Weekday Nugget #12 (Weekend Edition) - Lessons From A Guy That Had 4 Companies Acquired - Be A Boring Entrepreneur

by SpadoCochi. Posted on Sep 15, 2020    9    20


***I originally wrote this post in 2016 and it still applies***

There is an important distinction I want to achieve in this post but it will be short. Part of what stops a lot of would be entrepreneurs from jumping in is looking at sexy examples as their end goal.

The minority group of people that ever pursue entrepreneurship are being told that they will never be Mark Zuckerberg, so why try? Well, of course you’re never going to be Mark Zuckerberg.

Fortunately, most millionaire entrepreneurs aren’t either. The word “entrepreneur” has evolved as a term, to the point where it doesn’t have much meaning anymore. Frankly, whenever anyone asks me what I do at this point, I do whatever I can to avoid the word entrepreneur. Online, it’s much easier to gain an accurate glimpse of what I’ve got goin’ on, so I’m completely ok with using the word, but in person it doesn’t work.

Also, it’s been a long time since I’ve met someone that referred to themselves as an “entrepreneur” that wasn’t 1. pretentious or 2. not actually an entrepreneur.

Just a thought.

I simply say that I run a few small companies, because that is in fact what I do. My companies are boring, but the money is in the boring stuff.

App developers are a perfect example. Only 12% of independent app developers (indie---if you're employed this pays well) make over $100,000 and 65% of them make less than $35,000. Only 2% of the top 250 apps in the app store right now are from newcomers. The other 98% are from well-established shops like EA and Zynga, or some other company you’ve probably heard of. (Again, as of 2016)

The desire to be sexy is what causes people to reinvent the wheel too often.

Humans just aren’t that creative.

I’m not sure if you’ve noticed, but pretty much anyone in history that has done something 20% differently from how it was done before becomes a revered genius. Most “creativity” is a tweak on what already exists. That’s it. Even the sexiest companies have very unsexy premises. What’s intriguing is their level of success. Even most great artists are more skilled at presenting what's in their mind in a tangible form---but the majority of art is something us untalented people can at least visualize internally.

  • Google started as Yahoo! with less crap on the page.
  • Facebook started as Friendster for college students.
  • Amazon started as a simple online bookstore.
  • Tesla is a car without a gas engine. (Tesla made the product sexy though, by making it fast. Even the original design wasn’t their design at all, but Lotus.)

There were many small tweaks that made these companies possible, but the majority of their success came from an ungodly amount of sweat, tears and passion.

Most business millionaires do things such as:

  • Real estate broker
  • Software consulting
  • Insurance agency
  • Finance

Just like there are certain job careers that generally pay a good amount of money, the same applies to businesses. People generally demand the same types of things, which means the most high percentage opportunities are in the basics.

The nugget is this:

If you want to go out and change the world, swing for the fences if you dare...if you want to work for yourself? Hit a few high-percentage singles then go for your grand slam once you have some experience.

Feel free to join us at /r/weekdaynuggets to keep up with these posts :)


Comments

Putrid-Excitement 2

I believe if you can have a vision of a vastly SUPERIOR product in one way(that people want), and can keep moving towards some type of superior product, and achieve a top level product, you can work towards growth, scaling, product market fit.

It seems like most of it is managing workers doing mundane grunt work, and often times the product is really boring. Most tech startup founders get thrown out when business is booming. To be replaced by a steady ivy league ceo that does everything by the book, and knows how to lead and manage.

So, it seems like business is getting results by leading, and managing. The product can be exciting or boring, yet a business has to be masterfully set up, efficiently managed, and properly lead. The basics is 'all' you need. And is why people can make multiple successful non related businesses. The bottom line is making a stand out product, with a good profit margin, and good growth.

  SpadoCochi 1

Agreed.

EB-Crusher 2

I had a guy tell me yesterday that I will never be mark Zuckerberg. I took it as an insult but now I’ll see it differently. Thank you

  SpadoCochi 1

Awesome haha

Avm1234555 2

Plus like, do you really want to be Mark Zuckerberg? I wouldn’t be able to sleep at night with his creation and business practices.

MaxPast 8

I read an advice several years ago that got stuck in my head: "Don't be creative in product ideas, better be creative in their details, marketing and sales."

Putrid-Excitement 1

it can be both. I don't believe anything is one or another. Something doesn't have to be true and the other false, that is very religious. It's always do everything as good as possible for the best result. A good strategy process, good execution. Meaning to get inspiration from a few to dozens of sources and use that to make an innovative product. The same with marketing, and sales. It's actually just copying what is proven, seeing patterns/insights, and developing something 'innovative'.

It's all very boring work and is not all that creative, it's just very thorough, with a thorough outcome. Maybe that's what that guy's advice meant.

MaxPast 1

I tend to measure my efficiency in terms of statistics: nothing can be absolutely right or wrong but a repeated choice with 51% vs 49% chance of success will make a huge difference in the long run. It's like trying to get the power of 0.99 vs 1.01 and see how it works over time.

So, yes: there is nothing absolute in the world but it's still our responsibility to find a way with the highest probability of success. For me being non-creative in product ideas proved to be much more effective than trying to reinvent the bicycle. Not "always", but odds are clearly in favor of not trying to be creative in this task.

On the other hand, marketing can and must be creative. If you just copy what works, you will not get that far. I'm talking about creativity in tiny details of execution: an extra 0.5% CTR here and saving $0.50 CPC there because of extra creativity adds up over time. Yes, it may be boring when you are just starting with a new channel where you really need to just fill the gap, following the instruction. But, as soon as you get to the point where is no instructions left, that's where you better be creative.

Putrid-Excitement 3

>On the other hand, marketing can and must be creative. If you just copy what works, you will not get that far.

That is already on the way out as far as I am concern. Tech startups are using kpi optimization to take the guesswork out. Fewer things are creative. 20 years ago, maybe, 40 years ago most of it was creative. Now people just improve their marketing funnel, and they optimize their cost of acquisition and so on. They know the exact numbers of cost of acquisition and lifetime customer value. It's how paypal knew they can afford to give free money because they will make it back later 10 fold. Another example is grocery stores will use eye tracking, and brain probes to understand how to influence buying.

basically, everything is governed by the absolute objective, or things that are so true it's basically objective(solid insights). You can be creative but within a very precise framework. Toyota for example is absolutely by the book non-creative. Mercedes is 90% by the book, and 10% creative(designs, and new features).

Most business is hinged on the objective (example:minimalist design), then they get inspiration(copy) from other products, and then come up with their own innovative design. There are 100,000,000 different designs out there, you can't possibly as an individual be more creative than the hundreds of millions of designs. 'the key to creativity is hiding your sources'. To me it seems to be trusting the process, and having a process that's superior to human intuition. No one is naturally able to fly a plane, it's the process and training. Everything is in being able to achieve super human results. Using tech, or crowd sourcing ideas from people is better than an individual's creative mind. Make the best system and have the best objectives, strategy, tactics. Forget the creativity as the critical part. That's just self flagellation.

MaxPast 1

A lot of good points here but the most important one is about crowdsourcing/utilizing others' ideas.
When I talk about creativity, I mean exactly what you are talking about - being creative in how you research the market and analyze market feedback.
And it's not just about numbers - you must be able to read between the lines, trying to understand what your customers really want.

For example, in my previous venture I made almost all my sales by utilizing greed and FOMO by providing product packs with limited deadlines. I was able to find this way of dealing with my customers only after I talked with them a lot and analyzed their behavior. Not numbers, but feeling. And, talking numbers, I made about 10x more money than if didn't do that - I did some experiments and math, too :)

Yet another important breakthrough happened long before that when I analyzed my first customers and found that they don't use the product in a way I expected. Not numbers again, not some predefined and boring process, but just talking with people.

So, I'm skeptical about converting everything into maths or algorithms. If there is anything that can by converted into a predefined boring process or even automated, it will inevitably lose efficiency and eventually stop working. People is what really matters.

For me "being creative" means "notice something others missed" and taking advantage of that. If you run your business in a way that seems "normal" on the surface but the real magic happens deep inside, it may give you a long-lasting competitive advantage. Upsells, custom offers, pricing and discounts, direct marketing, building personal relationships - all of that is hard to find and copy by an outsider.

Putrid-Excitement 2


>For me "being creative" means "notice something others missed" and taking advantage of that. If you run your business in a way that seems "normal" on the surface but the real magic happens deep inside, it may give you a long-lasting competitive advantage

That's just market research. It is meant to be a process to learn and RE-SEARCH known things to come up with the best idea. It's not magic. The majority of business is based on objectives and kpis. Whatever you need to do to get the best result. This often is going through the process. Making sure everything is efficient, effective, and precise.

Optimization is what brings in results. That also means innovation by experimentation and market research. The bottom line is the bottom line. The rest are a means to an end.

>So, I'm skeptical about converting everything into maths or algorithms. If there is anything that can by converted into a predefined boring process or even automated, it will inevitably lose efficiency and eventually stop working. People is what really matters.

How can that hypothesis be true? think about it, a manufacturing line is a rigid process with optimal results. The product development is an iterative process that aims for the fast, efficient and effective results that is validated by customers in a rigid focus test, while also meeting specific specs. Marketing is also optimization to generate high result.

The creative parts of things is now being more and more objective, as new technology demystifies it and allows it to be metrics based. In the end, the goal is for objectivity and logic.

>For me "being creative" means "notice something others missed" and taking advantage of that. If you run your business in a way that seems "normal" on the surface but the real magic happens deep inside, it may give you a long-lasting competitive advantage. Upsells, custom offers, pricing and discounts, direct marketing, building personal relationships - all of that is hard to find and copy by an outsider.

No business does anything exactly the same as others. Everyone has their own take on things. Where the advantage is made by having stronger capabilities and resources. The business ends up trying to make the company more optimized. Toyota is optimized for Reliability, mercedes on luxury. This is what their customers want. An entire profile is made about the customers, and a corresponding type of marketing activity or product is made, For instance if you want to make a shoe for female's who practice yoga, you will develop a profile on them, based on the profile you develop products and develop marketing.

the more you can come up with truths that are absolute or very strong, allows you to identify things that are valuable to the customers. Even though focus test are subjective, the results can be made into hard numbers (90% of people preferred X feature/design. A/B testing. ). The more data, and insights, the more fine tune the business can be.

MaxPast 1

I'm replying from iPad, so it's impossible to quote the previous message here. Sorry in advance :)

Here is what I think about market research: it can be quantitative or qualitative. Most part of tech people and administrators like quantitative approaches because it gives them an illusion of making right decisions. You can't be wrong if all the numbers are on your side, right? If we are growing at 100% per year, are we right or not?

Qualitative market research is about finding the unknown, not quantifying and optimizing known factors. There are no objectives and KPIs in it. You can't be even sure that you are getting the best answer because you don't even know what you don't know. It's where creativity comes into play.

Look at all these data-driven companies that eventually lose market share. The most famous example is Google. How did all his PHDs overlooked Facebook? How could they fail with 95% of their next projects? What happened to Palantir which was a truly data-driven company from very beginning?

I'm a technical guy as well and I wasted about 20 years total looking for the best algorithm for running the business. For the best KPI or the best process. I finally found something that actually worked for me much better than all previous analytical approaches and it has nothing to do with numbers.

I use a methodology called Action Research which is a kind of Agile methodology for management. Short iterations, reflection on mistakes, quick learning and evolution. The most important part of the process is everyday reflection on my mistakes. And, more often than not, I find them not in something I can measure but in unknown unknowns. Something I wasn't even aware about when I made the decision.

That's why I'm skeptical about quantitative methodologies. Yes, they can be effective when optimizing low-level marketing campaigns or even developing customer cohorts but they will not really help you to make strategic business decisions. Optjmization brings its results only when you have no doubts that what you optimize makes sense. When you are sure that underlying business concepts are rock solid.

By the way, there is a huge difference between Lean and Agile: Lean is about optimizing a production process without unknowns. It's great for a factory, for example. Or for optimizing a marketing campaign. It's where numbers and KPIs are truly important.

Agile is about a creative process where you don't know in advance what you will get as a result. It can be hardly measured in numbers because their meaning changes over time. You get plenty of unknowns along the way and you can't be confident about your decisions.

Peoduct development is not a production line, it's a creative process based on feedback of unpredictable users and the market in general. Here I'm talking not only about users' feedback but about market evolution. You may find that your product requirements change over time because of competitors, technologies, political issues, etc.

"Demystifying creativity" leads to poor decisions made over time which have distant consequences. While you are focused on optimizing one metric of your product, the market no longer needs it because this market no longer exists.

Toyota is optimized for reliability but who owns the auto market nowadays? Who grows faster?

Fine-tuning the business is a good idea for middle management because it's their direct responsibility. But, if you plan to make strategic decisions, you better talk to customers face-to-face :)

Putrid-Excitement 1

>Look at all these data-driven companies that eventually lose market share. The most famous example is Google. How did all his PHDs overlooked Facebook? How could they fail with 95% of their next projects? What happened to Palantir which was a truly data-driven company from very beginning?

That is an interesting one. Google purposefully fails in their side projects in order for the government to not call Google a monopoly like they did with microsoft. It's now a tech company, not a search engine that owns 80% of the market or so.

but take a look at alibaba who only does it by the numbers. They implement a.i and machine learning to help them achieve what they need. optimization around an objective is key. honda also owns 70% of the motorcycle industry over its reliable cheap engines. They optimized and tailored it to feedback. All asian companies do this to the T. Samsung, Huawei, Xiaomi(sells a bunch of IoT product, a bunch of products that connect to the internet/their phone app). They look at things from a numbers perspective.

>Toyota is optimized for reliability but who owns the auto market nowadays? Who grows faster?

Tesla optimizes around fun, and cutting cost as much as possible. Take a look at the tesla pickup truck and how much cost cutting they did by keeping the design entirely flat. They know their customer base, and can optimize for max satisfaction, and lower their cost.

>Fine-tuning the business is a good idea for middle management because it's their direct responsibility. But, if you plan to make strategic decisions, you better talk to customers face-to-face :)



No offense, you've been repeating yourself, and you haven't made a compelling point. You haven't disproved that customers have their specific 'value drivers' that they value, and you have to optimize and tailor your product and brand around it. Meaning, if you know your customer base is republican type people and you have a skullcandy headphone type of brand, you know what that segment of people value. You can build a profile, and the preferred product, features, design, that is validated.

Everything is about understanding things in a very objective type of way, so you can build your offer around it. You just trial and error different things, and take inspiration from elsewhere as creativity. All of apple's products feature is market research, prototyping, focus testing to get a result. Then their teams work through different iterations to one final one. Einstein was noted to steal every single thing, even e=mc^2. All you gotta do is to have an objective, roll a bunch of ideas into one, fine tune it. objectivity in this case is customer satisfaction which you can a/b test to pre-validate and tweak next generation products. At the end of the day only a few things stand A. target customer's satisfaction B. profit. How does subjectivity play into this? I don't understand what your point is tbh, and how it superseded the bottom line. If you got anything that beats it I'd like to copy it :) imo, a company has to take a strong objective/stand so they can have something to optimize around.

MaxPast 1

I'm repeating myself because I still believe that what I'm talking about makes sense :)

You can't offend my by sharing your opinion, of course. I like to get critical feedback on my ideas because it helps me to learn faster.

On the other hand, I don't take others' opinions as the final truth but rather try to extract and verify all facts and ideas that lie behind their conclusions. Then I construct or modify my personal beliefs based on this analysis.

I've analyzed all interesting facts from your reply and found that something where I was wrong, something where I was right and I took it into account. Thank you!

Putrid-Excitement 1

>I'm repeating myself because I still believe that what I'm talking about makes sense :)
>On the other hand, I don't take others' opinions as the final truth but rather try to extract and verify all facts and ideas that lie behind their conclusions. Then I construct or modify my personal beliefs based on this analysis.

sure, but it's an indefensible position. Factually speaking. Anytime someone can not continue to adequately defend their idea it means they are wrong.

When there is enough info there is only one broad right answer, though there are multiple different takes/ideas. Yet it should based on one optimal idea that everyone has evidence is true. It's written in porter's competitive advantage(capabilities and resources > competency > strategy > differentiation or low cost > value > superior profit/outcome).

>For example, to make a championship basketball team from an objective stand point (superior win %) it must have solid offensive stats, solid defence stats, solid leadership, solid training. All in all, the objective outcome is the bottom line. Win xx% games, score XXX points per game, keep opponents under XX points per game. If a team can score something like an average 115 points per game, keep their opponents to <100 points, they are championship material team just on those objective stats, guaranteed.


At the end of the day 90% of it is re-searching (the known) how others achieved the highest results.. 10% of it is coming up with new insights and new ideas (unknown) aka innovation that can be proven objectively true. Toronto raptors in 2019 won because they utilized every player, and had tremendous defence, and offence. They were just consistent, and effective at all times. They could defend and make the opponent miss, while effectively scoring from everywhere on the floor from every player, which flusters the opponents offence. They just overwhelmed the opponent from multiple touch points. This allowed consistent high scoring, and consistent low opponent scoring. Good offence leads to good defence. Good defence leads to good offence. When you got both done well it is optimal. strategy and tactics can even be tweaked to score more in the 3rd and 4th quarter where it counts. Optimizing for the objective is all that counts.

Imo, the answer is always figure out what general outcome is objectively true, figure out what strategy is objectively true, what tactics is objectively true. From that point on you optimize on those things which is some innovation, and mostly doing simple things right. It's all fairly clean cut. I guess the idea can be traced back to Steve jobs when he said 'start with customer experience and work backwards'. Figure out what you outcome you want and there is no question what is the right outcome (after you a/b test).

Anyways, if you got a rebuttal or agree to whatever part, it would be interesting to hear what you got.

  SpadoCochi 3

Agreed :)