Knowledge kills Imagination while Ignorance flames it

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I tend to put down the various thoughts I have in mind as notes to someday write a blog about it. Last week as I was going through the countless number of notes that I had, I found quite a few notes about Knowledge, Ignorance and Imagination.

I decided to combine all of them and put this blog together.

 

Ignorance is important

I was once listening to a gentleman who had attempted to climb Mt. Everest. He made two unsuccessful attempts before finally scaling it the third time. He told me how excited he was the first time when he decided to scale the mountain. He had prepared for weeks and felt ready to scale the peak. When he started climbing and advanced up the mountain, things got harder and harder. There were gaps (crevasse) in the mountain which had to be crossed using ladders.

eve-when-fantasy-turns-real7

What started like this…

Giant Crevasses

Soon became this…

View as you cross

And this is what it looked like…

Bottomless crevasse after crevasse was crossed only to fall sick at camp 2 and to be sent back to the base camp and eventually home.

He told me that after the first attempt, he was more cognisant of the challenges and the risks that lay ahead of him, if he did attempt this climb again. It replaced the sense of excitement with a sense of fear, which was difficult to overcome. He nevertheless mustered all the courage within him to make another attempt to climb the peak and failed again.

It took an enormous amount of courage and will power to commit to climbing the peak the third time, which he accomplished successfully.

He told me the first attempt was probably the best attempt, since he was not burdened with the knowledge of what lay ahead and the difficulties that needed to be overcome. Even when the challenges were posed, he took them in his stride and overcame them. In each of the subsequent climbs the anticipation of the challenges that lay ahead drowned the excitement and made the journey less pleasurable. Also, the fact that he already knew the challenges which needed to be overcome, changed his approach from ‘fresh and fearless’ to ‘tentative and fearful’.

Knowing the challenges that lie ahead makes the journey less magical.

While the first time he was always looking forward to the next challenge, even when he fell ill at Camp 2. In the subsequent attempts he was always anticipating when he might have to turn back.

 

Knowledge kills Imagination

Have you even had a great leap of imagination where you thought, ‘why not’ ? I often have these leaps of imagination, and then, I go and research the internet and find out 300 different reasons why it is not possible. Finding out the true depth of something makes the challenges obvious. Of course the challenges seem insurmountable. If they could have been easily overcome, somebody would have already done it!

The trouble with knowledge is that it makes you anticipate negatively, which makes you worry; while the lack of knowledge drives you to look forward to the progress that you will be making and anticipate positively. You imagine great possibilities that lie ahead of you.

Walt Disney once famously said; “If you can dream it, you can make it”; but knowledge pulls you out of your dream and brings you back to reality. Hence it is important to keep knowledge at bay for a little while, when you are about to embark on something big.

When you have too much knowledge instead of looking at the next opportunity around the corner you are going to worry about the next problem that is going to rear its head.

“If Travis Kalanick knew that he would be facing litigation with various governments around the world, would he have not had second thoughts about Uber?”

Everything in nature, including the human mind seeks the path of least resistance, invariably the road to glorious success does not take this path. Entrepreneurs choose low hanging fruits because they are seeking the path of least resistance. The moment the idea of hyperlocal delivery took root, 100’s of people embarked on the journey of building hyperlocal businesses. Elon Musk put out a white paper on hyper loop, to my knowledge not even half a dozen startups are trying that.

 

Ignorance flames Imagination

Steve Jobs on his return to Apple, during the Worldwide Developers Conference in 1997 famously said “If I had known about IBM when I started Apple, I should have nudged Woz and said, forget it, we don’t have a chance… But we were too stupid to know that… And that served us well.”

It was his ignorance that allowed him to build Apple, to take on the behemoths of the computer industry. He was just doing what he loved to do, building products that he and his friends loved.

If you are going after a technology that others have written off as infeasible, the reason you might be successful is probably because you will have a fresh perspective unlike those who have been working on the technology for years. The ignorance has the potential of bringing an approach that the industry at large does not adopt.

Ignorance is a good thing when you are starting up.

Ignorance allows you to believe in your dream and persevere to achieve it. When you come up against challenges you let your imagination take flight and come up with a variety of possible solutions to the problem at hand. It is important to let this imagination play its part. But for human imagination we would still have been foraging forests for food.

Edison very famously said “I have found 1000 different ways how not to make a light bulb”. Now what if someone who had tried 750 different ways had met Edison and told its not possible for a boat load of reasons.

I had an occasion to listen Mr. G.M. Rao speak about how he got into the Airport business. He said, “When we started we thought an airport was just a box shaped building and a road, if we knew it would be so complex, we would not have even bid.” GMR group learnt how to build an airport after having been awarded the contract.

Approaching a challenge without expecting it gives rise to a great deal of ingenuity. This ingenuity allows humankind of overcome many a great challenges.

The next time you come up against a problem don’t kill yourself researching the problem, kill yourself finding a solution

As Steve Jobs more appropriately quoted; “Stay Hungry, Stay Foolish”.

Selling – How it works…

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There are many different terminologies that are often used when it comes to explaining sales. Most people who are engaged in sales, tend to talk about lead generation, customer engagement, conversion and so on and so forth. This is an extremely granular view of things.

Sales is what happens when you know what to put in front of whom.

When I think of sales I think of it in very broad terms. I feel that there are only three ways to sell a product. You can sell a product either to the brain, the heart or the ego. I put together the following diagram to illustrate how I see it.

BHE

How does selling differ in each of these cases?

Brain – If you are selling a product based on superior pricing or features, you are appealing to the rational side of a person. In this case you are selling the product to the brain. The trouble with selling to the brain is that, comparison of your product with that of a competitor becomes very simple and hence it is rather difficult to garner loyalty.

WhatsApp is a classic example of a product that was sold to the brain. Simple pitch – Free SMS, always. When WhatsApp started, smartphones did not exist. Putting together a messaging platform that worked using the internet was extremely difficult. With the advent of the smartphone, it became easier for competitors to build similar products, but WhatsApp was already far ahead in terms of network (number of users) and hence was not destroyed. WhatsApp never made a large enough dent in the United States because SMS has always been free with mobile subscriptions in the US. There was no rational appeal.

Heart – If you are selling a product based on the human appeal of the product, you are selling to the heart. Typically these companies are looking to create a human connect with their users. The fact that they seek to build a connect means that they build a certain degree of loyalty along the way. Usually the tools that such a business would use to sell itself would be, communities; relationships, with and between the users and the stories behind the startup.

Airbnb is an excellent example of a company that has grown up selling to the heart. Given the current situation with reference to internet and mobile eco-system, it would be rather easy for anyone to replicate what Airbnb does, but convincing a user to switch away from Airbnb is rather difficult. Airbnb has grown by narrating stories about what the company stands for, creating a personal connect with their users, this makes people feel more invested in the story, that is, Airbnb. The only way to pull a customer away from Airbnb is to have an even more incredible story. You can get a glimpse of the kind of connect Airbnb makes by looking at videos like, this and this.

Ego – If you are selling your product based on the ‘experience’ or ‘feel’ that the product is able to create for the user, typically such a product is one that is being sold to the ego. Most luxury product fall in this category. When appealing to the ego, rationality has no role play, which is exactly why it becomes possible to price these products in a highly irrational way. This pricing results in high margins in such businesses.

In terms of startups, Tesla would be one company that is playing in this segment. Tesla launched as a high priced product, the launch version did not boast great range, but was still able to sell in good numbers. Most startups do not pursue this route since volumes tend to be low and the marketing costs tends to be high in this segment. The route to profitability is also harder to show since the market is usually small due to the price.

If you look at the first diagram above, one thing that is clear is that as you move down from the head toward the torso, the loyalty goes up and the pricing power goes up.

In the early days of Airbnb, their obvious pitch was cheaper than hotels. This was a hard sell as hotel prices tend to be very dynamic and no house can compare favourably to the feature set any hotel has to offer. The company was well rewarded by moving away from selling to the brain towards the heart. Their pitch changed to build relationships as you travel, which appealed to the heart and changed the fortunes of the company. (There is a short 1.5 min snippet in the Apple WWDC 2012 video that shows the Airbnb approach, you can see it here)

Each approach to selling has its own inherent set of advantages and disadvantages. The key is to find the approach that works and to balance it with the needs of the market. There can be shift in the approach at different points of time as well. It is okay to change the approach and pivot on the sales pitch as well, as evidenced above.

So who are you going to be selling to? Brain, Heart or Ego?

Startups Club and What I have learnt during this journey

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I spoke about Startups Club and 5 learnings that I have taken away till now working with the many entrepreneurs who make up Startups Club. Sharing the video of the talk I gave during Seedstars World’s Bangalore Semi-finals. The audio is not particularly high quality and you may have to use a earphone.

Uncertainty behind Success

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Often times, when someone narrates the story of a startup, the focus is on the here and now. Also as you hear how things unfolded, it is hard not to think that there was a plan which was always in place. Truth be told most of the startups are absolutely unsure of how things are going to progress week on week, leave alone month on month or year on year. The uncertainly is greater at the earlier stages and diminishes as time goes by.

Also, when you come across a company that is at a place of great success, it is hard to imagine that the success was so uncertain.

The honest truth is that most companies even the very well established one suffer from a great deal of doubt and uncertainty. Nobody can accurately predict the future and hence the uncertainty. There are a couple of videos that I am providing links to, which clearly show even the mighty have doubt within themselves

The first video is of Alex Schultz, Vice President (Growth) at Facebook, speaking about the growth strategies that Facebook used in its early days. He goes on to talk about the doubt that existed within the company about whether it was even possible to grow beyond 50 Million users because every social network prior to them had plateaued at 50 Million. The link to the video is here.

The second video is of Brian Chesky, founder of Airbnb talking about how they financed the first few days of Airbnb. The company at one point was selling more cereals (which was a marketing gimmick) than rooms. You can find the link to the video here.

These are hugely successful companies today; was there a time when they had doubts about their ability to succeed? Most certainly. I am certain they still have doubts today, only the nature of those doubt would be extremely different.

Take the case of Apple. Arguably the most successful company on the planet at this point of time. Whenever Apple launches a product there is a great deal of doubt that accompanies it. Back in 2007 when they launched the iPhone, they would have been incredibly happy had iPhone sold just as much as iPod.  As can be seen from the graph below, iPhone outperformed the iPod.

mac-vs-ipod-vs-iphone-vs-ipad

Success is about being able to push past the doubt. A true entrepreneur is one who is able to thrive despite uncertainty. Working towards eliminating the source of the uncertainty and forging ahead.

Infallible Investor

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So last week I was reading this article. I could connect with the trials and tribulations that the lady was put through, only to come out with nothing much of substance at the end of the process. It may sound funny, when you read the article but the truth of the matter is that the fault lies completely with the entrepreneur.

One thing that every entrepreneur has to understand is that every “Investor is human” and fundamentally every “Human makes mistakes”. Investors are not infallible, they are just as much capable of making mistakes.

Most seasoned investors, even if they have been entrepreneurs at some point in time, are usually dealing with legal papers and excel sheets. They have an extremely good top level view, which pertains to, if a sector is interesting or not. They also might be able to tell, if a channel is worth pursuing or not; simply because of the number of businesses that they have seen and the amount of experience that they have accumulated. No investor is dealing with customers on a day to day basis and hence they may not have a clear idea about the customer behaviour and the exact strategy that may work for the business. If they did, the entrepreneur would not be required.

The key to all entrepreneurial success is: Conviction and belief in the ideas. Conviction leads to perseverance and execution and that, at the end of the day is a key ingredient to business success.

As a person with conviction and belief, the entrepreneur is the person meeting potential customer and dealing with day to day running of the business. This means that the entrepreneur is obviously going to have better understanding of the market and the niche that he/she is appealing to. The entrepreneur will also have some idea about the steps that need to be taken to move past this niche and appeal to the larger market. If you have conviction and belief as an entrepreneur, stand up for it. Tell the investor, look this is how it is going to work. This is my business plan.

“If you don’t stand for something you will fall for anything”

An investor is seeking confidence. Nobody wants to invest in a person that is going to fall for anything. This just means that the person is willing to sacrifice their judgement in order to appease the investor. What if the investor is wrong?

Always keep in mind, nobody is infallible.

 

As an entrepreneur:

Know your business.

Take a stand.

You may be wrong, if you are you will have to clean up your own mess.

The investor may be wrong, if he/she is you will be left cleaning a mess that you did not create.

The investor is only motivated by growth and your confidence in that growth.