Image courtesy of Mental Floss
I find business history and stories fascinating, and always like the intimate accounts of how entrepreneurs and businesses went about to build successful ventures — their thought processes, mistakes, pivots, decisions, and how everything comes together as a beautiful symphony.
But when it comes to reading about business advices, wisdoms, and strategies, it might be prudent to be wary and try not to take them at face value, without understanding the full extent of their contexts and nuances.
Prevailing business wisdom can occasionally serve as a good signpost, but often times there are different paths that are equally or more applicable to our situation.
some startups succeed by following the advice of Paul Graham essays, but many others don't
some go on a spending blitz on day one and conquer, some slowly build up and iterate
some fail fast and pivot, some persevere and kept going
some conscientiously sought out user feedback and preference, while some trust in their conviction in creating something users would like
some succeed with first-mover advantage, but many late entrants benefit from being more polished and not having to educate the market
If we follow the conventional ways uncritically, we blindfold ourselves and miss other paths that might be more optimal in our context. Nothing beats putting yourself in the arena and going through first-principle thinking.
case study - defying Silicon Valley conventional wisdom
SurveyMonkey has long been a darling in the Silicon Valley circle, and has all the ingredients to dominate a market by conventional wisdom:
- a product-led growth that focuses on a superior product imbued with viral loops
- deeply integrated channel sales partnership with Salesforce, Oracle, etc that help sell to enterprise customers
- a lean and small team with an engineering-focused culture
But despite that, it has been soundly beaten by Qualtrics, a company based in a small town in Utah who started 3 years later. As of 2020, Qualtrics has double the revenue of SurveyMonkey.
The crux of how Qualtrics succeeded is by ignoring what is hot and instead doing things in non-sexy and old-schooled ways, especially when it comes to their Product Marketing approach.
SurveyMonkey sells survey software, as the name aptly suggests. But Qualtrics focuses on selling insights and experience management. By packaging it as selling experience management versus selling survey software, they have shifted from selling tools to selling outcomes. In fact, Qualtrics employees are forbidden to use the word "survey" in any public-facing statements. You won't see the word prominently mentioned in their website as well. This is akin to the classic sales tactic where a sales rep should sell the desired results and outcomes instead of focusing on the product and features.
SurveyMonkey hires top (and costly) Silicon Valley designer, engineers, and growth marketers to build a world-class product; while Qualtrics hires entry-level sales rep at 1/6th the cost to cold-call executives and evangelize insights and experience management. The huge team of sales and account management reps in Qualtrics work directly with enterprise C-suite — instead of through channel sales partnership — to consult and craft the entire end-to-end process of helping companies understand their customers or employees better, with survey design, in-house visualisation, and business analytics services.
So instead of selling just a survey software — and competing with hundreds of other softwares as a commodity — Qualtrics positions themselves as providing professional services and consulting directly to C-Suite that helps guarantee the results: actionable business insights.
For enterprise decision makers, they don't care about another self-serve survey software with more features. Instead, they care only about what can get them their customer sentiments or business insights - without having to manage the entire process and handhold and oversee internal staff. Quantrics' non-sexy focus on professional services and consulting helps differentiate them from all other competitors.
In June 2021, SurveyMonkey has officially rebranded to Momentive to get rid of the word "survey" and move closer to Quantrics' style of experience management service.
In many other cases, we find companies taking completely divergent paths, yet arriving at similar level of success.
For restaurants, Dunkin Donuts and McDonald's achieve quick and sustainable way of expansion through franchise systems, while Starbucks and Chipotle grow by opening and owning every chain store.
For U.S. retailers, Walmart values providing the widest selection of products in every category, but CostCo and Trader Joe's create their own playbooks and achieve loyal following through selling limited and curated SKUs. This strategy helps lessen decision fatigue and adds an element of discovery for consumer. It also reduces the complexity and cost in inventory and supply chain management by having more focused selection.
In the investment industry, the prevailing wisdom for investment managers has always been portfolio diversification — not putting all your eggs in one basket. Yet Warren Buffett is known for high degree of concentration in his investment, doubling down on companies he is confident in. His partner Charlie Munger famous said "How could one man know enough to own a flowing portfolio of 150 securities and always outperform the averages?"
Play the hand you have. and not the hands others have.
In sports, it is natural for fans and analysts to look at the merits of a team's tactics. But often times, teams win championship not because of genius and unbeatable tactics; they simply execute to their strength, and execute to perfection.
Applying the same lesson to business, perhaps the best way forward for most founders is not blindly applying prevailing wisdom, but creating your own playbook with first-principle thinking — one that plays to your strength and your situation — and executing it with conviction.