The Base Layer for Success
Mastering the foundational factors to build a successful business.
My goal with this newsletter has always been to understand what makes great founders and companies better than everyone else and how have they achieved that status.
Are they wired different from the rest of us? What do they know that we don't? Are they smarter than everyone else? What can I do to be more like them?
I have always wondered these questions, thinking that there must be a secret formula for success that the rest of the population hasn't been able to grasp (that's probably because I'm an engineer - everything needs to have a formula!).
But the more I read about them, the more I realised that their journeys and backgrounds were all different and no two founders were the same. There is no secret formula that we can use to become successful and no handbook that we can guide ourselves.
However, once we analyze them we realize they all have the same foundational factors that act as the base layer for their success. I call it the base layer for success:
This layer is the basis on which all success is build upon, that you can then stack with specific knowledge factors.
Let’s analyze it more in depth.
“Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”
Although it seems obvious, consistency is the most underrated aspect that the majority of people struggle with (myself included) and, as a result, aren't able to reach the desired outcome.
People are often highly motivated when starting a new project. Everything seems exciting and new and you just want to do more and more. The hard part starts when they want to be more ambitious about it, and that requires working on it more often, not just when they feel like it. The problem is that they expect to become great as fast as possible, thinking that there might be some shortcut to become an expert, and quit when they can’t see the results immediately. Who hasn’t started an hobby like drawing or exercising and quitting soon after because they don’t paint like Van Gogh or have a body like Arnold Schwarzenegger after a couple of attempts?
In the book Outliers, Malcolm Gladwell wrote that it takes 10.000 hours of deliberate practice to become an expert in anything.
“Having access to getting 10,000 hours of practice allowed the Beatles to become the greatest band in history (thanks to playing all-night shows in Hamburg) and Bill Gates to become one of the richest dudes around (thanks to using a computer since his teen years).”
While the amount of hours required may be debatable, the key aspect to retain is that you can't expect to become great at something without consistently showing up. To build a world-class company or business, you need to treat it like an olympic athlete treats his sport.
Michael Phelps, the most successful and decorated Olympian of all time, is known for his strict and intense training regime. When he was 15, he signed his first contract and said he wanted to change the sport of swimming. He wanted to be the greatest swimmer of all time. And that meant he was willing to do everything necessary to achieve that goal.
"I went 5 straight years without missing a single day of workout - 365 days, every single day I was in the water. And in the sport of swimming, when you miss one day it takes you two days to get back. So I was already continuing to build on that throughout that time. There are days you're not gonna want to do it, sure, everybody has those days, but it's what you do on those days that help you move forward."
By not skipping a single day of workout, he was already in front of everyone else, because he did the work when no one else did.
What does this relates with building a great business?
Because the same happens there. Once, when asked for advices for new entrepreneurs, Elon Musk responded this:
"Work like hell. I mean you just have to put in 80- to 100-hour weeks every week. This improves the odds of success. If other people are putting in 40-hour workweeks and you're putting in 100-hour workweeks, then even if you're doing the same thing, you know that you will achieve in four what it takes them a year to achieve."
I don't mean with this that you should work unhealthy amount of hours, as this can have significant impact in your mental and physical health and is not suited for everyone, but it shows that if you want to be the best in the world you need to be willing to make big sacrifices. Even if you don't aspire to be the best at what you're trying to accomplish, you should always try to be as consistent as possible, in order to view the effects of compounding.
One of the questions that VCs always try to understand when hearing companies pitch is "How big is the market size?", followed by how big can it be in 5 to 10 years.
You might have an amazing idea, but if no one wants it then you're out of luck. Likewise, if you're solving an issue to an emerging market, you might have a shot.
When Brian Armstrong first pitched Coinbase to YCombinator, it was still the (very) early days of crypto and he wanted to solve an issue to those early adopters: build an easy way to buy and sell bitcoin.
At the time, no one really knew what crypto could become or had any idea if it would fade into the unknown or become successful. All they knew was that this was a new disruptive technology, with a growing community of early adopters who believed there was potential in it and wanted to have an easy way to buy and sell bitcoin without it being like you were trying to enter into the Matrix.
One of the ways to understand if you're in a growing market is to check for online communities: are they increasing or decreasing? What are those adopters doing with it? What is being said in social media about it?
Having an idea of the potential market interest before you start working on your project is key to best target your potential customers. As such, you can be part of those online communities (Twitter, Reddit, YouTube, etc.) and analyse what are the adopters saying, what are their problems and how excited they are about it.
Furthermore, if you want to have a great business, your product should aspire to be a painkiller, not a vitamin. What does this mean? Vitamins are "nice to have", but not "need to have". They can increase your satisfaction, but they don't solve your problems. On the other hand, painkillers are "need to have", you take them because you have a pain and you want it to go way.
Some examples of painkiller products are Google Maps, iPhone, Spotify, Uber or Netflix. These are products that we'd miss if we couldn't use them. Vitamins can be for example to-do lists, videogames or fitness trackers. They are nice to haves, but they won't change my life (except maybe videogames).
So try to build the painkillers for your market and your likelihood of success will be greater.
The final part of the formula for success is iteration. Listen to your customers. What are they saying? Are they requesting any features? What is not working?
While it's important to launch before you think you're ready so you can have your minimum viable product launch as early as possible, that first initial version is probably not (or should not be) the final version of the product. That version should be just enough to receive market feedback and check what's working, but if you build something that interests other people, you'll always receive feedback.
If one or more customers requests the same feature, that means that there is probably interest from a large group of people for that feature to be integrated into your product, which then will bring more customers to use your product once you add it.
That is what happened with Revolut, most of the features they added on the product - like crypto, vaults and stocks - were based on customer requests.
You will find that this influx of requests will build a snowball of potential new features that you can then add to your product roadmap, making it easier to know how will be the customer adoption, based on the amount of requests by the customers.
You might build a good business with just one of these three factors, but you won't build a great one. To build the best business in your field, you'll need to have this base layer embedded in you and build on top of it with your specific knowledge.
Now it's up to you to start. What are you waiting for?