From Gabriel Weinberg’s book “Superthinking”
Flex Your Market Power
Arbitrage– “When you take advantage of price differences for the same product in two different settings.”
Sustainable competitive advantage– “describes a set of factors that give you an advantage over the competition that you can sustain over the long term. A working flywheel can drive such advantage- think of what Amazon has on its competition with regard to shipping because of its size and investments in warehousing and delivery.”
Market power– “the power to profitably raise prices in a market. For instance, when Amazon has raised its Prime price, hasn’t lost many customers. An extreme showing of market power is a monopoly. Monopolies have vast market power because they have little competition.”
Perfect Competition– “markets where many competitors provide the exact same product, perfect substitutes (also known as commodities).”
“When you are undifferentiated- with no sustainable competitive advantage and therefor no market power- you are completely subject to the supply-and-demand forces in the market, and the price they deliver to you. That speaks to picking an industry in high demand for the long term, such as nursing. It also speaks to the need to differentiate yourself from your peers by developing a unique set of skills that the market values. Then you have the opportunity to demand high compensation by demonstrating the distinctive value you bring to your employers or clients.”
Consensus-Contrarian Matrix
“there is a good reason that no one is betting on that horse. As Jeff Bezos said at Vanity Fair’s New Establishment Summit on October 20, 2016, “You just have to remember that contrarians are usually wrong.”
“Given a ten percent chance of 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for fences, you’re going to strike out a lot, but you’re also going to hit some home runs.”
A Secret– “can be an idea that no one else has thought of, but it can also be an idea about how to achieve something that everyone else currently thinks is too risky. It is possible that an idea is not as risky as it seems, and by taking a fist principles approach you can come to a more correct risk assessment.”
Why now?– “The same concept applies for almost any change you want to make, from trying out a new organizational process to pursuing a new career. Why now? Would it make a difference if you waited longer?
Why now? ask now what?– “When you see something change in the world around you, ask yourself what new opportunities might open up as a result. From political sphere to the personal and organizational, many sweeping changes happen in the wake of a real impending crisis.”
First-mover advantage– “crafting a competitive advantage derived from being the first to move into a market with a product. However, they can also experience a first-mover disadvantage if they make a lot of mistakes. Fast-followers can copy the fist mover, learn from their mistakes, and then quickly surpass them, leavig the fist mover ultimately disadvantaged even though they were first.”
Product/market fit– “when a product is such a great fit for its market that customers are actively demanding more.”
“First to market seldom matters. Rather, first to product/market fit is almost always the long-term winner…Once a company has achieved product/market fit, it is extremely difficult to dislodge it, even with a better or less expensive product.”
Resonant frequency– “Each object has a different frequency at which it naturally oscillates. When you play that frequency, such as the right one for a wineglass, the energy of the wave cause the glass to vibrate more and more until it breaks.”
“When you achieve product/market fit, the effect is similar. When this happens, result are not just a little better, they’re dramatically better. Product is flying off the shelves. True resonance is like that: not one or two times better, but many, many times better.”
Customer development- “Customer development’s goal is to help you find a sustainable business model by applying scientific method through rapid experimentation with your customers. You set up a quick feedback loop with them to learn as much as you can about their needs, resulting in a repeatable process to acquire and retain them.”
“we explained how you want to de-risk an idea by testing your assumptions as cheaply as possible. Cusomer development is one way to do that, by talking directly to customers or potential customers. As Blank says, “There are no facts inside the building so get the hell outside!” If you can ask the right questions, you can find out whether you have something people really want, signaling product/market fit.”
“Talk to residents before you move somewhere. Interview current employees before you take a job. Poll a community before enacting a new policy. For any idea you have, think about who the “customer” is and then go talk to them directly about your “product.” Think focus groups, surveys, interviews, etc.”
Pivot– “a change in course of strategic direction, and there are many famous examples. You may be surprised to know that Twitter started as a podcasting network or that Nintendo actually dates back to 1889, when it was founded as a playing-card manufacturer.”
“Pivoting is usually difficult because it cuts against organizational inertia, involves openly admitting failure, and requires finding a better direction, all the same time. But it can also be necessary. Pivoting is appropriate when your current strategy is not going to bring you the results you are seeking. Consulting advisers, who can more easily see you situation objectively, can help you determine whether a pivot is a good move.”
“When you truly understand what job people are really trying to get done by using your product, then you can focus you efforts on meeting that need…Asking customers what job they really want done can tell you the root of their problem and eliminate faulty assumptions on either side, ultimately resulting in a solution with a higher chance of success.”
What type of customer are you hunting?– “you can build large businesses by hunting different size customers, from the really small (flies) to the really big (elephants). Janz notes that to get to $100 million in revenue, a business would need 10 million “flies” paying $10 per year, or 1000 “elephants” paying $100,000 per year.
“More commonly, with any project, and certainly with a business, you want to define what success looks like and whether it is achievable under reasonable assumptions and time frames.”
“How many “customers” will it take to achieve success? And what exactly to you need them to “pay” (or do)? Once you answer these questions, you can then ask whether there are enough of these types of customers out there. If not, you might consider pivoting toward bigger or smaller types of customers.”
idea maze– Imagine a physical maze, as in corn maze at a fall festival or a hedge maze in a formal garden. The entrance is you starting out on your idea, and the exit if your idea’s ultimate success. Within the maze are lots of dead ends, and it is your job to navigate the maze successfully get to the other size.”
heat seeking missiles– “It doesn’t matter where the missile is aimed pre-launch. Successful entrepreneurs are constantly collecting data- and constantly looking for better and better targets, adjusting course if necessary. And when they find their target, they’re able to lock onto it- regardless of how crowded the space becomes.”
“Another common example is nonprofit or community boards that get overrun by the personal interests and motivations of friends or family. In its worst form, regulatory capture is just plain corruption, though it often also occurs naturally with good-faith intentions through regulators not seeking broad enough input from their constituents or not conducting comprehensive impact assessments.”
Only the paranoid survive– “Grove’s words serve as a reminder that even if you establish a working moat, you must be constantly evaluation the strength of it, and even when you have a strong product/market fit, your moat may give way and you may need to eventually pivot.”
“If you see disruption on the horizon in your field, you ought to prepare to respond sooner rather than later. Maybe that means investing in a new set of skills; maybe it means switching responsibilities maybe it means pivoting to another field altogether.”