Learning Techniques

Paying Attention to Stories for Skill Extraction

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One reason we are so attuned to stories is that we use them to learn.

When you read an account of a startup employee being cheated out of millions of stock options, or when you read the story of a discrimination suit brought against an old exec, your brain files such stories away as ‘interesting’ and ‘notice this, for it might be useful later.’

The likelihood of a story catching your attention is directly correlated with its relevance to you. You don’t pay much attention to the stories of witchdoctors unless you intend to become a witchdoctor yourself. One can imagine that centuries ago, our ancestors sat around fireplaces and traded stories of the hunt in the exact same way you and I find ourselves saving articles to read later.

What interests me is the idea that we can be more rigorous about this practice, beyond “oh, that’s interesting, file this away for later.” This idea seems useful for two reasons. First, when you ask someone for advice, the odds are good that you’ll get a story in response instead of a general principle. Most people don’t take the time to generalise from life experiences into abstract ideas; you’re better off assuming that everyone’s going to tell you a story at some point and run with that fact.

The second reason this idea seems useful is that stories are often richer sources of information compared to abstract principle. I once spent a weekend in college reading 30 anecdotal accounts of startup failure — a list I had painstakingly compiled over the period of a few months. I quickly discovered that the narratives were often more educational than the lessons each founder concluded from their experiences — occasionally I found myself thinking “this is exactly the wrong lesson to learn from this experience!”

If a mentor gives you a general principle, you’re often left to figure out context on your own. But if a mentor tells you a series of stories that best illustrates this principle in their own lives, you’d have better context with which to judge the efficacy and relevance of that principle in action. It is the story that provides the colour from which you may draw your own lessons; reading narrative is how we augment our personal experiences with the experiences of others.

Bourdain and the Trial of Opening Your Own Restaurant

Let’s say that you’re a remarkable home cook, and you throw the best dinner parties amongst your group of friends. “You should start a cafe sometime”, they tell you, because they don't know any better and because they love your pork dumplings.

Good cooks don't necessarily make for good restaurant owners.

This is how many people start out when they decide to open a food business. The odds are good that the story is a nightmare. But the average person doesn’t know that yet.

You are smarter than that, though. Let’s say that instead of starting blind, you read Anthony Bourdain’s Kitchen Confidential before you rush to look for potential cafe locations. Nestled between chapters on sex, drugs, and mise en place is a wonderful section on the restaurant business. Bourdain writes:

TO WANT TO OWN a restaurant can be a strange and terrible affliction. What causes such a destructive urge in so many otherwise sensible people? Why would anyone who has worked hard, saved money, often been successful in other fields, want to pump their hard-earned cash down a hole that statistically, at least, will almost surely prove dry? Why venture into an industry with enormous fixed expenses (rent, electricity, gas, water, linen, maintenance, insurance, license fees, trash removal, etc.), with a notoriously transient and unstable workforce, and highly perishable inventory of assets? The chances of ever seeing a return on your investment are about one in five. What insidious spongiform bacteria so riddles the brains of men and women that they stand there on the tracks, watching the lights of the oncoming locomotive, knowing full well it will eventually run them over? After all these years in the business, I still don't know.

The easy answer, of course, is ego. The classic example is the retired dentist who was always told he threw a great dinner party. 'You should open a restaurant,' his friends tell him. And our dentist believes them. He wants to get in the business-not to make money, not really, but to swan about the dining room signing dinner checks like Rick in Casablanca. And he'll have plenty of chance to sign dinner checks-when the deadbeat friends who told him what a success he'd be in the restaurant business keep coming by looking for freebies. All these original geniuses will be more than happy to clog up the bar, sucking down free drinks, taking credit for this bold venture-until the place starts running into trouble, at which point they dematerialize, shaking their heads at their foolish dentist who just didn't seem up to the job.

(…) Unsurprisingly, a retired dentist who starts a restaurant for the sex, or to be told he's marvelous, is totally unprepared for the realities of the business. He's completely blindsided when the place doesn't start making money immediately. Under-capitalized, uneducated about the arcane requirements of new grease traps, frequent refrigeration repairs, unforeseen equipment replacement, when business drops, or fails to improve, he panics, starts looking for the quick fix. He thrashes around in an escalating state of agitation, tinkering with concept, menu, various marketing schemes. As the end draws near, these ideas are replaced by more immediately practical ones: close on Sundays . . . cut back staff . . . shut down lunch. Naturally, as the operation becomes more schizophrenic-one week French, one week Italian-as the poor schmuck tries one thing after another like a rat trying to escape a burning building, the already elusive dining public begins to detect the unmistakable odor of uncertainty, fear and approaching death. And once that distinctive reek begins to waft into the dining room, he may as well lay out petri-dishes of anthrax spores as bar snacks, because there is no way the joint is gonna bounce back. It's remarkable how long some of these neophytes hang on after the clouds of doom gather around the place, paying for deliveries COD as if magic will happen-one good weekend, a good review, something will somehow save them.

So what can you learn from this?

First, let’s ask the obvious question: is Bourdain believable?

Anyone who has finished Kitchen Confidential will say that he is: to hear Bourdain tell it, chefs must develop a sense for whether a restauranteur knows his stuff, if only for the chef to know how long to stick around (if the restauranteur is new, the answer is usually: not very long.) And so if we were to put a confidence value on Bourdain’s account, I’d say that we can put it in the range of 70%.

(This is not 100%, because Bourdain may still be embellishing his narrative, and I’m taking 10% off our confidence rating as a reminder that we should be epistemically humble here — we don’t have the necessary experience to evaluate what he’s saying).

The next question to ask is: what specific knowledge should a restauranteur have in order to succeed? From the passage above, I can think of a few:

  1. Most restaurants will struggle for traffic in the early days. Don’t thrash about during that early struggle. Don’t make constant tweaks to the menu or the concept. Don’t toy with marketing in desperation for traffic.  Wait a long-enough period of time, and know when to pull the plug.
  2. Don’t be under-capitalised. (Bourdain is talking about New York in his account; what does under-capitalisation look like for your specific market? How much money do you expect to throw in before you conclude that it’s really bad?)
  3. Know that you don’t currently know, but have to learn, the regulations for eateries in your locale.
  4. Know that you don’t currently know how high your fixed costs should be. Know that such fixed costs might not be clear to an outsider — Bourdain mentions ‘rent, electricity, gas, water, linen, maintenance, insurance, license fees, trash removal, etc’ — but this list isn’t comprehensive, and it’s probably different for your market.
  5. Figure out what hiring looks like in this industry, with its ‘notoriously transient and unstable workforce’.
  6. Figure out what it looks like to keep track of a ‘highly perishable inventory’ — how do you know what’s valuable given your menu, what keeps long, and how do you reason, financially, about food wastage? Plus the meta level above this: how do you test chefs to see if they understand these things, given that you don’t want to hire chefs who can’t keep their food costs under control …

This list of interesting questions leads us to the next step: how do we find the answers — or at least begin to find the answers — before we start our restaurant business? This is where things get interesting.

These questions can be answered in one of two ways: explicitly, and tacitly. That is, some of these answers may be learnt through reading or questioning, but others may only be learnt through experience.

It goes without saying that the explicit answers are easier to acquire: food safety regulations, for instance, can be learnt through research. Even questions like appropriate capitalisation and F&B financing can be answered through a systematic search for knowledge: you could find friends with experience in the F&B industry and grill them on the details of their restaurants.

It is the tacit answers that are much harder to learn. Notice that Bourdain says “under-capitalized, uneducated about the arcane requirements of new grease traps, frequent refrigeration repairs, unforeseen equipment replacement, when business drops, or fails to improve, (the novice restauranteur) panics, starts looking for the quick fix.” The glib lesson is “don’t panic when such things happen”; the real lesson is: “learn how that looks like and feels like in real life, and then actually not panic when it happens to you.

It is one thing to say “don’t panic”. It’s quite another to not panic when it’s your restaurant that’s on the line, a business that’s eaten up $200,000 of your capital and is burning through thousands more every month. You look at your floor of empty tables every day and think to yourself that the sunk costs could have been an extra holiday (or four) if it was left in your retirement account. You grit your teeth and start to do exactly that which Bourdain says you shouldn’t: you tweak your concept and change your menus and inevitably spiral down the drain to failure.

Searching For Answers

I think a list of testable questions is the most useful artefact you should aim to get out of any story. For each of the questions above, you may ask yourself two further questions:

  1. How confident am I that this is true?
  2. How do I find the answer to this question?

For example, “don’t be undercapitalised” can be answered this way:

  1. I’m fairly certain (80% confidence) that this is true because it matches my understanding of F&B businesses in general. All that equipment needs to come from somewhere — you’re going to need a spend a pretty penny to set up the kitchen, prettify the dining area, set up the drainage and cleaning, and so on.
  2. What is appropriate capitalisation for a restaurant in my location? This one is trickier to answer. I can’t work in a restaurant to figure this out; by the time I get hired, all the capital expenditure would have likely happened already. I could partner with an experienced restauranteur to figure out such costs. Or I could start out with a smaller, cheaper business — like a food truck — in order to get a rough idea of the ongoing costs, and then extrapolate from there to understand restaurant costs.

The above list of questions becomes more valuable once you realise that you may construct an equivalent list of strategies to figure out those answers. That list then becomes your n-step plan to run a successful restaurant business. To wit:

  • Find out how it looks like when a grizzled pro waits out the early drought to achieve restaurant success. What does it feel like to wait it out? How does the pro evaluate the odds of success? The best way to do this is from the inside: you’d want to be present as a member of the business, but at a high enough vantage point to see the events as they occur. So: waiter, line cook are probably ok roles, but accountant or business partner would be even better. In order to do this, I’d look for F&B businessmen who have had a history of setting up successful outlets — but not those with the star-power draw of a David Chang or a Gordon Ramsay.
  • What does proper capitalisation look like? I’ve already covered this above: either partner with someone else and ask to have a friendly look at their books, or start a low-cost experiment to get a feel for the numbers.
  • On regulations: talk to an existing restauranteur, or go to your local chamber of commerce/local government to understand the inspection regime in your current city.
  • On fixed costs: assuming that you’re rich enough, one possible idea is to go buy (or start the purchasing process for) other restaurant businesses in your city. Having a peek at their books would reveal a ton of information about the ongoing costs of running a food operation.
  • On hiring: again, you’re probably better off taking up a role in an existing restaurant business, and you should use that time to observe how they do their hiring. If Bourdain’s experience is anything to go by, you’re not likely to gain good insight into the labour networks of your chefs and line cooks in the short time you have, but that’s alright — at the very least, you’ll know that you know very little about hiring in this industry.
  • And finally, keep your eyes out for a workable inventory system. Bourdain writes later in his book that he learnt his trade from a guy he calls ‘Bigfoot’, a man he says is the ‘one perfect animal in the restaurant jungle, a creature perfectly evolved for the requirements of surviving this cruel and unforgiving business, a guy who lives, breathes and actually enjoys solving little problems like the ones above’; Bourdain does his inventory management exactly the way Bigfoot does, and to hear him tell it, Bigfoot’s systems are a marvel of efficiency and good sense.

Of course, I’m not penning this list as an actual example of an n-step plan to running a successful restaurant business. Bourdain goes into rich detail on all the various ways one may fail while running a restaurant business; the excerpt I’ve presented above is merely the simplest scenario. (The worst case scenario is the experienced restauranteur who’s had a string of two to three successes under his belt; he gets cocky and then gets killed by the fourth restaurant he opens. Bourdain calls these people ‘restaurant geniuses’, who in their twilight moments would bleed their successful restaurants dry in pursuit of their final venture).

No, I’m using restaurants as an example in this piece because it’s something we’re all familiar with. We have all eaten in or at least wondered at the realities of running a successful eatery. I’m also betting that most of us have seen beloved restaurants close their doors despite having great food. The real objective in this essay is to show you how one might construct an n-step plan for a long-term career goal, and how to do it from the stories you hear when you go to people for advice.

This skill extraction technique is something that I’ve found repeatedly helpful in my career. I’ve made it a point to avoid discussing the minutiae of the tech industry in South East Asia in this piece, but nearly everything I know about running companies in the messy environments here I have learnt through a combination of story-driven skill extraction, systematic trial and error, and eyes-wide-open curiosity. To sort of give you some indication that I’m not making this shit up: in 2017, I wrote a essay titled The Two Tiers of Singapore’s Tech Companies that became fairly famous in Singapore; the essay summarised several industry-wide patterns that I had noticed over three years of working and hiring in the industry around me.

What’s stuck with me was the sheer number of people who emailed, saying “thank you for writing this, I had no idea Singapore’s tech industry was structured this way” — I remember thinking to myself that if they’d only asked for stories from their seniors, they’d have come to the same conclusions.

Story-driven skill extraction matters. There is far more wisdom in the stories you hear from veterans than you realise. To paraphrase Donald Rumsfeld’s famous quote about ‘known knowns’, the value of external narratives is to take a list of unknown unknowns and turn them into known unknowns. The latter category is more tractable: at the very least, you will now know to go out and get those questions answered.