👋 Welcome to this week’s edition of 5-Bit Fridays. Your weekly roundup of 5 snackable—and actionable—insights from the best-in-tech, bringing you concrete advice on how to build and grow a product.

Happy Friday, friends 🍻

Before we get to it, earlier this week we got a chance to see what the Google team (less 12K people) has been working on at their annual Google I/O conference.

To no surprise, the biggest headline came from the AI team, as they announced their new AI model, PaLM 2, which will power its leveled-up Bard chatbot. And they tout it as what may be the future of search: Instead of gathering up a bunch of links (sponsored and high ranking), answers to our questions will be written by Google’s AI and will appear at the top of the page for some searches.

The update will roll out to just a few users (in Google terms) at first but could signal a radical change for publishers and real implications for businesses relying on SEO for distribution. Just take a look at this video to see how links get deprioritized.

And now onto what you came here for.

Here’s what we’ve got this week:

• Where do great ideas come from?

• Diagnose with data, treat with design

• Seismic waves of Gen Z behavior

• 10 interview questions, and insights on how to answer them

• How ChatGPT works technically

(#1) Where do great ideas come from?

You’ve no doubt heard the trope: ideas are a dime a dozen, it’s execution that matters.

That’s why when you have a startup idea, people usually tell you not to fret about telling others, as most will never steal it and do anything with it. Perhaps this notion came from management expert, Peter Drucker:

In other words, the value of an idea resides in effective implementation, not simply coming up with it.

I largely believed that to be true and never spent too much time questioning it. I mean, how often do you hear an uncle say “I thought of that before it existed!”?

But, the other day I read a great essay by from The Generalist. Mario argues:

1. Ideas in and of themselves are not cheap, and ideation is not valueless

2. Nor are ideas abundant. In fact, he points to evidence they are growing rarer by the year. As Stanford University study titled “Are Ideas Getting Harder to Find?” detailed how “research effort is rising substantially while research productivity is declining sharply.”

With these two points, Mario goes to on say that instead of minimizing ideas and only rewarding the execution of them, we should look to “understand better how, where, and by who they are created. What incentives encourage originality? Who should you hire to boost an organization’s innovation? And how do you harness the abilities of a collective?”

After examining 30 academic studies, he brings us these key actionable takeaways:

For Mario’s full deep dive, check it out here and definitely consider joining .

Now, to add to those insights and bring this to the more tactical, here’s a great framework from First Round Review for finding startup/new market ideas.

It’s called the Blue-Sky Brainstorm, and the three-step process goes like this: 👇

1. Set your compass with these three questions.

1. Where are the big/hard problem areas in the world?

2. What personal skills, advantages, or insights do you have to be able to help solve it?

3. How can you turn this into a viable business idea?

2. Hunt for ideas in nonobvious markets

The trick to spotting a nonobvious idea lies in finding what bucks conventional wisdom before anyone else and scaling that unlikely idea into a high-growth company.

To help mine nonobvious markets for ideas, Elad Gil buckets the best types to go after into three vectors: (1) new technology, (2) looks crowded but isn’t, and (3) seemingly niche.

1. New tech: Look at either what tech is compounding really quickly in terms of capabilities, or where adoption of tech is growing at a good rate.  As Elad says, “You can also look at the technology and ask ‘Well, how much faster or better is this thing getting per year?’ and then look downstream. Or go the opposite way and ask ‘What happens if instead of a million people doing this thing, you had 50 million? What fundamentally changes in the market?’”

2. Looks crowded but isn’t: You can still win even if someone else gets there first. The trick is to dig deeper and find differentiation, allowing you to capture what they’re leaving on the table. [Tip: Use the Blue Ocean Strategy Canvas to help]. Given that many of the most interesting markets always look crowded, go through these 4 steps to find signals of open space:

   1. Size up the competition: Are the competitors any good?

   2. Look for structural disadvantages: Are there unfair distribution mechanisms or other barriers? Some crowded markets are indeed crowded or not worth it.

   3. Suss out if there’s room: Is it a winner-take-all or winner-take-most market? Or is it more of an oligopoly structure?

   4. Calculate potential customers: Are customers actually being served well? What's the total penetration versus what it should be? Try to find the delta between how many people are customers and how many you believe there should be. [Tip: Use the Three Tiers of Noncustomers framework]

3. Seems niche: According to Elad, “Sometimes it’s not niche, it’s just boring. If you conflate the two, you’ll miss out on incredible opportunities”. Elad suggests three types of markets worth looking closer at:

   1. Too small: “Small can easily turn into a mainstream product.”

   2. Too boring: “There are some real opportunities in areas where investors or founders essentially don’t want to think about it or they just don’t understand it.”

   3. Too high-end: “You also hear that certain ideas are super high-end and can’t possibly scale. But you have to see the bigger picture and think about where it could go”

3. Relax your constraints on the current reality

At ideation, you don’t want to limit yourself to the current reality. Big bold ideas that could change how people live their lives often come from entertaining futuristic thinking and going beyond what’s available today.

So, as you consider startup ideas to previously unsolvable problems, here are 4 questions to help you cast off these constraints:

1. What technology is missing that is stopping you from achieving your end goal?

2. What can you do now that lets you fold your more ambitious aims in later?

3. What’s the science fiction version of your product?

4. Have you pondered any particularly intriguing “What ifs?”

(#2) Diagnose with data, treat with design

I’ve said it before, and here I am preaching it again. 's writing and insights are just stellar.

While reading an essay of hers from back in April, this phrase stood out to me: Diagnose with data and treat with design.

Let’s break that catchy mantra down.

Diagnose with data 🧪

When you are data-informed, it means you’re paying attention to data points beyond your intuition that give you an understanding of what is actually happening, whether problems or opportunities, so that you can make the best decisions. But, data has shortfalls. Namely:

1. Data can tell you what is happening, but not what to do about it

2. Quantitative data can tell you what someone is doing, but not why.

With that, data becomes the bread-and-butter for identifying and diagnosing things.

Treat with design 🎨

A few notes on that last point:

• If one data point is being used to suggest X led to Y behavior, look for more data.

• If design intuition tells you that some experience is bad, trust that sense.

• If design intuition tells you that A works better than B at a large scale, be wary.

• The more your target audience doesn’t look like you, the more skeptical you should be of design intuition.

• By and large, use quantitative data when optimizing and growing something, and qualitative discovery when you’re in the early stages of a product.

Enjoying this post so far? Feel free to share it :)

(#3) Seismic waves of Gen Z behavior

If you remember much from school Geography, seismic waves are those massive elastic movements in the earth that come from earthquakes, explosions, or other mega shifts.

Since we don’t spend much time talking about science here, in startup context, seismic waves are long-term, transformative changes that shape markets.

Think of them as startup waves worth catching. Macro tailwinds that create massive opportunities for folks like us.

As from describes:

Take these two examples:

• Instagram (1) rode the rise of mobile and rapidly-improving smartphone cameras. And also (2) rode the wave of younger people wanting to be somewhere their parents weren’t (FB). Plus, at the same time, people were getting used to living more public lives and social graphs were becoming more global.

• Figma (1) rode a technology shift in WebGL which let you render interactive graphics in the browser, and (2) enjoyed the increasing importance of design in a digital world and the expanding definition of “designer”.

Rex, who works at Index Ventures, spends a lot of time researching how people and technology intersect, with an emphasis on Gen Z. In a fantastic post, Rex dives deep into 3 behavioral waves worth paying attention to. These are shifts in Gen Z’s worldviews, attitudes, and preferences, and he bets that each shift will power a number of generational startups over the coming years. They are:

Adding to our first bit today of coming up with new ideas: By studying these seismic waves, you essentially have a framework for assessing where radical disruption (and thus large-scale value creation) lies.

I’ll leave you with this insight by Rex:

(#4) 10 interview questions, and insights on how to answer them

At this point, you probably know how much I enjoy ’s work. For the folks who’ve joined How They Grow in the past 3ish weeks, I cite Aakash’s work probably more frequently than any other expert.

And for good reason.

Aakash has over 15 years of experience in product at companies like Google, Epic Games, and Affirm. He writes one of my favorite newsletters with 46K readers, , and is also the #1 product voice on LinkedIn.

AKA — he’s a goldmine of insights. 💎

With his experience across various size companies—both being hired, and doing the hiring—Aakash recently shared what he calls the most commonly asked interview questions, and how to respond to each so you stand out and boost your shot at getting the offer:

To dig deeper, check out his post, “How to Win at Remote Interviews”.

And for our last bit today…

(#5) How ChatGPT works technically

We all use ChatGPT now, or at least, one of the gazillion tools built on top of it.

But, how much do you really know about what’s going on behind the scenes?

Same.

Luckily for us, does a great job at explain complicated technical things in simple and accessible ways. In a short 8-minute video, he explains how ChatGPT works by breaking down:

• Large Language Models

• GPT-3.5

• Fine-tuning

• Prompt engineering

• How to answer a prompt

Let’s take a look: 👇

The is one of the top 5 technology publications on Substack, and if you’re generally curious about complicated technical things being explained to non-technical people, go see what 363,000 other folks subscribe for.

And for my more humble newsletter…

Join over 5,000 subscribers

Free for now. Not forever.

🌱 And now, byte on this if you have time 🧠

If you have time for just one more read this week, I highly suggest this OpEd by on the big potential of small apps.

As I mentioned above, there are literally tons of new AI apps flooding the market each week. Many of them are one (or a few) man shops that generate huge interest very quickly, then fizzle out. People will try the newest, pay for them, and move on. 

While there’s nothing wrong with a quick venture for a quick buck, Packy digs into how these small apps can go about digging moats for themselves to not just get big, but stay big and relevant. Specifically: “Small Apps that recognize their fleeting nature can team up with protocols that are built to last to build something bigger and more durable collectively.”

This was one of my favorite long-form essays I read this week.

READ: Small Applications, Growing Protocols

And that’s a wrap on our 26th edition of 5-Bit Fridays. Wild we’ve been doing this for half a year already.

If you learned anything new today and are in the mood, feel free to hit the like, share, or restack button below to help other folks discover HTG. 🙏

Otherwise, keep your eyes peeled for our next deep dive. I’ve teamed up with a special guest, and I’m very excited to share it with you on Wednesday.

Until then.— Jaryd ✌️