How a Few Companies Win Big and Keep Winning — The Theory of Systems and Resources — Part 3
Thanks for withstanding the urge to open Twitter and/or YouTube, Snap or Insta (on your phone)… the wait will be worth it at the end of this scroll… Clap if it is, Comment if its not with whats lacking…all feedback is good (for me!)
For those of you, who do not read the earlier parts, I recommend reading Part 1 and then you could jump right into Part 3 … because I’ve quickly recapped Part 2 for you, right here:
Applying the Systems and Resources Framework to your Startup:
(1) Think of your startup as a new system, looking for resources to import, to build your own product/service (which in turn would be resource for others to consume). Which bucket do you fall under, A, B or C? What’s your magic resource — the one that you either co-create or bring to life through aggregation/ distilling / algorithmizing the resources of other systems. The magic resource can bring users closer to you and strike fear into the hearts of competitors, who seek to challenge you.
(2) List all resources you intend to use. How you intend to use them. How your intention/business model would utilize those resources at a time, and in a way to both, minimize cost and maximize the value (both perceived and actual) for the users/consumers / customers.
(3) Technically identify how you’re going to build your product/ service. Pros and Cons, for those resources, related to your present and near-future use. Make decisions quickly on the critical resources. Do not compromise on code stability/community and licensing.
(4) And now my friends, build, ship fast and break things, get feedback, learn, iterate, build and release, and monetize the heck out of those resources to unicorn glory :-)
…but I already read Part 2 and want to know how’re the best startups doing it…and what can I learn from them?
You’re right, lets get started on what the best startups do, that other’s don’t or don’t even know how to:
The best startups understand the Silicon valley group-think of startups as a route to solving a problem a lot of people have, and then figuring out how to solve that problem quickly and then asking them for feedback to solve it better. But the best ones improve on this by applying first principles.
(1) Start from first principles/ Apply your framework or meta-framework: What does this mean? Thinking deeply about the systems architecture of what you’re going to build and the resources you import, from the systems, the constraints of both, at the system and resource level, are a given limitation to the solution you develop to solve that problem.
(2) Be right with the Big Stuff, keep changing the small stuff: Most of the code written today, will have to be rewritten and reconfigured atleast a dozen times, before it will scale to solve the problem, it set out to solve.
I have seen this happen, in NearLaw when we grew from 10 users / week to over 100,000 and the mayhem it unleashed upon our dev team. Refactoring and testing code is not the same as requiring to architect it again. And we didn’t just incur development debt of messing up with stuff at the frontend what should have happened at the back-end. We also got stuff wrong about which API system we were accessing and how much data we were using on our servers and the computing time it took.
(3) Ship the barebones product, show and elicit feedback from real users, understand how they use it and fix the bugs, improve with every iteration and grow/scale and then monetize the heck out of it. Most of the venture investors and practical knowledge or expertise is focused on this step.
However the best startups are those that probably spent a good 20 to 30% of their time figuring out #1 and #2 and then spent 60 to 70% of their time in #3 (of which 50% was spent shipping stuff out, the real operations of it).
Applying the framework of systems and resources, I can broadly classify the best startups into these 3 buckets:
(A) Identify and assign resources which are not being used by any existing systems.
Google used the world’s data, emails, books, hotels, roads/maps, etc. and organized and assembled it into the biggest database on the planet. The resources existed in a disjointed and fragmented way across the internet universe. However Google was the first one to crawl, index and present it in a relevant way for the user’s query keyword and for a start, simply having access to such a wide array of relevant information quickly, was good enough.
(B) Identify and assign resources which are being used sub-optimally by any of the existing systems.
An example was how conventional news media was using editorial resources to amplify the news narrative whereas twitter democratized news (and many other user-generated content) wherein now everyone could get streaming news and even directly connect with/follow influencers.
(C) Identity, enhance and deploy resources which are present, but not clearly identified or understood enough to be applied.
Nanotechnology and cryptocurrency are resources which were developed from advancements in systems of material science and decentralized blockchain technology.
In conclusion, my goal for presenting this framework early, is the same as hackers have, when shipping a product early — even if they are, as Iam, slightly embarrassed about how unpolished or unedited it might appear — see what the users/readers think.
However, that doesn’t mean, I spent no time in research or thinking about it from multiple perspectives and forming a coherent set of broad first principles which underpinned the basis of the framework. Then I began to classify the points to communicate, write and split it into parts for readibility.
In the analogous process, if developers and engineers and builders of startup products and services, continue to think that hacking or just coding through a problem is the best way to get it done, they will miss out on first figuring out what are the first principles or fundamentals. First principles would include : how or what they build, what resources to utilize from which system, what are the relevancy customer experience points to deliver, and how those UI/UX/CX gets impacted by what system and resource constraints that are imported to deliver that very experience.
The integrated system architecture with costs/benefits of each resource and each system mapped out, along with their impact on the integrated customer experience, should decide what gets built and how. This is new learning and requires persistence, training, discipline to think systemically and who better than our engineers and developers to adopt and bring this to effect.
Interestingly, the other side of the equation of resources being imported to solve constraints or deliver functionality, is that, as startups are looking for new resources on existing and new systems which might emerge, the resources themselves are also a by-product of another startup’s existence, or rather their product. So the resources and their systems are also competing for being bought by the most number of startups.
Any large company is only as powerful as the ecosystem or system it is developing and the quality of its resources, for the community of importers. The more importers, the more contributors, the better its own systems and resources will be, for its own consumption and survival
That’s why you have Facebook (React/ React Native) and Google (Angular etc.) competing in almost every system in which the other offers resource. Everyone wants other startups to use their resources, so thirty-party dependence and utility derived from their system is maximum.
The battle for the next 100 years is not which social media product is new and shiny or which javascript framework has better support for template literals, but rather which startups optimize the resources they use (or import) and more importantly, which resources of theirs are they able to get the broader community to buy into and use.
This is not just about the future of this planet. This is about the potential future of which group of resource creators and builders are going to be have an disproportionate impact upon our collective destiny.
I urge you to take the time to understand this, build for this and get going. Don’t just make a dent in the universe, make a dent in all the multiverses — I’m grateful for your time today.
~VLS
P.S. All feedback is welcome and greatly appreciated.
