Being great
We spend a lot of time thinking about companies: our own, our competition, companies we admire or buy stuff from. Yet what makes a company inherently valuable and worthwhile remains a poorly explored question (to me anyway). It’s hard to define what a great company is if we don’t have a good definition for what a company is in the first place.
Is a company the product it produces, the people that work there, the customers, the leader or the mission or the cap table? All of these things can change over time, so what is it really? Let’s say you have an axe. If your axe breaks its handle, and you replace it, is it still the same axe? What if you later replace the axe head? Is it still the same axe now? I argue that it is: The axe is more than an idea, it's a tangible and valuable thing (if you need to chop wood … or other things that need chopping). I like to think of the axe as a set of capabilities: a sturdy handle to swing and multiply force, a head that generates momentum and a sharp blade that splits what you aim it at. These capabilities assembled the right way and working in concert makes "the axe" what it is. I think a company is the same. It is a set of capabilities that are fit together and coordinated to purse specific goals. Its capabilities are those things it has chosen to invest in and build up. Companies can have many capabilities : great hiring, sharp marketing, good design, outstanding service, logistics etc.
Like a good axe, a company may have just a few standout capabilities that help it win consistently at its purpose. Apple has some great capabilities around user lock-in that make it impossible to beat in some arenas. A start up can't aspire to this kind of thing the same way and has to win with capabilities it can build with what it has. In growth-stage companies, I keep seeing the same set of stand-out capabilities that I think keeps these companies out front.
1- Ability to prototype. Get stuff out quick, test, iterate and understand why things work or not. Prototyping is about knowing how to listen. That helps you know how fast and how much product/feature you need to build, when to iterate, when to refactor and when to pack it in.
2- Ability to productize. Productization is about shooting for repeatability and consistency in what you do. Well productized things are low friction, produce consistent results and fit well into the user’s lives. That holds equally true for your tech as well as your support, services etc. This goes to the reliability of a product, its pricing, market fit, delivery mechanism etc.
3 - Be where your audience is. People think of this as marketing/product-marketing and they would right for the most part. It starts with understanding in great detail who your audience is, how to reach them on their terms and how to be hyper-relevant to their lives. Always be asking who your buyers really are and where they are headed. And wherever your buyers are headed, get there ahead of them and set up a lemonade stand.
4 - Staying power. There is no point being good at the other things if you can’t hold your machine together long enough to win. Since the biggest gains occur the most infrequently, either because they don’t happen often or because they take time to compound, staying power matters. For most companies this about operating capital, and access to money. And that is very true, but most small companies can’t really lead in this area. Having a ton of money helps, but staying power can also be about retaining good people and good culture, consistent presence in the market, keeping tech debt low and liabilities under control etc. This is a corporate mentality that says “we are playing a long game and can’t tolerate anything along the way that will defeat us before the finish line.”
There are a ton of reasons I like thinking about SaaS companies along these lines. The most obvious is that they fit together into a sustainable solution delivery model. Another is that it helps me think about a company in terms of what it needs to be holistically good at (as opposed to departmentally) to win.
King Richard I, Lionheart, of England swinging a battle axe
