The Map, the Metrics, and the Mud
How Orthodox Lies and Heretical Questions Reveal Big Investments
The pilots began to hate the bomb line itself. For hours they stared relentlessly at the scarlet ribbon on the map and hated it because it would not move up high enough to encompass the city. When night fell, they congregated in the darkness with flashlights, continuing their macabre vigil at the bomb line in brooding entreaty as though hoping to move the ribbon up by the collective weight of their sullen prayers.
“I really can’t believe it,” Clevinger exclaimed to Yossarian in a voice rising and falling in protest and wonder. “It’s a complete reversion to primitive superstition. They’re confusing cause and effect. It makes as much sense as knocking on wood or crossing your fingers. They really believe that we wouldn’t have to fly that mission tomorrow if someone would only tiptoe up to the map in the middle of the night and move the bomb line over Bologna. Can you imagine? You and I must be the only rational ones left.”
In the middle of the night Yossarian knocked on wood, crossed his fingers, and tiptoed out of his tent to move the bomb line up over Bologna. In the morning, word spread that the Army had captured Bologna, and the bombing mission was canceled.
- Catch-22 by Joseph Heller
THE MAP IS NOT THE TERITORY
At a conference in New Orleans in 1933, philosopher Alfred Korzybski presented a paper on ontology in which he famously noted that “the map is not the territory.” He was highlighting that an abstraction derived from something is not the thing itself, it is only a representation. It is an idea that echoes the painting "The Treachery of Images” by Belgian Artist Rene Magritte, which shows a picture of a pipe and the words “this is not a pipe”. Both men were expressing the importance of not mistaking abstractions for reality.
This concept is surprisingly tricky. As much as we don’t mean to, people often do confuse maps of one kind or another with the reality they represent. In fact, the more often we rely on maps, the easier and more convenient it becomes to conflate a conceptual model with reality itself.
This is particularly true in technology. We assume AI is correct despite recognizing that it is entirely reliant on training data that is unavoidably incomplete. In hedge funds it is not uncommon for quantitative models to “overfit” their data, delivering exceptional performance on back-tested data based on strategies that will never work in real world trading.
If we are not careful, our reliance on models will eventually lead us to believe many things to be real and true that are, in fact, neither. Take for instance, (as we’ve mentioned before) the suicidal reputation of the Disney-maligned lemming. Lemmings do not, in fact, behave like lemmings.
Forecasts are the substitution of lies for chaos.
In a more practical example, we often remind founders we’ve partnered with that budgets and forecasts are the substitution of known lies for unknown chaos. Financial models are important, but they are also maps. They are filled with implicit and explicit assumptions. They are not reality.
Models simplify complexity. But every time you increase a growth forecast, it means an account representative’s sales quota goes up (which they will not like), a happy new customer is theoretically acquired (who may not exist), and a competitor loses a sale (to which they will certainly respond). There is a very real difference between what we do on our maps and what actually happens when you get down in the mud.
Understanding this perspective is particularly relevant in the world of venture capital, where identifying the best investment opportunities requires recognizing where the map, the metrics, and the mud diverge from one another.
Amateurs talk strategy; professionals talk logistics.
It can be tempting to stay high-level and theoretical, particularly if you’ve spent too much time in grad school. Well-educated people love to rely on conceptual frameworks and quantitative measures that are clever but can obscure the true nature of the market. The reality is that while amateurs talk strategy, professionals talk logistics. The best operators understand the map, track the metrics, but love the mud.
THE MAP: A DANGEROUS LOVE AFFAIR
Maps provide simplified blueprints and mental models to navigate complex and dynamic environments. These abstractions are developed from past experiences, established theories, and widely accepted truths. They are as accurate as necessary or possible to help inform a decision. Maps offer a semblance of order in a chaotic world.
However, all maps are potentially dangerous simplifications that contain embedded judgments and assumptions. While maps can help us to think clearly about complicated issues, they can also encourage us to become restricted or unimaginative in our thinking. Sometimes they allow us not to think at all. And all maps can, indeed certainly will, become outdated as the world changes. That is where the danger lies.
Revenues and profits and careers rely on existing maps continuing to be trusted, even if they are wrong.
Over time, businesses and markets fall in love with their maps. Entire industries become blindly invested in the reality they represent. Revenues and profits and careers rely on existing maps continuing to be trusted even if they are wrong.
Leaders welcome the comfort, simplicity, and predictability provided by well-established maps, even if they are less and less accurate. In most businesses, there is no glory in doing the work to create a new map, there is only hardship. And so, despite overwhelming evidence, we can all suffer from cartographic nostalgia.
It takes discipline and a willingness to be ostracized to recognize that many accepted truths may actually be Orthodox Lies
It takes discipline and a willingness to be ostracized to recognize that many accepted truths may actually be Orthodox Lies: widely held false realities, assumptions, or long-term limitations, strictly followed and enforced, that will eventually be proven and acknowledged as wrong.
Orthodox lies are products of historical contexts, cultural traditions, technological constraints, and socio-economic conditions that people are quite stubborn to abandon. Often there are priests by another name whose careers rely on enforcing their maintenance. But change cannot be held off forever.
When the mud changes, eventually so will the map. And that change can be rapid and radical. For thousands of years no one questioned the divine right of kings to rule. That changed in a generation. Flight was impossible for thousands of years, until it wasn’t. Forty years later there was a man on the moon.
Clinging to outdated maps leads only to missed opportunities, strategic missteps, and eventually extinction. Recognizing gaps as they emerge leads to innovation and investment opportunities.
THE METRICS: QUANTITATIVE MEASURES
Metrics are the quantitative tools we use to assess performance and make informed decisions. They provide a satisfactory sense of control and objectivity, allowing us to measure progress and outcomes. But just like maps, metrics can hide reality. They are designed to quantify progress relative to existing mental models and will not capture emerging realities and shifts in the market.
It is easy to miss changes in the world when metrics are tied to outdated maps. When this occurs, measurements remain constant while real changes go unnoticed. This misalignment weakens the accuracy of our metrics, rendering them less and less effective in providing accurate insights, like a car with an accurate speedometer and rapidly failing headlights.
We believe this effect is the fundamental driver of technology disruption. It’s not that market incumbents don’t want to grow. In fact, they are enormously confident that they are gaining ground because their metrics prove their ongoing success. But the mud has changed, the map is now wrong, and the speed is less relevant than the washed-out bridge in the darkness ahead. In fact, the speed is the problem.
The case of Blockbuster versus Netflix is illustrative here. Blockbuster's Metrics were tied to physical store performance and rental revenue, while Netflix focused on subscriber growth and streaming engagement. The latter's metrics were more attuned to the evolving terrain of digital media consumption, leading ultimately to its dominance and blockbuster’s sudden and unexpected collapse.
To stay ahead, we must constantly question the accuracy of our maps and the relevance of our metrics. We must be willing to develop new ones that better reflect the current reality. This requires a willingness to experiment, adapt, and pivot based on real-time feedback from the market.
THE MUD: GROUND LEVEL REALITY
The mud is the gritty, often messy reality of the market. It is the unfiltered truth that can only be understood by immersing in the day-to-day operations, challenges, and opportunities of the businesses we invest in. This means engaging with entrepreneurs and customers, understanding their pain points, and observing behaviors firsthand. It requires finding the hard parts and hugging them.
Getting into the mud involves a hands-on approach that goes beyond spreadsheets and boardroom discussions. To be effective, venture capitalists must be experienced operators and active participants in the ecosystem who constantly gather qualitative insights that complement quantitative data. Only then can you realize when the map and the terrain are different.
MINING THE GAPS TO FIND THE OPPORTUNITIES
At Audere, we believe the best way to identify large investment opportunities lies in finding the gaps between the maps, the metrics, and the mud. People and businesses cling to obsolete mental models and metrics, failing to recognize that the world has changed. And gaps emerge. Unmasking orthodox lies requires being willing to ask heretical questions. And the answers to those often contain tons of alpha.
Unmasking Orthodox Lies requires a willingness to ask Heretical Questions that reveal alpha.
Inertia is powerful, and change is hard, but being willing to challenge the accepted thinking is powerful. For instance, the transition from on-premise software to cloud computing created a significant opportunity for those who understood the new terrain and adjusted their business strategies accordingly. Just ask Marc Benioff.
The interplay between the map, the metrics, and the mud is crucial to identifying big investment opportunities. To drive outperformance, we must be paranoid about our perceptions and our perspective, we must constantly question our assumptions, and we must get into the mud to see what is actually occurring on the ground.
By recognizing the limitations of our conceptual frameworks and quantitative measures, and by immersing ourselves in the ground-level reality, we can uncover world-changing investment potential.
As always, we love to partner with exceptional founders and innovative investors. Don’t hesitate to reach out.
Let’s build a better future.
Peter & Maggie