Sugarcoat the broccoli

12 Apr, 2025

I recently listened to Notion co-founder Ivan Zhao on Lenny's Podcast and deeply connected with the way Ivan described "sugar-coating the broccoli." Ivan was imagining a world where users of technology were also builders of the technology, where building software was so easy that anybody could do it.¹ Technology like Lego. But his vision was difficult to sell because not that many people were interested in building software.² So, he had to sugarcoat his vision with something people actually used. He noticed people used productivity tools. So, he built Notion, which started out as a note-taking, tabulating platform you could use to replace Word and Excel. Notion is built with the logic of Lego building blocks: modularity and composability. You might not notice it as a user, because it's also just a great productivity tool (They've sugarcoated it really well.). As Notion focuses on building enterprise "solutions" today, they frame it internally as building "Lego boxes."

I liked Ivan's analogy of sugarcoating the broccoli because many great companies I admire follow the same principle, even if they may not frame it as such. The way I think about it is this: to imbue a commodity with a deep set of values and principles or—as I write it right now—to recreate a commodity with your values as the underlying logic. For example, three companies I admire are Patagonia, Apple, and Hermès. Patagonia sells outdoor gear, with Earth as their only shareholder.³ Apple sells personal computers with the logic that computers should be approachable and friendly. Hermès sells apparel but with an extreme differentiation on craftsmanship. I respect these companies because I resonate with their values—sustainability, user-friendliness of technology, and excellence in quality. The fact that they consistently choose their values, in spite of economic forces, builds a hard-to-copy moat and redefines the product category they are in.

I used to struggle with finding a "productive" outlet for my values. I have deep concern for the planet, for human well-being and happiness. I have concerns around poverty, inequality, tribalism, and the ways we wall ourselves from others. Having values, however, isn't sufficient for creativity. That's why I wrote you don't make money by solving problems, because there were many problems I would love to solve but it wasn't obvious how to take action on my values if my solutions could not be economically viable and long-term sustainable. Now, we have a solution: Build a commodity, imbued with the values you care about. In other words, sugarcoat the broccoli.

The commodity is the thing that a customer buys (e.g. clothes, devices, software), but the path you take to get there can be completely distinct. If I set the values I care about as first principles, how might I output the thing that fulfills the jobs to the done of the existing commodity? Patagonia was not innovating on new outdoor gear—they are still selling your standard rain jackets, sweaters, and so on—as much as they were innovating on a way to run an outdoor gear business, with protecting the Earth as their top priority. Crusoe AI builds data centers to be a cloud provider, and uses clean energy only so that energy intensive AI workloads can be aligned with the future of the planet. In Tesla's hey-day, their inception was also pretty much sugarcoating the broccoli—making cars, but electric cars that can be powered from the grid so they can eventually be moved to carbon-free alternatives.^{4 5} There are many ways to build a differentiated product, and being differentiated on values instead of production efficiency is one of them. Maybe this should not be surprising to anyone, because principles and values have value!

The next question is: How do you do that? It's already hard to build a competitive product. Now, you have to build a competitive product from a different set of logic—presumably logic that was selected against because of inefficiencies.

In these cases, the playbook seems consistently to be go up-market. Patagonia, Apple, Hermès, Tesla–these all sell their products at a premium. Let your customer express their values when they engage with your product! Furthermore, you are creating an inherently more valuable product.

By going up market, your products also exercise competitive pressure on the market. Competitors adopt some of those values when they realize there is a market for it. This is good if you were motivated by your values to begin with. It's like how Anthropic describes a Race to the Top at their goal; by prioritizing safety in AGI, they put pressure on other AI labs like OpenAI to focus more on safety too.^{6 7}

When motivated by values, there is a tendency to want to give away your service for free. My second claim—both for the reader and for myself—is that you have to charge for it. In some shape or form, your solution needs to be economically sustainable, and needs to have the fuel and power to win against incumbents. I don't think you do yourself a service by making it free. You are doing the world a service by building a free service, but I fear it's only a short-lived (even if intense) service. I say this purely as an empirical statement, which is to say, I know and look forward to the one day I am proven wrong.

I was walking myself through various commodities today that can be imbued with better values. Social media was an obvious one. Meta has dubious privacy practices, and Meta owns WhatsApp which I find hard to wean off. We all need a messaging app. What if we rebuild one from scratch? There's precedent for this: Signal.⁸

Today, Signal survives on donations. They are asking for donations because building Signal is expensive. I appreciate the transparency they gave into the cost structure of their company and their continued commitment to build industry-leading privacy.

However, something can be a labor of love and an act of service, and still charge people for it. The reason is not to extract profits or exclude others from the service. It's to signal and communicate to people that what you are creating has value. Humans are scared and confused beings. You need to signal to them that you are creating value. Price signals value. Otherwise you work against the cognitive dissonance that something is valuable and free. Just look at the sunshine, how little you appreciate the sunshine because it's free. (Or water. Or maybe your parents. And so on.) You work against both economic and psychological forces that put you at a disadvantage. The best way for others to value something is for you to value it too—so, charge for it, please.^{9 10}

I think that's why so many of these "sugarcoat the broccoli" type businesses that succeed go up-market. And that's how you exercise competitive pressure on the market too. By going up market, other companies notice there's money there to be made. You get more people building with your values. Whether we like it or not, we live on a plane where money drives behavior.

The final piece to sugarcoating the broccoli is that your broccoli needs to compete and optimize the scorecard in the market's arena. I'm ending with a quote from Ivan Zhao:

What is building a product or business? You want user. You want revenue... It's almost like a sports. The market is the arena. Then you'd want to optimize the scorecard where it's building for winning... I like to compete so I like that. And building for something you want the world to have is building for your value. You have some taste. You have some aesthetic. You have some values. You want the world to have more of that. They are different energy. I realize actually fairly recently, they're really different. Depends on which day I wake up, I might be in different mood for things, but building for value, it's more lasting and more fulfilling.