This past week I came across a fascinating concept in evolutionary biology called the Red Queen Hypothesis. The Red Queen Hypothesis proposes that organisms must maintain a perpetual state of adaptation and evolution, not only to gain a reproductive advantage against rivals from within their own species, but merely to survive in an ever-changing world filled with other constantly evolving organisms. The Red Queen Hypothesis paints evolution not as an inevitable outcome of generation after generation of survival of the fittest, but as a species-level arms race of life or death.
Evolutionary Biologist Leigh Van Valen developed the Red Queen Hypothesis as a potential explanation for why a species’ extinction rate is relatively flat over time. Under the core tenets of the theory of evolution, one would expect that as species evolve over time, the chance of them going extinct would diminish, but empirical evidence has shown this to not be the case. Van Valen named his hypothesis after the Red Queen from Lewis Carrol’s 1871 novel Through The Looking Glass (sequel to Alice’s Adventures in Wonderland). At one point in the book, the antagonistic Red Queen tells Alice that:
“Now, here, you see, it takes all the running you can do, to keep in the same place.”
This idea of running just to stay where you are is an apt metaphor for the necessity of an organism to constantly evolve just to maintain its current place in the evolutionary order. The most obvious example of this in nature also involves running. Imagine the perpetual evolutionary dance between the wily fox and the swift hare. The hare constantly evolves to become faster as the slowest hares are removed from the gene pool by the hungry fox. The inverse happens to the fox, with their slowest numbers dying out from not being able to get enough food to eat. This plays out as a balancing act of co-evolution where both foxes and hares will get faster and faster over time. If either species stops keeping pace in this evolutionary arms race, it will either die out or be forced to adapt in other ways. As long as both the fox and the hare keep at roughly the same pace, their relationship will remain locked in place.
The world of technology startups and venture capital has many of the hallmarks of the Red Queen Hypothesis. Incumbents and disruptors are often locked in a battle of the hare and the fox. As soon as either starts slowing down, their demise is relatively swift. Companies need to constantly be reinventing themselves to stay on top. This is easier said than done. If you look at the tech titans of 20 years ago, only Microsoft has been able to maintain its status as one of the leaders in the space (and even then it is no longer as dominant as it once was). It will be interesting to look back in 20 more years and see whether the Amazons and Apples of the world are able to maintain the current status they enjoy. Some might point to the incredible power that today’s incumbent companies have, but at one point it was similarly hard to imagine that seemingly invincible tech titans like AOL and Xerox would ever fall from grace.
Startups have a biological imperative to constantly be growing and innovating. If they don’t, they will die just as surely as hares would if foxes suddenly evolved to be born with jetpacks. The other day I saw a well-regarded venture capitalist compare startups who take venture funding to sharks. Sharks are only able to “breathe” by constantly swimming so that water passes through their gills and can be absorbed. Constant innovation is similarly the only thing that keeps startups flush with oxygen. You may argue about whether this is the way that things should be, but it is hard to argue with the fact that once a company gets on the venture train, it is exceedingly difficult to get off at the next station. As a founder, you should understand that an ability to evolve and adapt is table stakes. It is not enough to build one great product. You need to constantly and consistently be improving and building better and better products.
How can this be done? Are all companies doomed to fail at the slightest slip up? What can a company do to keep on innovating?
Luckily our world is in a constant state of change which means that there will always be new opportunities for companies that truly build themselves to constantly innovate. The path to constant innovation is surprisingly straightforward, but only an extremely small number of companies ever execute on it over the long term.
The first step is to create a diverse and high quality talent pipeline that will continuously refresh your company with new ideas and perspectives. A focus on diversity must start on Day 1, because if you, as a founder, don’t start focusing on diversity within your first 10 hires, it will be extremely difficult to start doing so after our first 100 hires.
The second step is to keep your eye on the horizon. Reinvest in yourself to stay on the bleeding edge of innovation. Don’t rest on your laurels and expect that what worked yesterday will work tomorrow. Always be on the look out for new opportunities recently enabled by social or technological change. If companies only tried to build upon what made them initially successful, Amazon would be the world’s best place to shop online for books (but nothing else) and Netflix would be the first place we would all go to rent our favorite DVDs through the mail.
The third step is to think for the long-term, without losing the ability to block and tackle over the short term. Apple is the master of this. They never fail to deliver on their quarterly objectives, even as they maintain a long-range focus on the next quarter century. Their obsessive focus on long-term planning has allowed them to build products that people will love to use today, even as they incorporate the building blocks of what their future products will be 10 years down the road. When Apple first built the fingerprint scanners into iPhones, they were preparing us for a day when our face would be the key to our most valuable data. If you pay attention, Apple has slowly but surely been incorporating more and more health and AR focused capabilities into their products. Don’t be surprised when new products with each of those categories at the forefront are released in the coming years.
The fourth step is to think based on first principles about the way things should be done, not the ways that they are done today. The insurance industry has been notoriously slow to embrace new technology and innovation. There are some structural advantages insurance companies have that make it a great sector to be a part of, but these same structural advantages allow them to sometimes forego evolution. In Columbus, we have seen the birth of next-generation insurance companies like Root Insurance and Beam Dental that underwrite risk based on measured activity, instead of age and demographic characteristics. Constantly ask yourself why things are being done a certain way and how should they work based on your understanding of people and available technology.
And that’s all it takes. Not so hard right? The difficulty comes in execution… and the fact that everyone else out there is going to be the fox nipping at your heels. Success is possible, but it won’t ever be easy.
And you might just stand a chance.