors and automobiles. And so it reminds me sort of if you think of really big technology shifts li- like this, it reminds me sort of electricity. When electricity came, you could completely reconfigure a factory floor, right? You no longer ha- uh, had to have... yeah, you could have the power source at, essentially at the operating unit of an operator. But, but that took a lot of redesign and corporation investment, learning, uh, complements, all kinds of stuff. Um, I, I, I, I, I tend to think this will be more like that. There will be some pure cases people will wanna-... you have them write their term paper with ChatGPT or something. But, but, but if you think of, uh, businesses, um, it's hard for me to think of a single functional area in a business that with redesign couldn't benefit. So, you know, uh, uh, accounting, HR, R&D, you know, all have use- uses of this, but requires incorporation, which is always, you know, uh, troublesome. Um, and so- so that- that's kind of my view. Uh, and- and so I... But- but there may be, uh, there certainly will be businesses that couldn't exist without it, and there's some that are coming up, but- but, uh... And- and some of those are, in fact, the businesses that empower the tertiary need, they're the ones that bring, bring in. But if you go back, this will date me, but if you go back into, uh, business history back in, I guess it was the '90s, there was this thing called business process reengineering. You know, the idea that you would... You could take a computer sensibility into business processes, redesign them and get these monstrous cost savings. And, uh, and- and it was a gigantic consulting opportunity, right? For people, uh, whole companies got developed based on that. Um, and, uh, it- it sort of feels kind of more like that to me. But- but- but, uh, but it's- it's- it's very interesting. It- it... I- I could be wrong, but it feels different than crypto, you know? It- it feels like there's more of a- a real, uh, ultimate use case. I mean, if- if- if it really is true what they say, that, uh, uh, a 50% improvement in programming, uh, efficacy is not uncommon, just that propositional loan i- is worth an awful lot of money if you think how many programmers there are in the world.

    4. LRLenny Rachitsky44:56

       No question. You mentioned, uh, eighth power. I just wanna check, is there an emerging eighth power you wish you maybe would have included or may be added in the future that's like, "Oh, maybe this is on the edge," or it's like, "Nope, we got these seven"?

    5. HHHamilton Helmer45:12

       (laughs) Uh, you know, um, uh, it's a great question. I mean, I'm always looking for it. 'Cause if you find it, it probably means it's so obscure that it'll also be a great investment opportunity.

    6. LRLenny Rachitsky45:23

       Hmm. Mm-hmm.

    7. HHHamilton Helmer45:23

       We're looking all the time, but so far, no. So far I'm pretty satisfied that seven is an exhaustive set. But never say never, you know? You know, that's an empirical, uh, seven, not- not a theoretical seven.

    8. LRLenny Rachitsky45:37

       Yeah. If we start seeing you making incredible returns, you've clearly found any power you haven't (laughs) Right, right. That's right.

13. 45:43 – 50:24

    Why moving fast is not a power

    1. LRLenny Rachitsky45:43

       ... told anyone about. I wanna close one thread on a power that you mentioned that is often a mis- a kind of a pitfall, uh, which is around, uh, process power and basically execution. A lot of people think... So in a lot of decks it's like, "Oh, we have the most amazing team. We move the fastest or earliest." You've mentioned how rarely is that actually a power, actually being able to execute and create a process that is an actual barrier. Could you talk a bit more about that to help people understand, okay, it's probably not our power?

    2. HHHamilton Helmer46:09

       One of the- the great thinkers in strategy was this Harvard professor, Michael Porter, and he... And probably 40 years ago made the very controversial statement that operational excellence is not strategy. He got a lot of people at the Harvard Business School faculty really mad at him, 'cause that's what their careers were about, and it sound- sounded like he was dissing them. But the point he was making was when you get to kind of this end state, if you already have power, um, that- that the things that drive operational excellence can be mimicked, because you can hire a consulting firm with who has best practices knowledges that come in and get you up to snuff. You can hire people from your competitors who know how to do it better and that. And that... And- and that's- that's kind of true, but it's also true in- in the- this takeoff phase in a business when, that we talked about before, when you're trying to attain competitive position, operational excellence is everything. And so- so in... If you think of not- strategy not statically endpoints like, uh, Professor Porter was, but if you look at dynamically how you get there, operational excellence is essential for a strategy. Um, and so think of those things I mentioned before about Netflix, about their UI and recommendation engine and so on, or international rollout, all those things. Uh, they were in a battle to get subs- uh, more subscribers than other people. Um, and- and those were critical for that, right? But in themselves, uh, they're critical in obtaining competitive position, but in themselves are not sources of power typically, unless, uh, there's some very, uh, tight considerations here or very demanding considerations for the unless. Uh, if they're really... Uh, they're- they're... They have to be material, uh, but they also have to be op- opaque or some way people can't easily imitate them, either they don't understand what's going on or th- they might be opaque. So- so for example, think of TSMC. So when they put up... Uh, when they put up the latest fab, there's, uh, uh, and- and get that operational. Are there... Are there a lot of steps in doing that that they kind of know how to do with their staff is trained to do it, but it's not documented necessarily and not... And you can't imitate it? Yeah, then maybe- maybe they have it. I don't know if they have process power or not, but it's... But it takes that level of complexity, and in my book I use the example of Toyota, and car manufacturing is complex enough that you can have this opacity.... uh, in terms of, of material steps. But it's, but it's not common. And so, so you're, so n- so if you're in a stability phase of business, you're, you're, you're stuck with this, this funny thing, which is most of your day is on those issues, and it should be. Because if you, if you, if you don't do it, uh, a competitor can and they can end up better than you. And so you're always, you're on a, you're on a, you're, you're on a treadmill. And that's the way business is. That's fine. And, and if you stop running that treadmill, you get creamed. And, uh, so you gotta do it, it's most of your day, but it's not power. And, and the, and there are those rare cases where it's so material and so inimitable that it can be power. But, but they're rare.

    3. LRLenny Rachitsky50:02

       I like the, uh, heuristic that if you haven't written it down or you can't describe it, that might be a sign that maybe process power is a, is a power of yours.

    4. HHHamilton Helmer50:12

       Yeah. Yeah. You know, um, and there isn't a consulting firm that offers to, (laughs) like, to bring you up to speed on that, you know?

    5. LRLenny Rachitsky50:20

       Or make you more like Amazon as a service.

    6. HHHamilton Helmer50:23

       Right.

    7. LRLenny Rachitsky50:23

       Kind

14. 50:24 – 51:16

    Three things that create value in a company

    1. LRLenny Rachitsky50:24

       of along these same lines, you talk about how the only three things that create value in a company are power, market size and operational excellence. And I think hearing that will blow a lot of people's minds, because they think there's so many things that contribute to the value of a company, and you whittle it down to these three things. What can you say about, about that insight?

    2. HHHamilton Helmer50:47

       So I'd say they're right and I'm right.

    3. LRLenny Rachitsky50:50

       (laughs)

    4. HHHamilton Helmer50:51

       Um. (laughs) Uh, they're right because there are this incredible ... I mean, business is really hard, right? And there are just a multitude of things you have to pay attention for. I'm right because all those things fall into those three categories. So it's an exhaustive set, and it's just, it's, it simply comes out of the math, you know? Um, you know, it's, it, uh, it, it... so, so we're both right, um, I, I'd say.

15. 51:16 – 56:35

    The debt trajectory of the U.S.

    1. HHHamilton Helmer51:16

    2. LRLenny Rachitsky51:16

       Final question. The intent of a lot of your work is to empower founders. I'm curious if you've noticed any broad economic trends or shifts that you think will make life easier or harder for founders in the coming years.

    3. HHHamilton Helmer51:32

       Personally, I am very, very concerned about the, uh, debt trajectory of the United States, uh, and many countries around the world, but I'll pick on the United States, but it's a trend going on everywhere. We're on a trajectory for this extremely high indebtedness. And so if you think about the last 30 years, right? There's been a crisis about once every 10 years. So there's the dot-com bust, there's the financial crisis, there was COVID. You know, I have, nothing makes me think that the frequency will be a lot less. I don't know what it ... Who knows? These are all uncertain events. But, but imagine if we got to one of those and we had no dry powder. And dry powder for us is the ability, uh, to, uh, heavily deficit spend take on debt. And fortunately, our government did that in both the financial crisis and in COVID, and, and because that people had jobs, if I ... My own view about the financial crisis is that, uh, if we hadn't done that plus having Ben Bernanke as, as, as the head of the, the Fed, we would have gone into another Great Depression. It was that ugly. So, uh, this current debt trajectory, you don't know how long it will take or exactly when, but eventually that will mean we will not have dry powder. People will not respect the credit worthiness of this country. And so, so I'm, uh, that worries me a lot. And, and, uh, and it utterly will affect, you know, the idea of company founding, because if you get into a crisis like that, it just, it, you know, all the capital markets lock up and it gets very difficult to do anything. And, uh, to really stretch my credibility here, (laughs) I'll, I'll opine on just how hard a problem this is to solve. The reason this is so difficult for this country to solve and other countries is that it is right at the crux of the, um, delicate dance between capitalism and democracy. So if you think about these, uh, of, of the, of the problem, of course, that's driving all this is entitlements. Um, there's, there's, there's sort of discretionary spending, you know, the, you know, certain recovery programs and stuff, but those can go away. The thing, the underlying trend that people just can't get their arms around is entitlements. And, and, uh, and anybody who looks at the, the numbers can see that. Every economist knows that. Um, and, but that's a, that's not an easy fix. And the reason it's not an easy fix is there are two opposing views of, of kind of what's going on, and there's no way to resolve those two views. One is that, um, that, uh, capitalism is rapacious and re- results in more and more inequality and the government has to do something about it. And the other is that the government is on a path that is, uh, creeping socialism that will undermine our, uh, freedom and economic sufficiency. And, and the, the poster child for the, the, uh, rapacious capitalism one is the... I don't know if you've seen the recent analysis of inequality in the United States just came out much more robust analysis and it said that basically inequality in the last 60 years in the United States is unchanged. But that's post-transfer, post-tax inequality, which basically says the amount of taxing and transferring going on was about right.So it says that the amount we're spending is about right from that perspective, that it compensates for the other in- inequities, um, and we should be spending that much, so we should tax more. And the, and the other, the, the poster child for the other point of view of the, uh, you know, dangers of government is the steadily increasing, uh, without interruption, percentage of the economy that is government-

    4. LRLenny Rachitsky55:45

       Mm-hmm.

    5. HHHamilton Helmer55:45

       ... and, uh, to levels that 75 years ago people would have thought absolutely impossible. So there are these two views about what's going on. One is that we're compensating for the normal inequities of capitalism and the other is that we're headed down a path to socialism and ruin. And, and that leads to a deadlock, which is you don't tax anymore and you don't cut spending, and that leads to deficits. And so, so anyway, a long, long, uh, uh, rant, sorry. But, but, but that, that trend is extremely politically difficult to deal with, and, and extremely threatening, and, uh, and that concerns me, uh, immensely.

    6. LRLenny Rachitsky56:32

       Not to leave listeners with, uh, a very sad

16. 56:35 – 59:25

    Optimism for the future

    1. LRLenny Rachitsky56:35

       state of affairs-

    2. HHHamilton Helmer56:35

       Yeah. Sorry.

    3. LRLenny Rachitsky56:35

       No, no, I think this is important. I think it's important people think about this and know these things. Is there anything that gives you hope? Is there anything that gets you excited about either for founders or anyone in general, just to kind of leave folks with maybe on a, on a happy note?

    4. HHHamilton Helmer56:50

       Yeah, I mean, I, I, I am an optimist really in a way, you know? And, and I, I, I do... There's a, a, a famous, uh, Austrian and eventually American economist by the name of Joseph Schumpeter who wrote this wonderful book, Theory of Economic Development, way back when, over 100 years ago, where he took the unusual view of saying that, that the vitality of an economy depended on entrepreneurs, and, uh, and I ascribe to that. I think that, that, uh, creativity and action are the ways society and people advance, and, and I'm... And I think the, the U.S. is, uh... And a, and a free society is, has huge advantages in, in that. And, and I think that, uh, I'm... Uh, I'm, uh, feel very lucky to be in a place, I mean, Silicon Valley, but, uh, but to be in a place and a country where, where that is vital and active, and that's... And I think that's, that's, uh, that's sort of ground zero for me. And so, so I- I think, uh, y- you see that alive and well, I think, and, and there, there are people that are very, uh, enthusiastic about that and, as I am.

    5. LRLenny Rachitsky58:12

       A beautiful way to close out our chat. Is there anything else you wanna share before we get to our very exciting lightning round? Is there anything you wanna leave listeners with, or any last tidbit of advice?

    6. HHHamilton Helmer58:21

       Uh, I sort of alluded to it before, but just remember, action is the first principle of business. You do stuff. And, and my book is very oriented towards that. The idea was not to tell you what to do, but to give you sort of guideposts while you're on that journey. And so I, I just... The people ha- uh, that are enthused about it, I, I encourage you to do stuff, you know? That's, that's where it all starts. Um, and, and, and I can think about it and maybe help, help a little bit, but it's mostly doing stuff.

    7. LRLenny Rachitsky58:58

       I love that point so much. It was something I was gonna touch on, but I didn't get to, is just there's so many people that just sit around and theorize about a strategy of their business, especially in the early stage, "Here's our grand master plan. Here's an amazing strategy," or just read about startup ideas and don't actually try it. I love this final note of just like, "Just try it. Just do it. Don't just sit there and, and, and-"

    8. HHHamilton Helmer59:18

       Yeah. Yeah. Just do it, you know? And, and life, life is full of surprises.

    9. LRLenny Rachitsky59:22

       Mm-hmm.

    10. HHHamilton Helmer59:22

        You'll end up in a place you didn't expect.

    11. LRLenny Rachitsky59:24

        Amazing.

17. 59:25 – 1:08:07

    Lightning round

    1. LRLenny Rachitsky59:25

    2. HHHamilton Helmer59:25

       (laughs)

    3. LRLenny Rachitsky59:26

       Speaking of ending up in a place you didn't expect, it's time for our very exciting lightning round. Are you ready?

    4. HHHamilton Helmer59:32

       Oh, uh, sure. I, I, I'll, I'll do my best here. I'm not very good on lightning but...

    5. LRLenny Rachitsky59:37

       First question, what are two or three books that you've recommended most to other people?

    6. HHHamilton Helmer59:42

       One book that is extremely wonky but, but... And, and I can only take it in very small doses, but is magnificent is one called The Road to Reality by Roger Penrose, who is this brilliant mathematician. And it, it, it will be very daunting for anybody unless you're a deep math person, but, but his, uh, brilliance in every edition just shined through in this thing, and it's just... It's an amazing book. Um, I would say, uh, there's another book. Boy, I wish I could remember the, the name. Maybe you can get the, the name of the author, a book called Gene by this, um, geneticist, and I think he's a Harvard Medical School professor, that's... Uh, that's about the history of genetics. Um, and he is an absolutely luminous writer. I mean, I... It, it puts me to shame. I- I'm embarrassed when I read it 'cause I think how pedestrian my writing is.

    7. LRLenny Rachitsky1:00:41

       (laughs)

    8. HHHamilton Helmer1:00:42

       He- he's... Uh, he, he... Uh, and, and incredibly knowledge about the history of genetics, and I think that's such an important topic that... So those are two that I would, I would recommend. Uh, fairly, fairly wonky, but, but I like them both.

    9. LRLenny Rachitsky1:00:56

       I love them. Uh, the author, I just looked him up, Siddhartha Mukherjee.

    10. HHHamilton Helmer1:01:01

        Yes. Uh, just, uh, uh, amazing. You, you just... You read it and you go, "How did he think of that phrasing?" I mean, it's just... He's amazing.

    11. LRLenny Rachitsky1:01:10

        Do you have a favorite recent movie or TV show you really enjoyed?

    12. HHHamilton Helmer1:01:14

        I- I'm a huge movie fan, um, and have been all my life. Uh, and I'm particularly keen on, uh, animated films. But the movie that I've recently seen that I liked particularly was American Fiction.... I thought that was, it, it, uh, didn't make any of sort of the easy choices in a movie and, and as a result was just incredibly interesting and thoughtful, I thought.

    13. LRLenny Rachitsky1:01:39

        Do you have a favorite product you recently discovered that you really love?

    14. HHHamilton Helmer1:01:43

        In my office, just this last week, we actually put a, uh, Persian rug in our entry room. And, uh, this is what's called a Farahansoroosh rug and it's, uh, 150 years old. And, uh, it had an effect on me that I didn't expect which is it is, it is, uh, a work of great beauty and it was before, it was all hand done, before machines, so you get all this wonderful variation of the actual icons and the rug and the different dye colors. And, and I find that every morning when I walk in, I go, "That's really beautiful." And it's uplifting and it, it shows you the importance of or the value of sort of the quality of art. I mean, it's just, it just, it kind of, uh, kind of blows my mind actually. So that's probably not the usual product discussion that you get, but-

    15. LRLenny Rachitsky1:02:50

        No, I love that answer. Recently we've had some really unique ch- choices. One is a, a very nice Mercedes, uh, and a Rivian-

    16. HHHamilton Helmer1:02:56

        (laughs)

    17. LRLenny Rachitsky1:02:57

        ... and, and, and a minivan recently. We've got a lot of very, uh, very nice things (overlapping) .

    18. HHHamilton Helmer1:03:00

        Oh, that's true. I'm a, I'm a car guy too, so I didn't answer on the car (overlapping) .

    19. LRLenny Rachitsky1:03:05

        Oh man, I love that. I'm, we have a Rory Sutherland coming on the podcast soon. He's one of the leaders of Ogilvy and he has a whole thing about how buying a home is like the best value of art, to buy art if you live in a home that makes you feel inspired and, and is beautiful.

    20. HHHamilton Helmer1:03:20

        Yeah, I- I'm a big believer in that, you know? I mean, I, I think that, you know, sort of your, your place and how you connect to it has an important grounding effect. And before I talked earlier about creativity, and I think surrounding yourself with, in an environment that stimulates that is, um, yeah, uh, is really important. Um, and so I, I couldn't agree with it more.

    21. LRLenny Rachitsky1:03:51

        Two more questions. Do you have a favorite life motto that you often think about, come back to, share with friends or family?

    22. HHHamilton Helmer1:03:58

        Uh, one is, uh, what Clint Eastwood, uh, advice to actors, uh, which is don't just do something, stand there. Um, (laughs) and, uh, so there, there are a lot of things that are long-term-ish with, uh, kind of low signal to noise and, and you can, you often just do a lot of stuff that you think makes a difference but it really doesn't. And so that- that's- that's- that's one. The other one which is somewhat more profound I think was one that I, I had a, a, a famous, um, Sri Lankan journalist was a mentor of mine and very dear friend and he had a favorite expression that, that I adhere to all the time which is, "Everything is always about something else."

    23. LRLenny Rachitsky1:04:49

        Wow. Deep.

    24. HHHamilton Helmer1:04:53

        And that's so true if you're dealing with this power stuff, when if you really dig down everything is always about something else.

    25. LRLenny Rachitsky1:04:58

        Speaking of power, final question. People that have a lot of power are leaders in the world. I'm curious, do you have a favorite historical leader?

    26. HHHamilton Helmer1:05:07

        So yeah. So I have some that I'm, I admire a great deal. I'm a, a tremendous fan of Winston Churchill's. You know, uh, quirky, most leader, most really great people are quirky, you know?

    27. LRLenny Rachitsky1:05:19

        (laughs)

    28. HHHamilton Helmer1:05:19

        And he, and he qualified, there are things you could say about him that, you know, you might not have liked that so much but, but he was a, a genius and, uh, had great fortitude, human sense. He understood things long before other people. I've, I give him high marks. Um, some of the great artists I admire enormously, I'm just, I'm reading a book right now on sort of the last 20 years of Michelangelo, which is a wonderful book actually, um, and which is a very interesting period because in his first 70 years he sort of finished, you know, he finished up all the, he wasn't going to do sculpture anymore. He'd just finished the The Last Judgment which was the wall of the Sistine Chapel and that's, I think the last major fresco he did and m- a lot of his friends in, at that time he was exiled from Florence and living in Rome and, and, uh, and he added this Roman community and a lot of his close friends had, had recently died or had difficulties. So he's at this inflection point in his life, uh, at 70 which in those days was very old and yet he went on to do some of the most remarkable architecture in the history of the world. And so that, the, you know, you- you've got to admire that, you know? I mean, just (whispers) . Sort of doing that which is that rare second act. Um, so but, but I think for world leaders, Winston Churchill is very high. I'm, I- I'm a fan of Teddy Roosevelt I must say too in this country, uh, so...

    29. LRLenny Rachitsky1:06:59

        (laughs) I love that. Hamilton, you are wonderful. I feel like we have helped a lot of people uplevel their ability to think about strategy and moats and power. Thank you so much for being here. Two final questions. Where can folks find more online if they want to dig in further and how can listeners be useful to you?

    30. HHHamilton Helmer1:07:15

        Yeah. So I, as I say, I'm, I'm, I'm an idea person and I'm about trying to empower company founders and so, so, uh, only thing I can say is, um, you know, read the book, spread the ideas, start, start your own company. Those are the things that would make me happy.

Episode duration: 1:08:07