False Negatives and False Positives

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One of my favorite ways of thinking about the world is by asking, “what are false positives? What are false negatives?”

This is particularly useful for thinking about opportunities with relation to my work. 

False Negatives

Some companies or trends are “false negatives,” meaning that an idea or product tried out at one time looks like a failure but ends up actually being a success later on and under the right conditions. One twitter user (I can’t remember whom, unfortunately), recently pointed out that online education was like this. If you were to step into a time machine and go back to 2010, everybody thought MOOCs would change the way we do education. The Obama Administration even poured a ton of resources into research on microcredentialing for this. 

But go to 2015 and most everybody thought online education was a flop. Learning coding on Coursera couldn’t get you a job in most cases. Going through a MOOC or online program signaled that you were either not smart or conscientious enough to get into a formal university program or that you were just doing the program for curiosity. It seemed like it was a dud.

But in 2019, it looks like one of the breakout companies from YC 2017 is going to be Lambda School — an education program based online with a better incentive structure. Online education being a flop was a false negative. 

False Positives

Others are “false positives.” These are companies that looked like they were successful (and may have been from a financial and returns perspective) but haven’t actually been as successful as they look. They’re often successful in one area but not in another. This is an opportunity for somebody else to come in and upend them. 

LinkedIn is the example that comes to my mind. LinkedIn is successful in terms of traffic and in its exit but seems like a subpar product for finding a job. LinkedIn profiles work well as resumes and the site works well as a socially-acceptable social network to be on while you are at work. But when it comes to finding a job, the best the site can do is let somebody apply quickly — which other services like Indeed allow, anyway. So, at least as far as finding a job goes, LinkedIn has been a false positive. 

Opportunities lie in false positives by building something that everybody knows the false positive company doesn’t do well but that the false positive company markets itself as. Any company that can help job-hunters find a job and be more than just a resume link (as LinkedIn has become) is attacking that market well. I’m optimistic about Crash for this reason — it’s attacking a market that the dominant narrative says somebody else, LinkedIn, does well, but everybody knows that narrative is wrong.

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