Creating an unfair product advantage
"Everything Starts Out Looking Like a Toy" (No. 51)
This week’s toy: play a round of Galaga in your browser. While this doesn’t run quite as well as a stand up arcade game, the ability to reach the arcade equivalent is pretty awesome. Edition No. 51 of this newsletter is here - it’s July 10, 2021.
The Big Idea
Today I revisited Ben Evans’ excellent 2019 article, “New Productivity”, which suggests that the businesses of the future will be born by unbundling the tools and processes we execute today. We’ve moved beyond taking every Unix function and reinventing as a company - Evans writes that “…now every Craigslist section, or LinkedIn category, or Excel template, becomes a company as well.” I think his prediction has been solid: if you look at companies that are born within the last two years their focus has been smaller and smaller.
If you can think it, you can build it. Quickly.
Yet this ability to start a company almost via API (actually, now I think you can) lowers the bar to create a company while sidestepping the question: what should you start a company to do?
The purpose of building an idea and getting it out there is to find product validation, identify potential customers, and to solve a problem. Doing this while making more money than it costs you and building sustainable growth makes it a successful company. So how do you stack the odds in your favor?
Repeating Problems have value to solve
I like to focus on systems - repeating sets of data that interact and resolve with specific inputs and outputs - rather than one-time issues. I believe the problem-solving idea is the company-forming idea in miniature.
What’s the framework to solve a repeating problem?
Find out whether it’s a problem. Is it an anomaly or has it happened before? If it didn’t get fixed, what is the impact? Is it a business-stopping issue?
Investigate the source. Did it start happening on a particular date? Does it always happen from one source? At this point using reports in your existing systems is a valuable method to see if this has happened before.
Test a potential solution. What would solve this problem? If you don’t know, go back to step 2.
Can you script and automate the solution? What are some risks to your solution?
Tell someone else how you plan to solve it. You always uncover edge cases when you share your solution with another person.
Write down all of the steps you’re going to take. Imagine that this is your dry run for creating a solution.
Now, do it. And take notes.
What went wrong? This might tell you some important steps for the next time that you want to do this again.
Was it worth solving?
Now that you solved your issue, was it valuable? You might not know immediately.
You’ll need to know:
How often does this happen?
What’s the cost of getting it wrong?
Did fixing it save or cost money?
Making the leap to building a company based on this solution will take more time. You’ll need to know if you are solving only your own problem or a more general one. It would help to know eventually if people are willing to pay money to solve it. And it will be important to assess whether this is a chronic or one-time problem.
If you’re running into the problem, it’s likely that other people are hitting it too.
Ask around - find out if other people solve this problem in a different way or if there is already a commercial solution. Congratulations! You might have initial market validation if they say yes. Now starts the long process of testing and validating whether other people agree.
What’s the takeaway? Deciding to solve a problem is a microcosm of starting a company. You are dedicating resources to an idea, and ideas are often cheap. You might find that you solve a problem over and over and it’s not a generalized need. Or you might find a need that has deep demand.
A Thread from This Week
Twitter is an amazing source of long-form writing, and it’s easy to miss the threads people are talking about.
This week’s thread: on Heat, Drought, and other extreme weather. The first step in solving the problem is acknowledging it exists.
Links for Reading and Sharing
These are links that caught my eye.
1/ Rent to own … or own a rental? - Cory Doctorow writes about how everything is turning into a subscription. We might not own much of anything in the future.
2/ The machines don’t need us to pick groceries - this video shows a warehouse where robots are picking and packing grocery orders for online shoppers. You’ll notice that the environment is built for robots, not people.
Physical retail is becoming more like random-access bits. How will the concept of a “store” change as a result?
3/ Remote work and how to manage it - We’ve all spent a lot more time working remotely since March 2020. But how can this work on a large scale with a giant workforce? Here’s what happened when Best Buy tried remote work. Getting to a sustainable solution for remote work is not a binary decision - it’s a fundamental change to the culture at some companies.
On the Reading/Watching List
Yes, I’m a Marvel fan. And I’ve been waiting for this series for a long time. The “What If…?” series is a long-running teaser about alternate storylines and multiverses. Now that the MCU is developing that way, it’s possible that The Watcher may even show up as a mainstream character.
What to do next
Hit reply if you’ve got links to share, data stories, or want to say hello.
I’m grateful you read this far. Thank you. If you found this useful, consider sharing with a friend.
The next big thing always starts out being dismissed as a “toy.” - Chris Dixon