Sunday Reads #101: Speed as a competitive advantage
And some link-love on Artificial Intelligence, GPT-3, and amazing books.
|Jitha Thathachari||Jul 26, 2020||1|
Hope you and yours are keeping safe (and sane).
I'm back again with the most thought-provoking articles I've read in the week. (in case you missed the compilation of my best articles last week, you can find it here: The best of Jitha.me).
This week, we first take a look at what gives companies a competitive advantage. Amidst all the talks of moats and defensibility, maybe the biggest source of power is just… working faster?
Next, a quick look at the underestimated role that vaccines have played in our progress.
And then, some link love. There’s been a lot of chatter online about GPT-3, OpenAI’s newest AI engine. I share some of the coolest things it’s done.
And finally, this week I’m restarting something I used to do way back when I started writing the newsletter. I’ll now share book recommendations every week - hope you like them!
Here's the deal - Dive as deep as you want. Read my thoughts first. If you find them intriguing, read the main article. If you want to learn more, check out the related articles and books.
[PS. If you like what you see, do forward to your friends. They can sign up with the button below.]
1. Speed as a competitive advantage.
A lot of discussion on startup and business strategy ultimately comes down to one single piece of advice.
“Build a moat”.
Yes, increasing margins is important. Yes, solving distribution is critical. But before you do all that, you need to build a “moat”.
What’s a moat? Like medieval castles, a moat for your business protects you from competitors and substitutes. It gives you market power, so you can focus on growth, profitability, and all the good stuff.
For many investors, it is the most important thing.
Take Warren Buffett, for example.
As as the VC firm Andreessen Horowitz says, in Moats Before (Gross) Margins:
Yes, gross margins are important. But over-rotating on gross margins is myopic because business quality is driven by more than margins.
Business quality is about defensibility. Defensibility comes from moats.
Now, there are a few standard types of moats in business. If you look at the most successful companies, you invariably see some (or all) of them.
Regulations. Technology / IP. Brand. Economies of Scale. Network Effects.
Jerry Neumann has categorized them very well, in A taxonomy of moats:
But what if you have none of these moats yet?
Turns out, you can generate a moat out of thin air, by simply being fast. By hustling.
Yes, speed can be a lasting competitive advantage.
In fact, as per Elon Musk, it may be THE lasting competitive advantage.
Says the man who’s started four multi-billion dollar companies:
The most important sustainable competitive advantage is fostering an organizational culture that supports a higher pace of innovation.
And if you want something more tweetable:
The fastest company in any market will win. That’s why companies need to make speed a habit.
Dave McClure of 500 Startups has a great presentation on Slideshare, on speed as the primary business strategy.
The presentation has some great examples of companies that succeeded with relentless focus on speed.
Stylus Innovation – $13M exit in two years.
Direct Hit – $500M exit in 500 days.
Xfire – $110M in 2 years.
The presentation also has some concrete tips on how you can be faster. Whether it’s fundraising, hiring, employee onboarding, or business development, you can be much faster.
[As you think of ways to speed up, it also helps to remember, your Minimum Viable Product can be more minimum than you think.]
We’re running at top speed here. Can’t go any faster!
Sometimes, you think it’s impossible for your organization to be any faster than it already is. If you go any faster, you’re sure things will break.
At such times, check out Patrick Collison’s list of examples of unbelievable speed. It’s called… Fast.
Some examples from the article:
The Eiffel Tower was built in 793 days.
On August 9 1968, NASA decided that Apollo 8 should go to the moon. It launched on December 21 1968, 134 days later.
The iPod shipped within 290 days of starting development.
Amazon started to implement the first version of Amazon Prime in late 2004. It went live on February 2, 2005, six weeks later (!).
To be fair, when it comes to speed, Amazon SMOKES every other company.
Speed is a competitive advantage in your career too.
As James Somers says in Speed matters: Why working quickly is more important than it seems;
Systems which eat items quickly are fed more items.
Slow systems starve.
This is true at a simple level, of course.
The faster you do things, the more things you can do. The more intelligent bets you can place. And so, the more you can win.
But it’s also a superpower that makes you indispensable. The more things you take on, the more critical you become to your organization.
[PS. Permalink to post is here.]
[PPS. Speaking of unlikely moats, sometimes, good old focus can be a competitive advantage too.]
2. The World of Vaccines and COVID-19.
Humanity’s history is a continuous battle between us and the microbes.
For most of our history we were on the losing side. It wasn’t even close. Billions of children died from infectious diseases. No matter where or when they were born, around half the children died.
What finally won us the war? Vaccines.
As Max Roser says in his article on vaccines and public health, vaccines have doubled our life expectancy. In the image from his article below, you can see how vaccines decimated the ancient scourges.
Some other COVID-19 links:
A surprising candidate for the country with the best response to COVID.
And some good news in the search for the COVID-19 vaccine. It's early days yet 🤞.
3. The World of Artificial Intelligence and GPT-3.
OpenAI released a new language generator AI two weeks ago, called GPT-3.
It's taken the internet by storm. Some of the things it has done are brilliant!
It completed an essay on “How to run an Effective Board Meeting”, with brand new ideas.
It can write code 🤯
And the list goes on:
It rewrites Harry Potter like a Raymond Chandler potboiler, as a rap song by Lil Wayne, and croons for him a la Taylor Swift.
It might have even learnt how to pretend to be less smart than it is!
And here's a thread with several more examples.
It’s a laundry list of professions GPT-3 is going to take over - lawyers, coders, poets, philosophers, and counting.
Might this simple text reading neural network be the start of Artificial General Intelligence?
4. The World of Books
Starting this week, I'll recommend one or more books that I've loved in every issue of the newsletter.
A bumper issue the first time.
Amazing Science Fiction books that you haven't heard of.
The Mote in God's Eye has one of the most realistic depictions of alien life I have read. Realistic = unfathomable for humans.
A Deepness in the Sky. Again, a book about aliens. Half the book is written from the perspective of the aliens. Makes for a fascinating read, delving deep into their psyche. It's Book 2 (although it's a prequel) in the Zones of Thought series. So you might want to read Book 1 in the series, A Fire Upon the Deep, first.
I also finished Anathem this week. It's a complete page-turner (which is a relief because it weighs in at 1000+ pages). Lots of world-building in an alternate universe, so be warned that it will be slow going at the start.
In case you want something shorter…
Here are a couple of mind-bending short stories / novellas (free to read in the links below, and neither are about aliens 😀).
The Cookie Monster, by Vernor Vinge (who wrote The Deepness in the Sky).
Nightfall, by Isaac Asimov (who wrote the Foundation series).
More recos (non-fiction this time) next week!
That's it for this week! Hope you liked the articles. Drop me a line (just hit reply or leave a comment through the button below) and let me know what you think.
See you next week!