🏰 Why incumbents have bigger moats, The science behind goal setting, ...
Hello!
Adam Thornhill here.
‘The Podcast Guy’ who saves you 10+ hours a week.
Ready for the 56th edition of Best Business Podcasts?
Here are the best bits from My First Million, Nudge, and SaaStr.
❌ What are the 3 causes of failure?
🎯 The science behind goal setting
🏰 Why incumbents have bigger moats
❌ What are the 3 causes of failure?
🥉 Third place (3 min read vs 1 hour 18 mins listening)
What do you think led to Alibaba's success? Shaan Puri recaps the incredible answer he heard from David Wei, Jack Ma's right hand man.
What they say
What made Alibaba successful
Models for success are misleading. They cannot be copied due to the unique combination of luck and timing.
A better question is what are the common keys to failure?
They're always the same. The three things that lead to failure are 1) Money, 2) Plans, and 3) Technology.
Money makes people stupid. When problems come up, people's first instinct becomes throw money at it rather than attacking it with creativity.
Plans always change. That's the only thing we know about plans. You should follow your gut and adapt constantly to the circumstances.
Everybody wants to call us a technology company. No, we are a service company. We're here to serve our users. If you don't think of yourself like you're in the service industry then you're in the wrong industry.
Shaan Puri
The Google of China
When Google was dominating with AdWords, Alibaba were like 'We need to make our version of AdWords.'
Jack Ma cut a check for $250,000 to build this project. The team laughed saying you're missing three zeros at the end of this.
Jack said 'That's how much money it took me to start Alibaba. I had less than that starting the whole company so if you need more than that for a feature we're doing it wrong.'
He then moved 19 people into his apartment where he started out. He said that's your office. Work there.
Shaan Puri
What I say
Why it matters: Jack Ma was insistent on lean budgets and pushing the team to think creatively. He epitomized the importance of overcoming challenges with ingenuity rather than relying on financial resources.
Sadly, many startups have not heeded Jack’s warning. Well known, well funded startups will die over the next 18 months. The cause of death? Money. Startups with a ‘spend to solve’ mentality have bloated their burn rate and lost their ability to adapt.
Between the lines: Constraints boost creativity because they force you to:
Focus on solving one problem really well and throw out nice to have projects
Step out of your comfort zone and look at a problem with a different lens
Embrace frugality and consider the impact of your decisions on profits
Money isn’t the only constraint you can use. We can also leverage time. That’s why hackathons have become so popular. And it’s not just because they’re fun. Unicorns have been born out of this process, with Zapier being the most notable.
🎯 The science behind goal setting
🥈 Second place (3 min read vs 38 mins listening)
How do you set the right goals? Phill Agnew welcomes renowned psychologist Ayelet Fishbach to the pod. They discuss the best bits of her book Get It Done, including the science behind goal-setting and rules you can apply today.
What they say
6 tips to motivate yourself and others
(1) Focus on the outcome, not the means. Your goal should be to read a book a month, not to read every day.
(2) Your goal should be a bit abstract. A New Year’s resolution to learn a new skill is more motivating than saying ‘I want to study Spanish for one week.’
(3) Your abstract goal should still contain concrete numbers. 10,000 steps a day is more motivating than ‘Go for a walk everyday.’
(4) If you’re starting out on a goal and you’re uncertain if you’ll achieve it, you should look back on what you’ve accomplished. However, if you’re nearing the end of your goal you should look at how little there is left to go.
(5) Too many incentives demotivate us and overwhelm our teams.
(6) Make some of your incentives uncertain. Offering a surprise $1 or $2 reward for downing a pint of water is more motivating than offering a certain $2 reward.
Phill Agnew
What I say
Why it matters: Most people don’t set goals. And when they do, they set it and forget it. So we’re already ahead of 99% of people. But that’s not why you’re reading this. We want to be great, not good.
To be great, you need to set goals that provide a sense of direction without limiting flexibility. Abstract goals with concrete benchmarks offer a unique combination of adaptability and accountability.
Between the lines: Phill’s advice is super actionable but you need to apply it wisely:
0-1 years / short term goals. Phill’s closing remarks are great for these.
1-10 years / medium term goals. Do not under any circumstance set these!
10+ years / long term goals. This is your vision for how you’ll change the world.
So why no medium term goals? They’re assumptions based on assumptions. Medium term goals are an excuse for executives to pontificate rather than focus on the here and now.
Case in point - all medium term goals are redundant with the advent of AI. Companies that try to achieve medium term goals will stifle creativity, fail to adapt, and die a slow death. Instead, figure out what you want to achieve in 10 years and then take small steps to get there with short term goals.
🏰 Why incumbents have bigger moats
🥇 First place (3 min read vs 22 mins listening)
We should all stay up-to-date with AI developments. For founders, you need to reconsider the headcount required to run your business. For tech professionals, you need to use these tools to maximize your productivity. For entrepreneurs, you need to focus on underserved niches in order to thrive. Today, we’ll dive into the later.
What they say
Startups have lost their edge
It's faster to build a generative AI feature than it is to build a mobile app.
When Jobs launched the App Store in 2008, startups were significantly ahead of the slow incumbents.
Now, startups are behind incumbents.
Look at the pace of innovation at Microsoft adopting OpenAI technology. The big companies are moving just as quickly as startups.
If you're a startup you can't go head to head because an 80% solution by Microsoft is probably good enough to keep their existing customers.
You have to go and pursue a market where nobody is really paying attention. That's why there's a lot of interest in vertical software.
Tomasz Tunguz
Different AI moats
(1) The first moat is this idea that 'My model is better than yours.' Some models have better accuracy, lower latency, and lower cost. It's possible to compete this way but the performance difference has to be noticeable.
(2) The second moat is usage. The more queries you have, the more feedback you have, the better the model will become. This creates a flywheel. You need the traffic to be able to tune and optimize the model.
(3) The last moat is we're going to see companies start with public data to drive a significant user base and then use that to get access to private data.
The combination of better access to data, more usage, and access to private data will create the strongest ecosystem.
Tomasz Tunguz
What I say
Why it matters: AI has blurred the lines between startups and tech giants. In this new reality, startups should focus on niche markets where tech giants have not yet ventured or have ignored the potential for innovation.
Consider targeting incumbents who will be slow to leverage their position of power. Steal enough market share to get meaningful usage, refine your own model, and build your moat.
Between the lines: To succeed, startups need to get mass distribution as quickly as possible.
One such channel may well be ChatGPT Plugins, the next App Store. Plugins are still waitlist only but they have the potential to become an important channel for you to get in front of your customers.
Shoutouts
When I find newsletters, podcasts, or books worth sharing, I’ll feature them here:
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Note, these quotes were pulled at different points of the episode. Some sentences were left out to make the narrative more concise. I am 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.
i loved the ai part.
> your goal should be to read a book a month, not to read every day.
this one was definitely weird though.
james clear gives the exact opposite advice. read 20 mins every day & by the end of the month, you will have read a book. focus on system, not goals.