By Matata Mercy
In his popular book called Zero to One,the founder of PayPal and Palantir technologies.
Peter Thiel opens the first chapter of the book by saying that the next Bill Gates will not build an operating system, the next Mark Zuckerberg will not build a social network and the next Larry Page or Sergey Brin will not build a search engine.
He then continues his statement by saying that if you are coping these guys then you are not learning from them.
He was literally saying that every moment in business history happens once.
If you are building something that already exists, you are moving from one to n and if you are working on something new, then you are moving from zero to one.
One thing that strikes my thinking is what Peter Thiel thinks about competition, according to him competition is for losers.
Eventually, all the companies producing the same products and services will lose out since the profits will dwindle with time and their will be no winner.
While a monopoly, a company that has little or no competition will enjoy most of the profits or in some cases all of the profits. An example of such a company has been Google.
Google has dominated the search engine business for decades and no company has actually come close to it, not even Microsoft's Bing.
Google has been owning about 98 percent of the search market and even the word google has become a verb in the dictionary.
Now that's how good it has been. Today, I will share with you my thoughts on how to build a company that creates new things.
In short companies like Google, Facebook, Amazon and Apple that I can consider as monopolies by them creating something new with little or even no competition.
1.Find solutions to unique or existing problems that are 10x better.
If you are planning to build a company that creates new things, then you should find solutions to either unique problems.
Meaning problems that are not easily identified by other humans or just problems that already exist.
The best thing that you can do for your company is to provide a solution that is 10x better than what other players in the market are offering.
Truth be told, if you offer a solution that is 10x better, it will be extremely hard for other players in the market to catch up with you.
If the solution you offer cannot be easily duplicated by another competitor then it will be very hard for anyone to kick you out of business hence your company will become a monopoly and it will enjoy the profits.
For example, Google's search engine has been far much better than what other competitors in the search engine business were offering.
It's algorithms were providing the search results that users needed and as a result billions of users flocked to Google for answers.
While other search engines like Microsoft's Bing, Yahoo and others struggled to get users.
2. Using network effects to scale.
If you want to build a company that would eventually become a monopoly, then you need to ensure that the product or service that this company is offering is able to scale.
The best tool that I would suggest is what I would call network effects.
With the internet spreading now all over the world, it is now easy to scale ideas that seemed impossible some years back.
Because of this a small website initially used only by college students at Harvard later went viral.
It is now currently being used by millions of people everyday around the world, talk of Facebook.
A few college students were on Facebook and later their friends joined in to chat and interact with them.
Their friend's friends later joined in that is now what I have called a network effect.
Today, it is easy to build a product online that can spread quickly as a result of the reach of the internet.
If you are going to be successful at building a company that becomes extremely successful and valuable, then you will need to think about utilising the power of network effects.
3. Cash is not king.
One man sometime back told me that money runs the world, I am not sure if his statement is absolutely correct but I do think in my own opinion to some extent money does run the world.
Although money is important in the startup world, if handled poorly, it could ruin the company in it's early days.
If you want to know if a founder of a company is serious about solving the problem that his company claims to be working on.
The best place to start is to look into his paycheck and see the figures.
A startup whose founder is paying himself six figures in salary annually is likely to turn into a politician rather than a celebrated entrepreneur.
He is showing a bad example to his fellow employees who will assume that startup has gained value already that must be shared which is actually a false analogy.
Instead of focusing on building interesting products and services that are of value to users, the employees will be focusing on pay increase.
This startup is bound to fail even before it's first birthday.
A real founder who is going to succeed will leave a frugal life.
I heard a story about the founder of Dropbox, it is said that he lived like a minimalist in the first two years of the company.
He slept in an apartment with one bedroom and a mattress, with no furniture in it. No television set.
Now that is a kind of founder whose company will succeed. He has set a benchmark for pay just by the way he lived.
4.Small groups are great.
Truth be told, small groups of people can achieve extraordinary results when they are focused on their desired goals.
Facebook started in the dorm room with a few people among whom were Mark Zuckerberg, Chris Hughes, Dustin Moskovitz, Andrew McCollum and Eduardo Saverin before it became big and took over the world.
It is easy for a company to work on great ideas when small because it is easy to make decisions and also iteration is easy and fast.
In large companies, decision making is hard because of the bureaucracies involved inside the company.
Most large companies are focused on profits and taking risks is least on their agenda.
While in startups with few people it is easy to take risks because they have nothing to lose.
In short, if you are going to build a company that creates new things, ensure that the founding members are few, preferably not exceeding five just like the founders of Facebook were.
5.Founder and co-founder should compliment each other.
When you are starting a company, it is not going to be an easy road, things will get tough and sometimes you will feel like giving up and that's where having a partner commonly known as a co-founder is important.
Having a co-founder is just like getting married. It is a decision that you have to make critically when choosing a person as your co-founder.
Just like with a marriage where you cannot just pickup a woman from a bar today and get married to her tomorrow, it is the same scenario with choosing a co-founder.
In short, a co-founder is someone whom you should have known for sometime and who can fill up the skills that you lack.
For example Steve Jobs and Steve Wozniak were the co-founders of Apple Inc.
While Steve Wozniak was good at the technical stuff, Steve Jobs filled up the marketing skills where Wozniak was not good.
6. Sales people are welcome.
To most technical people like computer programmers, software developers and other creatives, hiring sales people is a very big waste of resources and time.
What all these software developers and computer programmers care about is creating cool stuff.
These technical people believe in the mantra that when they build it, the users will come.
To me, in my own personal opinion, this statement is not actually correct. There is a possibility of building a product or service that has no users.
Imagine spending millions of dollars on building something that no one wants to use. It is so frustrating and demoralizing indeed.
The best solution to this fate would be to first build a minimum viable product that we can put out to the users to see how they respond to it.
And we iterate the process from there, by adjusting the product or service according to the data obtained from the few users out there.
So sales people are welcome or else there is a risk of building a product or service that no one wants to use.
In conclusion, I would like to end this article by asking one fundamental question that will open up your mind for the next great idea.
What valuable company is no one building?
Good luck.💰💰ðŸ¤
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