"Morning comes whether you set the alarm or not." —Ursula Le Guin

Whatever whiffs of normalcy were in the air a few weeks ago have vanished with the threat of a new COVID variant. 2021 is still afloat, but it's in the middle of the rapids, and there's a bend in the river just ahead. What should we expect?

Right now is when a lot of organizations are placing bets for 2022. Lux Capital's Q3 2021 letter to its partners laid out two potentialities for next year's Q3 letter:

a) Another remarkably incredible year

b) A punch in the face

So which is it?
Well, we don't know, and neither do you. The best thing to do: be ready.

For better or worse,
change is afoot. Now is the time to question assumptions about your business. A few notes on how to ask and who's doing it well:


There's nothing like a good analogy to promote understanding, right? Making inscrutable concepts accessible by comparing them to something well known is a technique used by teachers; aligning a nefarious proposition to something trusted is a technique used by con artists. Analogy works.

But analogy is limiting. It's lazy thinking. It cloaks the real drivers of a situation by aligning two things that are similar but not the same.

When things change—and they're changing a lot right now—we cling to assumptions that may have been true but no longer are. Much like using an analogy, we depend on existing models to explain complex situations to ourselves. Instead, we should reduce the complexity of its core assumptions and examine them for truth. Then we can build a new model based on assumptions that have been validated.

This approach, sometimes called First Principles, and much loved by the hedge fund and startup set, has its roots in Aristotelian logic. If you can stand to read another paragraph about Elon Musk's prowess in thinking, there is a good primer on first principles here.


The venture capital world is all aflutter about a new example of business model innovation. No, it's not the next two-sided marketplace. This time, someone is reinventing the venture capital model itself.

Tiger Global, Exhibit A for applying a first-principles approach, is attracting accolades, envy, and agita for its unorthodox approach to startup investing. An excellent but very long analysis of Tiger Global's MO lays out all the rule-breaking they are doing:

- Outsourcing due diligence

- Accepting lower returns

- Signing a deal a day

- Investing in multiple startups within the same market

You can only imagine the pearl-clutching taking place on VC Zoom calls around the globe.

A departure from the norm may seem like risky business. But Tiger is arguably reducing risk by spreading investments across a broader portfolio and eliminating the need to choose the winner in an emerging space. It has also lowered fixed costs by outsourcing diligence and other necessities. That's not to say that Tiger does not hold substantial risk--it's venture capital, after all. But they've balanced investment risk with innovation to the business process.

It's counterintuitive, right? Reduce risk by tossing the old proven stuff out the window? But by examining old assumptions, Tiger is changing the game for a new era of investing. So far, it's working.


When there is a lot of change, especially structural change, it's an excellent time to reexamine the assumptions that your business is founded on.

So how do you identify your assumptions, let alone scrutinize them? Well, it's hard, especially if you are part of an organization built upon a collection of beliefs that are rapidly becoming outdated. At the extreme, incumbents get a fresh look by bringing in a new management team; more common is to get help from third parties like so-called MBB consulting firms.

DIY is an option, of course. It requires asking lots of questions, many of which start with "why." And the internet is teeming with how-to guides (almost all of which mention Elon)—the Farnum Street version seems to be the most respected.Finally, once you have identified the new truths that replace old assumptions, it's helpful to validate them. As we say at Spark No. 9 all day long: this is why we test.

Want more examples of companies creating new models by rethinking assumptions?

Sunday, a new payment app, uses QR codes to allow diners not just to view the menu but to pay, too. Assumption Sunday is proving wrong: servers must come to the table to execute transactions.

Beauty Pie
Beauty Pie is a membership club for luxury beauty products. Assumption Beauty Pie is proving wrong: people buy beauty brands, not beauty products.

Bubble is an app-building platform for everyone. Assumption Bubble is proving wrong: web apps need to be built from scratch.

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