Kill the Gorilla

I went to see Sujal Patel give an intriguing talk on “Introducing Disruptive Technologies into Mature Markets” this Friday. Listed as starting at 6:30 (it actually started at 8, but that’s a different story), my expectations were high as I dragged myself out of bed at 5:30, after a mockingly short 5 hours rest. It didn’t disappoint.

In brief, his three keys to dethroning your gorilla:

1) Possessing a “disruptive technology.” According to Patel, for a new product to make a dent in an existing marketplace, it must be at least 10x better than similar existing offerings. Not twice as good, not five times as good. The logic behind this is that a product anything less than 10x better will not be able to cross the chasm into the early majority, because all breeds of majority adopters (early, middle and late stage) are compelled to adopt only when a product is so overwhelming better that it justifies the investment of time to learn it. This matches my intuitive perception of user adoption patterns — I’m certainly unlikely to adopt something new unless I can clearly see high benefit and low risk (i.e., of the new technology disappearing) to doing so.

2. Tenacity. Though this one is somewhat obvious, the depth to which it is necessary is something that new or non- entrepreneurs may not understand. Patel gave the example of spending literally three months in VC meetings for “all but two days. ” In many of those meetings, he was assured that his idea “was like so-and-so’s idea,” but worse. Other challenges in his case involved convincing VCs that two late 20-somethings, who knew almost nothing about storage, could build a successful storage company amongst a landscape of almost 100 competitors. An illuminating example that he didn’t give was that, as he lectured us, his company had dropped in value almost 22% in the last couple months on news of poor fourth-quarter earnings. Nevertheless, he had to show up, organize an hour-long show, and preach the perfection of his company’s execution. Guts.

3. Partners=results. If there is a single, overarching requirement for success, it is surrounding yourself with the absolute best people that exist. He specifically mentioned the need to find “high ceiling” people who have separated themselves from their peers. When asked in the Q&A session why he’d failed to mention “adaptability” as one of the core needs of a new business, Patel responded that “adaptability” is really a function of who you have. Do you have partners that hear the needs of the business and work together effectively to ensure those needs are met? If so, adaptability is already assured.

Overall, it was an extremely relevant topic for me. Thinking about the features of the site that are truly 10x better than their alternatives helps to focus on the core of the business model. And the need to partner was one that I had already understood, but Patel’s commitment to not compromising on a less-than-ideal partner certainly resonates, as my search for able accomplices extends into weeks from what I’d hoped would be days.

Consulting

I had my second visit with business consultant Karrie Kohlhaas yesterday, and continued hammering out the most effective way to spend my time. Karrie is one of the first bona fide business-minded people I have had the opportunity to sit down with over a meaningful length of time, and as such, it has been a very intruiging process to watch her work.

As far as I can tell, a good business consultant is part entrepreneur, part investor, part psychologist, part buddy, and part client. It can be hard to toe so many areas. Take yesterday’s meeting. Karrie sees the research I have done on trying to determine the different target groups for the site. She sees that one of the groups is collectors, and that I have written that I believe that collectors are motivated by having a community of like-minded collectors. At this, she squints her eyes slightly, and in a split second I witness her thought process dart through a sequence something like “Real sellers don’t care about community” to “Though I suppose what that really means is its hard to say what these groups want,” at which point she’ll say something like “Hmm, that’s interesting. Community.” Because one of your roles is client, and the customer is going to get the benefit of the doubt when there is potential doubt.

This is surely the most difficult set of balls to juggle as a consultant, because on one hand you need to use your expertise to tell your client that you disagree, but on the other hand you need to instill confidence that leads your client to believe in themselves and become more productive. And though this is not altogether dissimilar from an employee telling their boss that the blink tags proliferating the new company web site sort of clash with the progress mankind has made in the last 10 years, it is different, because A) your boss isn’t paying you to tell him he’s wrong B) you’ve known your boss longer than 10 minutes C) you aren’t charging your boss $125 an hour and thus D) time is less of the essence. It’s extremely complex, and yet paradoxically, the complexities add up to the result that conversation has to move faster.

Analysis of the peculiarities aside, finding a good consultant can definitely be an extremely productive experience, especially if, like me, you’re new. Karrie’s part entrepreneur has helped me come up with catchy ways to think about and describe my business. The part investor has helped me be extremely needs-met-centric in my consideration of the site’s success. The part psychologist has made more observations on my nature in three hours time than many of my friends have tried in three years time. Part buddy chatted with me about how the body will steal back sleep cycles during the day if you don’t let it sleep proper. And part client wraps up all of the above in as rosy a container as can be expediently created.

I’m sure your mileage may vary by consultant. I picked Karrie by her prickly (in a good way), unorthodox profile on Biznik, which, in a nutshell, reminded me of me. Now that I’ve visited a couple times, I’ve been most impressed by her focus and follow up. This is a topic that I may revisit in a future blog once I have more data for comparison points. It can certainly go a long way toward helping one escape their own mind.

Differentiation

It’s the three-inch titanium wall between you and the loot. It’s the ghost you feel on your ceiling in the middle of the night. It’s the $64,000 question challenging your otherwise-grand business idea: How is your thing different and better?

This question has been dancing through my head for weeks. It’s one thing to have an idea that could make people’s lives better. I have those every day, and you probably do too. In fact, talk of “how to do things better” has graced watercooler after watercooler since some business wunderkind had the idea that our lives would be improved if we didn’t drink from the tap. However, barfing out some idea of how things could hypothetically be better is not unique. If only the ideas heard by the watercooler were judged in a void where “degree of improvement” was the sole arbiter of success, then the world might properly appreciate the value of a good idea.

But they aren’t and it doesn’t. My idea kicks eBay where it counts, while providing a service that person after person has agreed they could utilize. But the $64,000 question remains, because the 800 lbs gorilla is often only of peripheral concern to the new business. Big businesses tend to lumber along with scattered focus, and as a result, are easy to be negatively contrasted with a nimble startup if one focuses on the idealistic: “Could I do a certain thing better?”

The crucial gauge of the great idea, then, is no more how it compares to the gorilla than how it compares to everything else. Once I find a site that seems to be trying to do something similar, I ask: How do I compare to what these people are doing? How will I compare to them once they see my idea and start trying to copy it? And of course, how well is this business doing? Quite frankly, this final question is an annoying one to ask, because if they are doing well it means more competition, and if they’re doing poorly it means the need we’re trying to meet might not be as great as anticipated.

From what I can gather, it would seem that there are a lot of “entrepreneurs” who don’t have the tenacity or wherewithal to ask this question, and their site ends up missing the key point of differentiation. For example, Powersellers Unite provides a list of the 20 most successful eBay copycats, er, Internet auction marketplaces. You visit these sites, and you see very little to distinguish them from eBay, save that they €™re willing to make less money with lower or no fees.

It takes tremendous courage, tenacity, and perseverence to honestly evaluate a competing idea and confront the question of why that idea won €™t work and yours will. But it alone is what charges a €œgreat idea € with the power to become €œa great, successful idea. € Over the course of refining my great idea, I’ve focused on learning to be honest about the similarities, and persevere through them with an even greater understanding of where are the cracks in the fortress of competition. There is no second option for businesses that want a realistic chance to succeed.

Welcome to 800 Steps to Entrepreneurial Success

Business consultant Karrie Kohlhaas pointed out to me today that the really successful entrepreneurs understand that all that work done to build a business for success isn’t really building a business at all. It’s building you.

In that spirit, I now embark upon my entrepreneurial self/business building. My site proper details my steps to this point, but all I have left from the sum of those experiences is a bunch fragmented memories. With this blog, that changes. The idea here is to chronicle the process of how big stuff happens, bit by bit by itsy bitsy bit.

What I expect will result from this exploration is a series of observations on the challenges and thrills of hatching a plan. Ideally, these observations will form a pattern from which meta-patterns will eventually manifest themselves. Through the back and forth of coalescing and isolating the meaningful lessons I come across during this journey, I reckon I’ll end up with either 800 steps to entrepreneurial success, or freezer-burn.