A New Game

Apr 6, 2021
If you are thinking about starting a startup, it’s important to figure out the odds of creating your own game, not just follow trends -aka the games invented by other players.
The mindset will decide what idea you will come up with, who will join your team, how to execute, how high you can price a product. Most importantly, how innovative your next product will be. The key to win as a startup is to find the most efficient way to win the game long-term, not the easiest way to survive, and continuously compete with other players in the short term.

Why Successful Companies Fail

The Game Is Changing

Being right is the enemy of staying right because it leads you to forget the way the world works. This is one of the reasons why companies rise and fall. Companies learned to play one game and got good at it, but the market is constantly changing to a new kind of game.
When business certainties are no longer certain, the ability to imagine things from first principle as they never were and ask, “What if?,” is on every executive’s skillset wishlist.

Maintaining Success

But, Leadership tends to see more risk in the downside of the current plan than the upside in taking on new things. They are un-incentivized to react to new products and distribution channels.
Things those companies doing regularly:
  • View a temporary trend as a competitive opportunity
  • Believe it’s easy to span across generations
  • Hate being wrong
  • Love the new idea, not the new way of thinking
  • Reward the “data-driven”
  • Politics all day
Things those companies thinking regularly:
  • Dissect the dominant business model in our industry
  • How big is the existing market?
  • How big is the remaining market?
  • Find a way to get in.
Being right and staying right are different. Doing well reduces the incentive to explorer risky ideas, especially when those ideas conflict with your proven business model. I’ve advised famous big company where the ego of a product line boss always trumped overall long-term strategy. It was about their bonus and promotion, not the company. What makes disruption so devastating is the fact that absent a crisis, it is almost impossible to avoid. Managers are paid to leverage their advantages, not destroy them; to increase margins, not obliterate them.

Why Unknown Startups Win

Paths Not Yet Taken

It's one skill to compete for share in an existing market category. It's a whole other skill to design, redesign or create the market category itself. And what I would posit to you is the most legendary founders in history do not want their product, company or, frankly, even themselves to be compared to what came before
Counterintuitively, truly transformative products rarely fit into pre-defined boxes. Limiting focus to “yesterday’s” best-performing industries restrict seeing the new opportunities. Those business leaders who are running the show are very bad at telling you what you shouldn’t do and what should do, even they are/were successful.
To maximize the odds of creating your own game, you should totally ignore “the trend...the data...the user”. Numbers are about the past if you want to create new things, you need to focus on what’s the one that can’t be copied, and people don’t know they need it yet. If you thinking about the market size, the market you are thinking about to getting in is full of competitors. You try to win at the same game as everyone else. You chase the current winners by acting as the current winners. In the effort to look or act like someone else, to be closer to their path, you forget that outliners success lies at the end of paths not yet taken.
Those outliners in the creation path looked ridiculous at the beginning. Facebook was a social network for college students, Elon Musk failed to demo SpaceX's mini rocket launch in his backyard 3 times. Nowadays, most people just attribute too much to luck, which stops them from actually thinking and doing amazing things.
We should all be looking for more unpredictable(risky) paths and having the ridiculous deep conviction on an idea we truly loved. To create a new game, you should think:
  • Can I design a category that I have the chance to dominate in the long term?
  • What’s the unique leverage other companies can’t/hard to clone in that category? How to create that?
  • What’s the opportunity cost of building that?
  • How to make that leverage compound over time?

© Allen Lee 2022