Analogies are powerful tools that help us understand complex concepts by connecting them to more familiar ideas. By identifying shared features between different domains, we are able to abstract away much of the details and focus on the crux of an idea. They are a form of shorthand that helps us grok new ideas quickly. But they are also dangerous. And for founders, an over-reliance on them can lead to motivated reasoning and false starts. Analogies have a sneaky way of supporting our underlying assumptions, and the longer we use them the harder they can be to replace.

In tech, the use of analogies has become trite. The “Stripe for X” or “Uber of Y” pitch has long been cliché, and too often analogies used in the industry are poorly thought out or just plain wrong. Good analogies are found through effort. And it's better to not use analogies at all, then to share a meaningless one. Analogies that are too simplistic or far removed from the specific context of a business come off as shallow thinking. In a pitch, when founders try to frame their business around another successful company or strategy without fully understanding the nuances involved, things can quickly fall apart.

Another danger of using analogies is the potential for motivated reasoning. Business systems are complex, and founders may be tempted to use analogies that justify their preconceived notions, rather than making decisions based on an objective evaluation of evidence. This can lead to a confirmation bias, where founders seek out ideas that support their existing beliefs and dismiss or ignore ideas that challenge them.

Despite the pitfalls, there is value for startups in identifying effective analogies, especially in the context of fundraising. Raising a new round of financing is valuable opportunity for founders to define the key aspects of their business and think through the analogies that accurately distill key concepts. This is particularly important for startups operating in emerging industries, like AI and web3, where good analogies are especially hard to find and there is a lot of complexity that needs to be translated to different stakeholders.

To find good analogies, it's important to first identify the key concepts or ideas that need to be explained. Then, think about other contexts or domains that share similarities with those ideas. To make this more concrete, the next addition to our research hub will be a system thinking primer which will go into more detail on this process.

What defines a good analogy? A good analogy is one that effectively and accurately captures the essence of the idea being explained, while also being relatable and understandable to the audience. For example, if we are trying to explain a transformer model to a non-technical audience. We might say, a transformer model can be thought of as an orchestra conductor. Just as a conductor coordinates the performance of different instruments in an orchestra to produce beautiful music, a transformer model processes and combines different pieces of information from a variety of sources to generate high-quality outputs. Like a conductor who has to manage the timing, tempo, and volume of each instrument in the orchestra, a transformer model has to balance the importance of different parts of the input data and decide how to weight each piece to produce the best output. The model can also selectively attend to specific pieces of information, just as a conductor might ask a particular section of the orchestra to play a more prominent role in a particular passage.

This analogy might help our non-technical audience better understand transformer models at a high level, but is not practically useful if they wanted to start building one. Analogies are most useful for founders as a translation tool—making the complexity of a business digestible to a broader audience. But they are not a substitute for domain knowledge. If a founder is tackling an unfamiliar problem, analogies can help identify interesting places to dive and learn more, but should not used as a proxy for deeper thinking. Ultimately, the key to finding good analogies is to think creatively and critically, and to be willing to explore multiple possibilities before settling on one that works. Use them wisely!