(Summary of Daily Shot from Dec 3, Dec 10, and Dec 16, 2020)

Straight to the point, for any business, but super especially new ones, this is the most important thing:

problem <-> solution <-> target customer...  need to fit onto each other like a perfect glove. Duh, you might say, obviously. Fun fact, rationally speaking yes it’s obvious, but in reality, new founders play favorite really hard and here is what this looks like:

Solution. Our tinkerers :). People who just love building that special something. And it always needs to be better, there is always just one more iteration to be done and then it’s ready....or not. The robotic pasta maker or that online course, it always needs just that one more thing before we can put it on the market or focus on optimizing the supply chain or all these other business-y things.

Problem. Our fixers. The new mothers who have felt lost in their competitive jobs afterwards, drop out and become coaches, wanting that nobody else will have to suffer like that. The businesses aiming at solving the environmental crisis. These are people driven by pain. And yes, there is such a thing as “positive pain”, where constructively interacting with it leads to personal joy. But if it is negative pain, people will become bitter (and customers will realize and respond accordingly) or, hopefully, heal it on a personal level. Then though, they just lost their main business motivator.

Target customer or user. Our people people. Opening up that alternative school for these mis-served, brilliant young minds. Or that retreat center for people in emotional distress, providing a loving space for them to just be. To be honest, it’s a founder focus that I see the least. My hypothesis is that there usually tend to be a lot of doable employment opportunities for people to spread their love to others. And that this stereotypically female type of motivation is often subconsciously categorized as unpaid care work. Thus people don’t even consider turning it into businesses, or even feel dissonance to just think about it.

None of the three. The sharks. These are founders who smell blood in the water. They look at the trinity of problem, solution, target customer and see how it all plays together and can make money. And that’s why they enjoy it. This doesn’t have to be a ruthless person. It’s just somebody that enjoys playing with the entirety of the business model canvas right from the start.

And here’s a last hypothesis: in a promising founder team, ideally, all members come from a different motivation AND can respect and compromise on these differences. Thus pulling out the best, intuitive, authentic from each motivation, offsetting the drawbacks, and building a powerful engine behind their business.

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I have an old physics friend who really wanted to own a very expensive laser when he was a teenager. To play with it. To see what it can do. Nothing really “practical” that would justify its price tag. So when he went to his parents to borrow money for it, he didn’t ask them to buy one laser, but 100. And yes, he sold the other 99 with a wonderful profit. That, ladies and gentlemen, is a shark*, a person who just intrinsically favors anything business before anything else (problem, solution, target customer/user).

But as in all things human, we tend to not fit into neat little categories. For example, let’s look at a shark-tinkerer hybrid. Think Elon Musk, Steve Jobs, or my friend (now running an AI startup). They love their toys, that visionary product, they will even come close to risking their entire companies for it. Like Elon and the vanishing door handles. But still the first thing they do is a napkin calculation of how it will turn a profit. Shark first, but tinkerer a close second.

Think of it as a spectrum:

Tinkerer——T/S——|——-S/T——Shark

I’m hypothesizing this could directly translate to:

Hobbyist —- small biz ——|—-large biz—- 🤑

Meaning if you, at heart, tend to favor the product building process over the business building part (left side of the spectrum) there will be a natural cap on your potential business growth, if any. It’s a time and focus thing.

On the other hand, the more business focus you have, paired with your inherent desire for product excellence, the higher the chances that you can carry it through the requirements of the business scaling process (right side, S/T).

But let’s talk about the 🤑. What happens if your tinkerer (or fixer, or people person) part is vanishingly smart compared to your business persona? I think that’s where we might end up with the not-so-pleasant sharks. The snake oil salesmen, the culture-appropriating startups, the ruthless CEOs. So somewhere on the right side of the spectrum is a tipping point. A point where somebody’s talent is so skewed towards playing the economic system that they lose focus of delivering something meaningful.

And as an important last point: teams. They are the “weighted average“ of their decision makers. What does that mean? Take Jobs (shark-tinkerer) and Wozniak (tinkerer, who just wanted to open source his invention, thus maybe even a hobbyist). Given the enormous amount of tinkerer between them both, if they both had an equal say in decisions, we would have never heard of a company called Apple. Instead, by allowing Jobs full decision making power in all things business (bordering on ruthlessness tbh) ensured that there was enough “shark-ness” on the team. So keep that in mind for your next team meeting or equity allocation.

Ok, this was a bit longer than intended ( can you tell how my inner math geek got triggered?), so let me summarize today’s message: if you’re running or investing in a business, be mindful of the overall shark-ness and the possible consequences that come with that.

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Let’s talk about the holy grail of scalable businesses: platforms. And why I’m hypothesizing that only one type of founder or “team average” is able to build one: the shark-designer.

We are all very accustomed to the normal, “pipe” business. These are businesses who offer a product or service and that is what people pay for. That could be your new cell phone, your bookkeeping software, or paying a lawyer for their services. Very linear.

Contrary to that, a platform business connects. It offers, but doesn’t sell, software that taps into at least two type of resources and creates a network between them (like Airbnb: travelers and homeowners). These platforms make money by taking a transaction fee or charging per API call, for example. As such, they can capitalize on the vast resources of others. IF they can get large numbers of them to join. It’s a big “if”, but it needs to happen. Platforms are notorious “winner takes all” businesses (besides Amazon, which online marketplace do you know?).

But who is able to pull that off? My current hypothesis: the shark-designer.

We had talked about how founders, or even teams, naturally and not always consciously prefer a certain aspect of the business building process. Either they love building the solution (tinkerers), solve a problem (fixers), care for a target user group (people person), or none of the above but they foremost see the business value behind all of them (sharks). 

Let me introduce a new category: the designer. This is a person who actually cares about all three roughly equally. They enjoy building a product or service, because it solves an interesting problem, for a group of people that they have some type of affinity to. This all-encompassing perspective is wonderfully represented in their creation process: Design Thinking. Note of caution, there are a lot of people who would call themselves designers but, in this framework, are actually tinkerers: they simply build for the joy of building.

Back to building platforms. We know the platform building team, on average, needs to have enough business shark in them to get out of the small business trap. So far so good. But why also requiring a “designer = equal parts tinkerer, fixer, people person” personality of the founder or the founding team average? Let's look at it one by one.

Only shark personality. For one, we argued that “only sharks” seldomly have the drive to build something meaningful, instead focusing on gaming existing economic systems. But for a platform to succeed, it needs to break into a new target market and “win” it, not just game it.

How about a shark-tinkerer? You also need that person or team to have just enough tinkerer to actually be interested in building a software product that keeps improving and adjusting. You need a solid amount of builder energy. But if you only have the shark-tinkerer, like Apple initially, they will have a hard time to give up control over the resulting product that the customer purchases. I think Steve Jobs could have built a great hotel chain but never an Airbnb.

Why is the people person energy so important? To attract those large numbers of users, you need somebody who really cares about helping a target user or customer. Somebody who wants to understand them, get in their heads, make their lives easier. Like the young Airbnb founders who themselves struggled to be able to pay San Francisco accommodation prices when wanting to attend a conference. But, besides the shark energy, it can’t be only people person energy either. If it was, you’d probably be more interested in scaling a charitable organization than building a platform.

Is the fixer energy really necessary? And last but not least, a laser focus on what problem is actually being addressed by your platform is absolutely fundamental to tie the builder and people person energies together. It’s a complicated business, connecting two user groups with very different requirements, and at scale. If you don’t hit their pain points just right, it’s not going to be sticky enough to ensure those large numbers. So you need to be highly attuned, motivated, intrinsically so, to understand their problems. And able to capture its essence so accurately that your inevitable and humongous fundraising and marketing efforts are highly convincing. Btw, if it was only a shark-fixer energy, you are more likely to end up with an international Montessori School system than a platform.

Easy peasy, right?

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