Q2 2021 Quarterly Review

The Icarus of Ice Cream, Collapsed Lungs, Overcoming Resistance, and A/B Testing

Hi 👋 - And just like that, 2021 is halfway over. Below are a few of my favorite articles, books, and podcasts from the second quarter. Like the format? Hate it? Let me know by responding to this email. To readers in the US, happy 4th of July! 🌭


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Article: The Shocking Meltdown of Ample Hills — Brooklyn’s Hottest Ice Cream Company, Courtney Rubin

This article combines two of my passions: business and ice cream. Ample Hills is the Icarus of ice cream. The company serves delicious ice cream1. It also serves as a cautionary tale about what happens when a business puts growth ahead of fundamentals. Between 2015 and 2019, Ample Hills raised $19M, expanding from a few stores in Brooklyn, to 17 across the US. Oprah and Disney CEO Bob Iger were fans. Buoyed by growing sales and glowing press, the company built a factory in Red Hook, Brooklyn capable of supplying all of its shops and supporting aggressive expansion. Factory capacity would never exceed 20%. On March 15, 2020 the company filed for Chapter 11. As Rubin recounts, Ample Hills prioritized new stores and aesthetics, while neglecting older stores and operations. Its many ambitious plans - geographic expansion, penetrating grocery stores, revamping its packaging - kept it from focusing on basics like budgeting and controlling costs. 

Despite pushback from the staff — including a small protest on a company whiteboard, with a drawing of a square pint, with a circle, a slash, and the words “No Squints!” — Smith and Cuscuna would not be dissuaded. “It was like, ‘The rules of physics don’t apply to us. We’re Ample Hills!’” Scott says. Smith, he adds, had begun to think of himself as “the Steve Jobs of ice cream.” According to both current and former employees, Smith frequently invoked the mercurial Apple founder, as well as Walt Disney. Smith admits the execution of the square pints was “an absolute unmitigated disaster,” but maintains the idea is still a great one. “I can guarantee you somebody will do it more effectively,” he says. “It’s always hard when you’re creating something new. That’s not a reason not to do it,” Smith adds, comparing it to Apple’s creation of the iPhone.


Podcast: Michael Phelps and Grant Hackett — Two Legends on Competing, Overcoming Adversity, Must-Read Books, and Much More, The Tim Ferriss Show

Swimmers Michael Phelps and Grant Hackett have a combined 33 Olympic gold medals. This podcast dives (see what I did there?) into the habits required for world-class performance. Phelps trained 30-40 hours per week, six to seven days a week, for years. When not training, he focused on recovery, nutrition (8,000-10,000 calories per day), and sleep (8-10 hours a night, plus a two hour nap). Hackett won a gold medal in the 1,500 meter freestyle with a partially collapsed left lung. He describes it as the most brutal experience of his life. The intensity, focus, and toughness required to compete on the Olympic level is profound and inspiring. But for all of their success, Phelps and Hackett have struggled outside the pool. Both have wrestled with mental health issues. The second half of the podcast is a brave and open discussion about this. It’s normal to feel anxious or depressed. It’s ok to not feel okay. You don’t need to struggle alone. Champions ask for help. 

I would say throughout my career, I’m great at compartmentalizing. I would say I could probably win a few more gold medals of that. But that’s not something to be proud of. So, I think that’s one thing that I’ve learned. Just to really talk about it. I’ve learned more about my emotions and if I have something I don’t like, I talk about it or ask questions about it. So I think, with the experiences that I’ve gone through and the struggles that I’ve gone through, I feel like I have almost let my guard down in a way, if that kind of makes sense, like drop my shoulders, like take in a deep breath, and just try to relax. Because I think, throughout my whole entire life, I’ve been trying to shave hundredths of a second off my time. Right. And now, for everyday life, I’m trying to slow it down.


Book: The War of Art, Steven Pressfield

There’s something about needing to write that makes me want to clean my room. Or do laundry. Or rearrange my sock drawer. Anything really, but write. The devil sitting on your shoulder coaxing you to fold your socks is resistance, and according to Steven Pressfield, author of The Legend of Bagger Vance, Gates of Fire, and others, it’s the most toxic force on the planet. Overcoming resistance is the topic of Pressfield’s The War of Art. The antidote to resistance is turning pro. This means showing up every day and trying. It’s Bill Belichick analyzing film. Pain and persistence are the price of admission. Resistance never goes away - amateurs and pros both have dirty laundry - but pros don’t give resistance an inch because they’ve got work to do. I’ve read this book twice, and plan to read it again. It’s a great kick in the pants. 

Fear is good. Like self-doubt, fear is an indicator. Fear tells us what we have to do. Remember our rule of thumb: The more scared we are of a work or calling, the more sure we can be that we have to do it...So if you're paralyzed with fear, it's a good sign. It shows you what you have to do.


Article: Building a Culture of Experimentation, Stefan Thomke

Part of my research for The Joys of Forced Experimentation, this article deserves more airtime. We often know less than we care to admit. One way to see if you're right is to test your hypothesis. Tech companies like Booking.com have built impressive systems around this. Setting up A/B testing infrastructure is easy. The hard part is cultural. Ninety percent of your tests are going to fail. Does management see this as a waste of money or as a valuable insight? For testing to work, companies need to adopt Thomas Edison's lightbulb besting mentality:

I have not failed. I've just found 10,000 ways that won't work.

The more I study business, the more respect I have for culture as a driver of long-term success. 

Many organizations are also too conservative about the nature and amount of experimentation. Overemphasizing the importance of successful experiments may encourage employees to focus on familiar solutions or those that they already know will work and avoid testing ideas that they fear might fail. And it’s actually less risky to run a large number of experiments than a small number. At Booking.com, only about 10% of experiments generate positive results—meaning that “B,” a modification that attempts to improve something (sales, repeat usage, click-through rates, or the time users spend on the site, for example), performs better among randomly assigned users than “A,” the control, which is the status quo...But when you conduct a large volume of experiments, a low success rate still translates into a significant number of successes, which, in turn, diminish the financial and emotional costs of the failures. If a company does only a handful of experiments a year, it may have only one success or, if it’s unlucky, none. Then failure is a big deal.


Most Popular on Below the Line 

As always, thanks for reading. Marketplace Existential Threats, a primer on marketplace liquidity, was the most shared post. Thanks for sharing! The most viewed post this quarter was Horizontal Advantages, a case study in marketplace liquidity and customer acquisition comparing Booking.com to Marriott. Lastly, Spotify's Second Act, a history of Spotify’s podcast strategy, got the most new signups. 


People sometimes ask how they can support the newsletter. If you enjoy the content and want to do more to support it, sharing it with friends and coworkers goes a long way. Additionally, from time to time I’ll feature a book, like The War of Art, and have an Amazon affiliate link. If you’re interested in the book and purchase through the link, Jeff Bezos throws a few pennies in my direction.


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