Sonder

The Tyranny of Empirical Evidence

Empirical evidence is a beast of a tool. It derives its power from its ability to be exceptionally difficult to renegade, even when you’re presented with damning proof against it. I believe it’s a flaw by design in the human experience1 - you are exceedingly more impacted by what you experience.

We use empirical evidence everyday, because that is how we fundamentally learn. Almost every moment of our lives revolves around inferences extracted from hundreds of thousands of micro-experiments, pattern matched. The bread and butter of life itself is to discover patterns, play around with its controlling variables and create an optimal outcome for yourself.

Think about the times you’ve observed something and adjusted your protocols. Maybe its your shower knob, whose setting you’ve memorized to achieve that optimum temperature for a relaxing bath. Or its the times you keep your window open to get the cooling for your home just right. It could be avoiding a certain vegetable because it seems to give you tummy trouble. It’s all about modelling the observed patterns and reshaping your behaviour.

The fuel to the fire that is empirical evidence, is a backing story. Stories are the basis for how homo sapiens ended up coordinating in large numbers2, so no wonder they play a huge part in strengthening one’s convictions. Wrap your empirical evidence up in an impactful tale, and you are well on your way to influence mammoth crowds. A great, believable story which fits at least some of the facts can immensely reinforce a belief. Stories are so powerful, that even stories of someone else’s empirical evidence itself can sway the emotions of millions. At that point, the story is treated as dogma, which makes the evidence now inherently irrefutable, and any lemmas coming out of it now become mere axioms.

That’s what you do. You sell a big lie. You wrap it up in a truth to make it palatable. — Sherlock

In fact I believe empiricism forms the foundation for traditional Indian medicine. Pattern matching was probably done in two ways: to identify the disease through the observed symptoms and to discover the cure via accumulated herbal wisdom. Consequently, stories and nuskas were woven around those patterns to create a legend, which was passed down generations. Now so many aged indians swear by ayurveda, even in the face of modern medicine, which is based on a far stronger proof of robust statistical inference.

Now on to why it interests me.

Empiricism serves as a crucial tool for startups. A startup is about solving problems for other humans, after all, so its natural that it applies. Empiricism has a fascinating characteristic; when you conduct experiments and observe results, you create something remarkable for yourself - you create personal empirical evidence. If you’re able to optimize the outcome of an important problem, the experiment concludes and a new habit is formed, which encapsulates learnings from your empirical evidence.

That’s where a startup gets in - optimizes some objective for a customer to become the product of choice and creates a sticky habit out of it through the generated evidence; and suddenly, there cannot be another way to ever think about solving the problem than the startup in question. And what’s more, because your learnings are encapsulated in this experience, everytime there is a shadow of doubt on whether this is the right way, the predating hardships come up and the user becomes unwilling to leave the product, from fear of old problems creeping back up.

Kevin Hale has a talk on evaluating startup ideas3, which covers habit formation briefly. He explains that the three prongs of habit formation are

  • Motivation ⇒ I have this crazy burning problem
  • Ability ⇒ I can see a solution to my problem in this startup
  • Trigger ⇒ Thing that get’s them to realize OH! I need to solve it with your startup

In this framework, empirical evidence servers as the trigger. The target is the magic moment that occurs after trying the product.

The other (and often talked about) advantage of leveraging empiricism is the power of word of mouth. If people have their pressing problems solved, they will love your product. In turn, they will talk about your product, and their friends will listen. This is where storied empirical evidence shines through - emotions of your friends have a tendency to colour your own.

Vidit Aatrey, the CEO of Meesho, has termed India as a “trust-deficit society”; this rings true. The feeling of being gouged on price persists. India is at a place in cosumerism, where the value of every little bit of money in hand is still super high: products being sold need to be 15-20x to get them into the hands of users in the first place. Indians still need them, and will probably even pay the amount for a 10x value proposition(or lesser), but they wouldn’t try it in the first place.

Indian startups have overcome this by using the same idea I describe. Let the customer experience the value proposition at a discount, get them experiencing the magic moment and win the game by establishing themselves as part of the newly formed habit. Some of the most popular Indian startups - Ola, Uber(India wing), Swiggy, Zomato, etc. - have successfully created a relationship with the consumers, established trustworthiness of their service, and ultimately driven themselves towards profitability by driving the prices higher to adjust for the burn. I think this is what makes many startups in India focus on growth first, rather than profitability; it is an important strategy to get things in customers’ hands. As the median income rises in India and an increasing number of young consumers accrue disposable income, the country is poised to transition into a large-scale consumer society.

In a product sense, empiricism should drive you towards building something people love and demonstrating quick results to the user. Love will keep new people flowing in while those results will help keep them around.

So far, knowing what you’re optimizing and do it well, has been the lofty goal. Do it well, and love will be showered. But, if you aren’t able to get some quick wins for your customer, how are they going to be around for the do it well part?

  1. Much like the addictiveness of gambling. (Thanks to Michael Seibel for that insight) ↩

  2. From Yuval Noah Harari’s “Sapiens”. Harari describes that Homo Sapiens won the game between early humans(comprised of Homo neanderthalensis, Homo floresiensis, etc.) by effectively coordinating in large groups through their ability to believe in shared fictions. ↩

  3. “How to Evaluate Startup Ideas” ↩