🏪 Secret shop your competition, do simple things uncommonly well, and more
Winners include: My First Million, Lenny's Podcast, and Acquired
GM, this is Podup #20. Discover the best 3 business podcasts of the week (save 5 hours listening in the process).
What you need to know
💡 Shaan’s new business idea
📶 Do simple things uncommonly well
🏪 Secret shop your competition
BONUS segment
🚧 Constraints can be a good thing
Costco for clothes
🥉 Third place (3 min read vs 1 hour listening)
One man’s trash is another man’s treasure. Shaan Puri has a lot of trash. His trash is in the form of ‘bad’ business ideas. I write bad in quotation marks because that’s how he refers to them, but they’re not bad at all. They’re f***ing great. Not only are they great, but you can use them to study how he identifies new opportunities.
What they say
Shaan’s ‘bad’ idea
I went to Lululemon to get shorts and a t-shirt that are high quality and fit well. The shorts were $85 and the t-shirt was like $77.
If I want high quality basics that are premium material and fit but I don’t care about the brand name, where would I go today to get that?
I think somebody can create the Costco for clothes.
Costco’s model is you pay $100 ish for the membership. They then give you all the groceries for cost plus 10%. The 10% is the labor, the stocking, the stuff it takes to move the goods around.
Because of that, you get incredible value at Costco. You’re not sacrificing on quality, you’re just sacrificing on the fluff - the packaging, the shelves, the store experience.
I think someone can do this for all the clothing basics. You make everything at the same quality as these fancy Lululemon type brands and provide it at the actual cost.
The counter argument is there was a company called Brandless that tried to do this for homeware but they went out of business.
If I was going to work in e-commerce, I think an idea like this is a better idea than 99% of e-commerce ideas.
You’ll end up with subscription revenue, you’re differentiated, and you appeal to the lowest common denominator. Everyone needs shirts. It’s an everybody problem.
Shaan Puri
What I say
Why it matters: Startups continue to replicate the business models of Uber, Airbnb, and LinkedIn. Heres’s why:
There’s an anchoring effect. You know how their services work. It’s 10X easier for you to understand what a business does if you refer to it as Uber for dog walking (Rover), Airbnb for camping (Hipcamp), or LinkedIn for healthcare professionals (Doximity).
It actually works. Replicating a business in a new market (Baidu was Google for China) or a new industry (Glassdoor was TripAdvisor for jobs) can create billions of dollars of value.
Having a framework like this can help you to identify new opportunities as an entrepreneur. This even applies for intrapreneurs. Think YouTube for kids. YouTube Kids replicated its own business for a different segment.
Between the lines: Costco for clothes could be a unicorn idea. But, you need to validate the problem you’re trying to solve. Don’t get caught up with the irresistible subscription revenue. Look at how this model has worked historically (like Italic) and how it has failed (like Brandless). You need to dig deeper to understand why before diving in head first.
Above all, keep it simple
🥈 Second place (4 min read vs 55 mins listening)
Humans want the simplest option. Just look at Google. It’s the most visited website in the world and it’s essentially a logo and a search bar.
Casey Winters is Chief Product Officer at Eventbrite. He shared insights on Lenny’s Podcast to help you stay true to the keep it simple stupid mantra.
What they say
Strive for perceived simplicity
There’s a concept called the product lifecycle. This is when users flock to a simple product. The product adds more features for power users. Users flock to the next simple product as a result.
I’ve done a lot of research and work on this problem and found a few different design hacks that companies use to try to avoid this cycle.
One is if you build out more complex functionality, unbundle it over time like Facebook Messenger and Uber Eats have done.
At Pinterest, we did heavy investment in progressive disclosure. We hid the more complex functionality until our users learned the more critical functionality and then we opened up more of the full suite of the product.
You can also segment experiences based on different user types. Certain users may get a very simple user experience and some might get the more complex one.
At Eventbrite, we strive for perceived simplicity. There are advanced features in the product and they are easily discoverable when you look for them but they’re effectively hidden if you’re not looking for them.
The advanced areas of the product don’t make the product harder to use for the majority who will never need that level of complexity.
Casey Winters
Aspire to be like WhatsApp
The company that I feel has always done the best job of this is WhatsApp. At its core it’s a chat app. It’s really good at being a chat app.
I remember when I went to Brazil, all of a sudden I started receiving voice messages. It was really easy to figure out how to use them.
When I needed to learn how to do video calls or phone calls, it would take less than a second to figure out how to use the more advanced stuff. It’s effectively hidden if you’re not looking for it.
Casey Winters
What I say
Why it matters: It’s easy to overcomplicate things. I’m a big believer in doing a few things really well, but importantly, doing them as simply and quickly as possible. Startups win by doing few things fast and fantastically well.
As companies grow, they have a tendency to be all things to all people. You want to avoid this like the plague. Ground yourself with focus and simplicity. Focus on building features that support the majority of your users and do the simple things really well.
Between the lines: Simplicity is the ultimate sophistication - Leonardo da Vinci.
Da Vinci practiced what he preached. Here’s two fun examples, one obvious and one more surprising:
The Mona Lisa. She’s the most famous painting in the world. Yet, she’s simple. She’s sitting contently, hands on her lap. Da Vinci kept her portrait simple but did the basics uncommonly well. He supposedly spent over 10 years just painting her lips. Let’s not forget about her eyes - they infamously follow you wherever you go.
Parachutes. Da Vinci is credited as one of the inventors behind the parachute as we know it today. His simple rendition - cloth held open by a pyramid of wooden poles - was eventually built and successfully tested by Adrian Nicholas in 2000.
If you don’t listen to me or Casey about keeping your product simple, that’s ok. But, you should at least listen to the greatest painter of all time.
Be more like Sam
🥇 First place (4 min read vs 3 hours 5 mins listening)
Sam Walton was the OG Jeff Bezos. There are a load of Jeffisms that mirror Sam’s thinking. To prove this, I challenge you to guess who said what quote (skip to the end for the answer).
(1) “In the long run, if you take care of customers… that is taking care of stakeholders.”
(2) “There is only one boss; the customer. He can fire everybody in the company by spending his money somewhere else.”
Why bring this up? Sam Walton not only built the largest company in the world by revenue - Walmart - but he influenced the founder of the second largest company in the world by revenue - Amazon. David and Ben share the stories behind Sam’s success. Here are the best bits.
What they say
Keep your ear to the ground
Sam had his ear to the ground in retail. He heard through the grapevine that there were two Ben Franklin stores that were trying a radical new concept.
They were redoing the whole way the store was laid out. They were removing the upfront counters. They let customers go into the store, browse the merchandise, pick it up themselves, and then checkout.
He was like ‘I’ve got to go and see this.’ He took the overnight bus up from Arkansas to Minnesota and checked them out. He took notes the whole time on his yellow legal pad.
David Rosenthal
Always try your competitor products
I love how obsessed he was with first hand experience. He couldn’t just hear about it and implement it. He was like ‘I must see it for myself.’
He so fervently believed that he picked up insights from actually spending time in stores and actually talking to customers.
It seems like he’s done that more than any other entrepreneur we’ve ever talked about on this show.
Ben Gilbert
What I say
Why it matters: David and Ben discussed how they listen to lots of other podcasts, find the best ideas and incorporate them into Acquired. I echo David that everyone can apply this obsession with first hand competitor experiences to their own business.
Between the lines: I try to do this at Medicspot. My registered GP/physician is from our main competitor. I use their service as a real patient. I learn how they’re improving their service, what works, and what can be improved. I couldn’t recommend this enough (the be a customer of your competitor part, not use our competitor’s service)!
BONUS segment
We’re all tightening our belts right now. It’s not easy. But, being undercapitalized can be good. David shared why and put a silver lining on the recession we’re facing.
Find opportunities you’d otherwise ignore
Sam has this amazing quote. He says ‘The things that we were forced to do because we started out undercapitalized in these remote small communities contributed mightily to the way we’ve grown as a company. Had we been capitalised, we might not ever have tried all of the little towns we went into in the early days. It turned out our first big lesson was there was much, much, much more business in small town America than anyone, including me, could have dreamed of.’
David Rosenthal
Quiz answer
If you’re a Jeff Bezos fan, there’s one thing that gave this away - the phrase ‘in the long run’. Both were long term thinkers but Jeff personifies this to the letter.
(1) “In the long run, if you take care of customers… that is taking care of stakeholders.”
—Jeff Bezos
(2) “There is only one boss; the customer. He can fire everybody in the company by spending his money somewhere else.”
—Sam Walton
Note, these quotes were pulled at different points of the episode. Some sentences were left out to make the narrative clearer and more concise. Podup is not associated or affiliated with any podcast (unless otherwise stated). All roundups are independently written and do not imply any sponsorship or endorsement by the podcast.