Networking - being shy does not help

I attended the Garage Geeks this Thursday. I wanted to share the experience and some of my personal learning.

The guy on the top left is me

Mingling is not be core competency (this is a huge understatement). This is why I choose carefully the conferences and exhibitions I go to. When I attend an event, I typically listen or try to find only relevant persons to talk to, do my thing and vanish quickly.

Two things happened to me this week that changed it in the Garage Geeks

The first one is that I heard Yossi Vardi speaking with a tech-crunch interviewer about conferences. He said that he goes to many of them to meet people and this is not less important than the agenda of the conference. I thought to myself, "well, I will try to be less shy this time"

The second thing is pure luck. I had to buy a medicine for my kid at a specific pharmacy close to the place where the even took place. The event was scheduled to 8:30PM, but I was there before 7:00PM since  pharmacies are closing at 7:00PM.

The result was that I was the first person to arrive to the site. Since I had to make myself useful I offered my help in organizing the place and a nice conversation started to take place.

It was still early, and the stream of people arriving was thin, so it was easy to start discussions with new people that arrive. As a result I was really able to speak with tens of people. I spoke about my start-up, asked for new ideas, directions, connection, etc. AND, people really like to help.

I met people that I wanted to meet for a long time and had no idea how to connect with. With one of them I started to talk since he blocked my way to the pizza and he "had to" hand me one :)

Finally, the event was great and insightful. I've already started testing a social aspect to my product.

To those of you who have not been in Garage Geeks, you should really go.

The conclusion is simple. Don't close in a shell. Go out and meet people. You never know where the lead/direction/connection you need will come from. You can also provide a useful advice to another person that needs it.

Don't take yourself too seriously.

Amir

Dutch restaurants - very nice, very efficient, very ineffective

I have just came from from Amsterdam where I ran half a marathon.

What a beautiful city - canals, boats, old buildings, good food, very nice and friendly people, clean. What more can a person want?

However, being there made me aware once again on the on the difference between effective and efficient.

So much has been written on this point and I wish not to repeat it. I do wish to share with you some experiences I had, mainly in restaurants to demonstrate some of the funny points.

At a typical dining place such as small cafes the waiter also prepares the food, handles the register, arranges the inventory, etc. The waiters are very diligent. They are very hard working, so they also try to keep a small staff.

This comes at a great cost that no one seems to care or even notice: customers are waiting for a long time for their food. It is funny to see that when there is a chore, the waiter will do it first. They will clean the next table or place bottles on the bar, but won't bring a menu.

This means that

• Less customers are dining
• Frustrated customers (such as myself) are leaving. I left a very nice pancakes place after I sat for 15 minutes without even getting a menu

These are very efficient people and very in-effective ones

I did find effectiveness though. This was at the market. You should see the guy that serves herring in a bun or the guy who is making fresh Waffles (the best ones I had). They are super fast and customer oriented

In short, I enjoyed my time and came with nice anecdotes

Best,
Amir

Paradigm shifts and moats

In my last post I discussed the issue of competitive edge, taking one factor to an extreme point while keeping the rest at par with market needs. I also started to discuss how to relate to competitors copying your changes and the fact that creating a long term competitive edge for a technology firm is very difficult. In the end of my post, I started to explain that if you are doing something that relates to another dimension such as service or logistics and if the change you embark on will be considered by your competitors as pure madness, they will not rush so fast to try to imitate it.

In this post, I would like to continue discussing this issue and I think that instead of delving into abstract theory, I should use an example.

Take a company that offers outsource solutions such as software projects. It is known in the industry that a software project rarely is on time or on budget, it is difficult to control, the client wishes for late modifications, specifications change, and so on.

In many cases, being late has a severe consequences on the business such as losing potential income, or letting competitors be in the market before you.

Now, suppose this company will offer to be always on time, every time and inviting their clients to change specification as many times as they wish.

Suppose the company will offer this to the market and say that it is so confident that it will deliver on its promise and hence for any day it is late, it will pay 1% of the project's value. (a week delay is 7%, 2 weeks delay is 14%, etc.) Lets assume that a typical project is 9 months, and competitors are typically late by several months, this is a huge penalty.

Naturally, competitors will think this is a bluff. But it isn't. There is a way of managing projects in such a way and also be able to finish them much ahead of time. The method is called critical chain and I wish not to explain it in this post. I may do so in another post

The thing is that such a method changes drastically the way the company operates. It is a different philosophy of managing projects and much of it is not in line with what people are used to do. Competitors will not rush to take this route, it is not intuitive to them.

In addition, it is a different way of selling and marketing. This means that a competitor that wishes to copy this, needs to make several paradigm shifts. Now this is real barrier, I would dare to say this is a moat.

The bottom line is that we need to seek how to create an edge not just by having a unique product feature, but also in other aspects of the business such as supply chain management, managing projects, etc. These changes should be paradigm shifts that no one will dare to mimic until it is too late for them. By then, you have won the battle

Best,
Amir

When the tail is bigger than the dog - Creating a competitive edge

When building a start-up or good marketing plan even for a mature company it is important to ask "what separates you from the herd?" 

It is true, and I will be the first to admit it that when a company is a small fish in a big pond, this question does not really matter since the pool is big enough for many fish. However, if you want to become a big fish and you have no real advantage over your competitors, this task is almost impossible. This is why most venture capitals will insist on you having an edge.

There are many names to such an advantage. Warren Buffet calls it moat. Jack Welsh used to instruct GE to go out from all markets where they cannot be #1 or #2. Andy Grove called it the 10x factor.

But this is easier said than done. How can you create such a huge advantage that is not easy for a competitor to overcome and imitate quickly?

In a great book called "Blue Ocean Strategy" the authors suggest to categorize the product features and then take one or few of them to the extreme while keeping the other features more or less at par with the competition (or even decrease them if the market thinks that they are not no important). By taking one factor to the extreme they open a new market with zero competition, no sharks and no blood - a blue ocean.

There were many interesting examples such as gyms for women only, or a Golf club with an over sized club head where any amateur who never thought s/he can hit this small ball, is now able to.

The chart below shows how a wine company analyzed its product comparing to other wine makers. they decided that people are too confused about wine. Wines are focused on the winery brand, age, barrel, grapes, wide wine selection, etc. Yellow Tail surveyed many potential users (including ones who do not drink wine) and recognized that many people were looking for a simple wine for fun and adventure (kind of a red bull drink). Many people want an easy selection and they could not care less which winery makes it and how aged the wine is. They went for it full force. Read the book to see how they did.

When I come to think of it, the oldest famous example I know of, is how the Japanese car manufacturers took the market by offering simple family cars, but a supreme quality.

The problem with technology based companies is that it is difficult to create a long term barrier unless you are clearly developing something so complex and full of patents (say a rocket). Most companies do not have such a luxury and any feature they build into the product, their competitors can imitate within months. No wonder that Warren buffet said that he "does not understand how to invest in technology firms." It is obvious that he DOES understand it better than most of us. He means that there are no moats!

What companies can do is not to use the product but to provide a logistical service which is superior and which their competitors consider as total lunatic/impossible. If we take quality as an example, then if it comes with a 10 years guarantee as opposed to 1 year by the competitors, now we are talking. Competitors will not rush so fast to offer it. It is obvious that such an offer must be backed up and never (or very rarely) be paid, because if not, you will lose all your business due to: 1) you cannot afford to pay so much and 2) your users will grasp your guarantee as a fraud.

Other offers might be:

1. Offering an "always on time" service where the competitors are pretty much late. Suppose you are an outsource firm that does software projects. It is known that projects are never on time/budget. What if you commit to your promise and put a hefty late charge on each date you are late? What will be the market response? (how to do that is a different question)
2. Offering an ultra quick service where the market is slow to respond. See how fast DELL can send you a PC to your home based on your personal configuration. I think that no one except DELL can do that. This requires something ultra special of managing their supply chain.

Taking one factor which the market really needs to the extreme creates an edge, taking a factor that competitors think is impossible or idiotic to offer, creates a long term decisive competitive edge.

This like enlarging the tail of a dog until the tail is waving the dog instead of the dog waving his tail.

In my next post, I will discuss this issue further and speak of a paradigm shift, how frightening it is, and how to use it to your advantage in creating a decisive competitive edge.


Best,
Amir