| In JC’s Newsletter, I share the articles, documentaries, and books I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate. I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those. If you are not subscribed yet, it's right here! If you like it, please share it on social networks! Share 💡JC's Newsletter
🔎 Some topics we will cover this week Launching a new product inside a company The vision of Innovation at Shopify How to create an economic franchise The power of working together
👉 Jason Droege: Building Uber Eats (Join Colossus) ❓ Why am I sharing this article? Amazing tips on how to launch a new product in an existing company, and be ready to take high risks of failure and not care about this. You need to do it for the adventure. There is a need for support for the early failures The team should start very small (“one-man team for the first six or seven months). We should not be “internal consultants”, and be really biased towards building ideas. Get into the market as quickly as possible. Do not overthink incentives. The scale of the test for them was huge ($30m burn). At Uber, Ops were part of product almost. How do we think about it? I love how they thought about Global-first: “what is the most important thing that we can build that will have the most value across 25 countries?” “I used to sign up as a restaurant and take phone calls from our sales team just to see how we were pitching it.” ➡️ Even more powerful than shadowing. Could we try that?
Context: Jason Droege, a venture partner at Benchmark. Jason's had a long entrepreneurial career, which most recently culminated in building and leading Uber Eats. He joined Uber in 2014 with a blank piece of paper to grow the business beyond ridesharing. Within 6 years, he found product market fit with food delivery, refined the service and scaled Uber Eats to a global $20 billion GMV run rate.
How to do a new product inside of an existing company: A new product inside of a big existing company that takes advantage of some of the preexisting rails of that company and has worked. You have to risk career-ending failure to find career-defining success. There are just some people who are willing to do that, and they want the ride. They want the excitement. They want the adventure. They want the challenge. You've got to have buy-in from the top so the person who's making all the mistakes early on, which was me, because I made a bunch, feels a sense of safety.
Stay small: I started, day one, it was just me on the team. I was a one-man team for the first six or seven months. There's not an analyst team, there's not research reports. There's none of this. We rejected this whole idea that any of that would be helpful. It was literally me walking on the city for a few months developing some ideas, and then fielding ideas from our operations team, too, which is a really big part of Uber's success.
Test very quickly: One of the ideas we tested is that -- being from one of our teams, which is UberRUSH. Essentially, we just tried a few things. I wanted to get into the market as quickly as possible because this was new for me.
Incentives for the team: I've seen a lot of mistakes where it's like, well, if we get to this revenue level, then you get this. If we get to this geographic expansion level, you get this. And the problem with those things is that it doesn't gives the leader of the business enough flexibility to do the right things for the business. There almost needs to be an unwritten contract between the CEO, frankly, I don't think it could be anybody else than the CEO and the person doing the job. I'm going to take care of you if this works. I think that the person doing the high-risk work just needs to know that the CEO is going to defend them at the Board level when they burn $30 million, which I did, and didn't have much to show for it, before we find the success.
Challenging the belief system? We lost so much time and a little bit of money because of our belief system. We started asking ourselves around big decisions, "Why are we doing this? What do we believe, in the first place? What you believe determines what you think. What you think determines what you prioritize, and what you prioritize determines of what you do, and what you do determines whether or not you're successful. So if you aren't evaluating what biases do we have as an organization, what biases do we have as a business, what are our personal viewpoints, what are we so convicted on?
Global-first: At Uber, everything had to be global. We had global teams, operations teams. And our operations teams were kind of part of the product team, if you think of it that way because you need the restaurants, you need the local ops, like that is part of the product experience for the apps and the marketplace and how that works.
What our product team had done previously is they had thought through how do we thread the needle on all the needs for every country that we plan on launching into? What is the most important thing that we can build that will have the most value across 25 countries? And then they force ranked with that go-to-market in mind, and they were a very business and marketplace-minded product team, which was exceptionally useful.
Being on the field: I used to sign up as a restaurant and take phone calls from our sales team just to see how we were pitching it. And I would hear things from inside the organization being translated through to what they would say, how they would say it, how they would negotiate and how hard do they push, or they wouldn't push.
👉 Tobi Lütke (Shopify): Calm Progress - The Knowledge Project Ep. #152 (Farnam Street) ❓Why am I sharing this article? Confirms my feeling that over-planning is counter-productive. What should we subtract? Recently, we decided to stop Mind stand-alone, Baby, Mind B2C Marketing, …
Be careful with “best practices” and false expertise. I also believe that we can do better & different everywhere. I love: “Every group in a company should be able to go to a conference and talk about how how our group is better than the general implementation of this discipline” Go-to-market: How do we want to forgo short-term profits on Mind/bundle to create the category. Giving Shop Pay to everyone is like giving Mind to everyone.
Replacing roadmaps and planning: How this looks in actual practice is you look at everything that is being done in your company and you put things into categories, helpful, not helpful right now, because reality changed.
Subtraction: The best thing founders can do is subtraction. It’s much, much, much easier to add things than it is to remove things. So as people are adding things the set of things that has to be maintained gets larger and larger, and larger, and you end up with more and more people actually working on just maintaining of status quo, or maintaining code basis and so on.
This is why one of the books I give to my executives is Parkinson’s Law, which is a wonderful 80 page read on how silly companies end up being, and very often.
“Best practices” & innovation: Compensation:
➡️ We still want to incentivize on long-term thinking so I would not apply their model (and you need to be public to really do it). Go-to-market: Tips on sleep: You do not do basically with some minor allowances, anything in your bed that isn’t sleeping. Your bed is for sleeping. You have a chair close by, you take your book there. You read there. You do not bring your phone to bed ever, even it’s in the afternoon. To allow yourself to go into bed if you’re sleepy, you don’t go there until you’re sleepy. You learn how to figure out you’re sleepy, you will always get sleepy at the same time of the day. And if you’re not sleepy, you don’t need to go sleep.
👉 Thread by Shreyas Doshi: new products in successful companies (PingThread) ❓ Why am I sharing this article? New product initiatives within already-successful companies often fail to achieve their potential because they have too much rather than too little. Too much of: 1) headcount: you are now under pressure to come up _something_ for all these people to do 2) democratic decision making: creative product ideas usually get killed (or watered down) by groups of people 3) optics requirements: need to manufacture metrics & milestones to *show* straight-line progress and demonstrate certainty during an inherently uncertain journey 4) involvement of the “core” product group: you have to make tremendous compromises within your new product to keep the leaders of the company’s core product happy 5) reliance on the company’s distribution: you and your team don’t have the incentive to understand the customers of your new product well-enough, and your initial traction is often misleading
Consider if you should be asking for less: less reporting, less certainty, less consensus-driven decision making, less meddling, and less pressure to build out a “full team” early on.
👉 An Interview with Eugene Wei About Streaming and Social Media (Stratechery) ❓ Why am I sharing this article? Jeff Bezos used to say, “just focus on the customer. If you just create a great customer experience, it really doesn’t matter what your competitors do.” In a state of infinite entertainment, the customer’s attention is now the scarce resource and managing that is very difficult. But what’s funny is prices are all relative values. It’s hard to put a value on these things, but customers have been trained that the price anchor for streaming services is really low. In a way, that’s why it does matter to pay attention to your competitors. It does matter to pay attention to the environment that you operate in. Because in a world of infinite entertainment options with competition from video games and TikTok and podcasts and all of that, I think we’ve ended up in a place where maybe Netflix is going to continue to have the scale advantage, but maybe the ultimate terminal value of that is less than we would’ve anticipated.
👉 Jeff Bezos on acquiring Ring (Internal Tech Emails) ❓ Why am I sharing this article? To be clear, my view here is that we're buying market position – not technology. And that market position and momentum is very valuable.
👉 Bob Iger Back at Disney; Chapek’s Tactics, Iger’s Strategy; Tactics, Strategy, or Environment (Stratechery). ❓ Why am I sharing this article? We want to build an economic franchise In France and in Belgium our product is needed. In Spain, I think we need to make it desired. With the new category creation (one stop health partner) we have a chance to create no substitute. If we succeed at this, we will enjoy good margins
Warren Buffett quote about newspapers I have mentioned before; from Berkshire Hathaway’s 1991 letter to shareholders: An economic franchise arises from a product or service that: (1) is needed or desired; (2) is thought by its customers to have no close substitute and; (3) is not subject to price regulation. The existence of all three conditions will be demonstrated by a company’s ability to regularly price its product or service aggressively and thereby to earn high rates of return on capital.
In contrast, “a business” earns exceptional profits only if it is the low-cost operator or if supply of its product or service is tight. Tightness in supply usually does not last long.
👉 Elon goes hardcore (Platformer) ❓ Why am I sharing this article? Even if it is very bold, clarifying the intensity to be successful upfront is likely good practice The rest of the methodology is likely a lot less.
“Going forward, to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore,” Elon Musk wrote. “This will mean working long hours at high intensity. Only exceptional performance will constitute a passing grade.” Musk presented employees with an ultimatum: click “yes” on a Google form affirming your desire to “be part of the new Twitter,” or leave in exchange for three months’ pay.
👉 The Knowledge Project Ep. #151 Alan Mulally (Former President and CEO of Ford Motor Company, Former CEO of Boeing Commercial Airplanes): The Power Of Working Together (Farnam Street). ❓ Why am I sharing this article? Having an issue on a problem is a gem that should be shared with the rest of the team to find solutions together At Alan, we leverage HPFOs to share our 🔥 once a week. Let’s make sure, we are comfortable sharing the problems and we ping well for help!
Business reviews: Every week we meet with all of the stakeholders and we go through in an hour and a half, two hours, we go through every element of the strategy for accomplishing our objectives. Also, the status of that. We actually color code all of the team members. Green it’s on plan. Yellow, they have an issue but they have a solution. And red they have a new issue but they’re still working on the solution for it.
Having clear performance goals and one plan. Most companies have many plans and most people are trying to figure out what the plan is, as we all know. Many people, many leaders, if they have a red item, first of all, that embarrasses them, they think they’re not doing their job, as opposed to that red item is a gem. I clap when you have a red because you’re not red, it’s your item is red. Thanks for sharing that. Now we all can work together to help you and us turn the reds to yellows to greens.
Every business plan review, we’d get together and we’d say thank you, how can I help?
Example: Up comes this red chart on something really important, a launch of a new vehicle. And so he explains it very succinctly that here’s an issue that came up, we’re working on it, we don’t have a solution yet. “Any initial thoughts from the team on how we can help Mark?” And Derrick Kuzak was leading engineering worldwide, said, “I’ve seen a problem like that before. We’ll get you that data.” Betty Fowler, who was leading quality worldwide had a similar comment, and Joe Hendrix, who is leading manufacturing worldwide said, “We’re going to figure this out. You’re going to need some manufacture engineers up in Oakfield, Canada. I’ll get them identified and get them up there, so when we have a solution we can switch out the parts and get the production going in a timely manner.” That took 10 seconds, 12 seconds, we were on to the next chart.
Working on the vision: Perso: A family meeting every week: we go around the house, we pick up all of our stuff, we take them back to our cubby or back to our room… We go around the room and every member of the family describes what they’re going to do this next week, and also identify any things that they need our help with. So we all write down things that we can do to help. The next agenda item was we would just reflect on the behaviors that we’ve agreed to, because we agreed to a compelling vision for the family that had us all growing and contributing and making a difference in service.
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