View profile

Weekly 3: Outdo your competition

Summary: Choose the path of most resistance. Be more credible. Follow the rule: less > more. (~6 m

Idea Journal Weekly 3

July 15 · Issue #43 · View online
We combine 3 ideas to help you think differently and be more creative.

Summary: Choose the path of most resistance. Be more credible. Follow the rule: less > more. (~6 min read)

#1. Make your competitors sweat more than you.
Suppose you’re a small and nimble person being chased by a large and aggressive bully, when you reach two sets of stairs: do you go up or down?
Silicon Valley oracle Paul Graham writes in his essay How to Make Wealth that you should “run upstairs.” Although going up is hard, it’s easier for you, and the bully can probably run downstairs as fast as you can.
Graham recommends that you take the same approach with your startup.
Big companies can develop technology and create innovative solutions – they just can’t do it quickly. Their size makes them slow, and “in practice big companies only get to develop technology in fields where large capital requirements prevent startups from competing with them.”
He suggests that when you’re selecting the aim of your startup, deliberately pick a hard problem to solve, and at every decision point along the way, take the harder choice.
Graham and his colleagues used this rule with their own startup Viaweb, an early software-based application that allowed people to easily set up online stores in a web browser.
If there were 2 features they could add to their software, and both were equally valuable in proportion to their difficulty, they always chose the harder one. Not only because it was more valuable, but because it was harder: “We delighted in forcing bigger, slower competitors to follow us over difficult ground.”
#2. Position your next business or project above the “line of super-credibility.”
Author and entrepreneur Peter Diamandis writes in his book Bold that we all have a line of credibility in our minds, and when we hear a new idea we automatically place it above or below this threshold.
If an idea is above this line, we’re willing to give it the benefit of the doubt, and follow it over time, assigning further judgements along the way. But if it falls below, we’re likely to “dismiss it immediately, often as ridiculous.”
Diamandis points out that we also have a line of super-credibility. At this level, we immediately accept the idea as fact and think: Wow, that’s great! How can I get involved?
To make the launch of your next business or project super-credible, he recommends 3 steps: 
1. Familiarity matters. The best people to help you with your next project are those who helped you with your last one, or have watched you succeed in the past. If you don’t have a track record, start making one.
2. Trust matters. Diamandis suggests slowing down and building credibility. Don’t mistake a little initial traction for inevitable success. Real traction requires a lot of trust: “Investors love ideas, but they fund execution.”
3. Messaging matters. Who presents your idea may matter even more than the quality of the idea itself. Find the most authoritative and credible person possible to position your business or project – even if that’s not you.
Diamandis himself aimed for the line of super-credibility when he launched the Ansari XPRIZE: a $10 million dollar incentive competition to put the first privately-developed vehicle into space.
Initially, Diamandis didn’t have $10 million dollars to fund the prize, or even a team. But he did have a network of high-profile contacts in the space industry,  based on his years of organizing space conferences, promoting space travel through foundations, and going to graduate school.
When Diamandis finally announced the Ansari XPRIZE, he surrounded himself with some of the most credible and influential people in the industry: Erik Lindbergh, the grandson of Charles Lindbergh, the first person to make a solo transatlantic flight across the Atlantic Ocean; 20 astronauts, including Buzz Aldrin of the Apollo 11 mission to the Moon; and Dan Goldin, the Administrator of NASA at the time.
Without their support, Diamandis acknowledges that the project would have been ignored.
#3. To beat your competition, “underdo” them.
Authors and entrepreneurs Jason Fried and David Heinemeier Hansson write in their book Rework that conventional wisdom says in order to beat your competitors, you need to do more. 
If they have 4 features, you should have 5; if they’re spending $20,000, you should spend $30,000; if they have 50 employees, you need 100.
But for Fried and Heinemeier Hansson, this kind of one-upping mentality is a losing strategy: “you wind up in a never-ending battle that costs you massive amounts of money, time, and drive.”
Instead, and in contrast to Paul Graham’s advice in Idea #1 above, they recommend that you do less than your competition to beat them: “Solve the simple problems and leave the hairy, difficult, nasty problems to the competitors.”
Developments in the bicycle industry provide a useful example of what it means to underdo your competition.
For many years, the leading brands focused on producing increasingly sophisticated equipment: for example, mountain bikes with disc brakes and suspension systems, road bikes with lightweight titanium frames, and the assumption that bikes should have multiple gears, up to 27 in some cases.
But more recently, fixed-gear bikes have exploded in popularity – they have just one gear, and some models don’t even have breaks. The advantage is that they’re cheaper, easier to use, lighter, and don’t require as much maintenance.
With your own product or service, instead of shying away from the fact that it does less, highlight it: “Sell it as aggressively as competitors sell their extensive feature lists.”
Quote of the Week
“Americans mythologize competition and credit it with saving us from socialist bread lines. Actually, capitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition all profits get competed away. The lesson for entrepreneurs is clear: if you want to create and capture lasting value, don’t build an undifferentiated commodity business.”
- Entrepreneur and investor Peter Thiel in his book Zero to One
Idea Journal
Idea Journal
Did you enjoy this issue?
If you don't want these updates anymore, please unsubscribe here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue
New York, NY