On Scaling By Doing Things That Don’t Scale — 5 Timeless Lessons

VC advice on how to scale a startup

Jeff Bezos once said:

“I frequently get the question: ‘What’s going to change in the next 10 years?’ I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that the second question is actually the more important of the two.”

We often read, hear, and see how the world is changing. New strategies, new tech, new products, services… Yet, what flies under the radar is that most next big things essentially function on most important things: fundamentals that stay consistent for generations. Ergo, the more things change, the more they stay the same.

I discovered more proof on this when Sajith Pai spoke on the 100X Entrepreneur podcast.

Sajith shared stories of his accidental journey towards VC-dom and novel perspectives on investing in up-and-coming fields like ed-tech and agri-tech. But much of what he did to reach where he is, and what he’s doing to take himself and Blume VC where they want to go, stems from some unchanging fundamentals.

In this piece, I won’t dissect his thoughts on investing (because I’m not a VC). Instead, I’ll share five timeless pearls of wisdom that stood out for me and how anyone can apply them regardless of the field they work in.

1. Process > Tool or Outcome

“It’s not so much about the tool as it is about the process.”

We all like to imagine how good we’ll feel AFTER we’ve achieved a goal. But following a process to achieve that goal pushes us outside our comfort zone. In an instant gratification-addicted world, that’s something we don’t want. Eventually, we give up.

When we discover a new tool, we begin our pursuit of the goal again, often with the same outcome. (How does the idea for a startup that helps people overcome Instant-Gratification addiction sound?)

Yet, successful people emphasize the importance of the process. 

One of the two words that sprung up often in the podcast was Process. Since 2012, Sajith has followed and refined a process to systematically analyze and write about investing opportunities. He built a process to collect and retrieve notes, which prove pivotal when he needs to deep-think or write articles.

These processes enable him to consistently generate value-creating content and help him achieve his goals. (As someone who makes copious notes, I second his belief that note-taking and accessing are underrated superpowers.)

Takeaway: We have little control over outcomes, but complete control over the process. Focus on the latter regardless of whether your work is viral or invisible. The compound effect will yield remarkable results over time.

2. To build a powerful brand, don’t sell.

“If you create or share interesting or useful content reasonably consistently, you stand a good chance [to build thought leadership.]”

Value investor Michael Mauboussin opined that the absolute-skill gap among people has blurred today. As a result, luck plays a large role in influencing outcomes. Most opportunities appear in unexpected ways. If we build the right functional skills, we’re better positioned to leverage opportunities when they appear.

Sajith’s focus on creating conditions for serendipitous circumstances that culminate into great investment opportunities, ties neatly with this. He creates such conditions through content. Not the chest-thumping “look-how-impressive-I-am” kind… but the kind that offers insights about the industry and helps readers form profound worldviews.

how to create something useful for your customer

In a world drowning in a deluge of saccharine content, such insight commands a premium. It’s what made Sajith attractive to Blume VC, and what makes entrepreneurs and journalists interested in him and the firm. Entrepreneurs want to connect with Sajith and gain his insights, which also lets him get access to 70-80 percent of investment opportunities in areas of his interest.

(I’ve spent many Sunday afternoons reading his insightful TL;DR tweets. Sajith was also generous to share insights on his content creation process for my ebook on building thought leadership.)

“True disruptors shift how people think not only about their product, but also themselves, the industry, and the world,” Ali Mese wrote. “They don’t sell a product, they sell a whole new way of thinking.”

Takeaway: If you can reshape how people think about your industry, you’ll reshape how they think about you. You’ll build a strong reputation that leads to better relations with influential people and translates into long-term revenue.

3. Consumer data is a moat.

If your only defense against invading armies is a moat, you will not last long. What matters is the pace of innovation. That is the fundamental determinant of competitiveness. — Elon Musk

Many businesses fixate on moats hoping they’ll safeguard their market share. They assume their feature-laden products or clever, repackaged business frameworks are moats. But anything that’s easy to replicate, or that customers don’t find useful, is not a moat.

Sajith advise to startups? Don’t fixate on moats in the early stages. Focus on unaddressed problems, collect consumer data, and use it to improve the product. This advice is not just useful for startups but even for established brands.

When a team at LinkedIn crunched the numbers for its flagship product for recruiters, it realized that customers who engaged with the product in the first 30 days were four times more likely to continue using LinkedIn. So the team created “onboarding specialists” who did some work for customers and then called them to show how the product worked.

If a customer wanted to hire a software engineer in Arizona, the onboarding specialist designed a search to help the customer find people who fit the profile, walked her through adjusting search parameters, and so on. Within 2 years, the churn dropped by roughly half and revenues exploded to the tune of tens of millions of dollars annually. (source)

how to use consumer data to improve your product

Likewise, SaaS companies could analyze data to engage customers and increase product usage. In the long term, they might hire fewer coders and more onboarding specialists who can spot patterns and help solve burning customer issues. Now, won’t that make the products more useful?

Takeaway: Fixate on customers. Build products they find useful or novel. Over time, your business will turn into a strong brand, which itself becomes a moat.

4. Solve for huge consumer friction.

“When you solve a huge consumer friction, how you solve it compellingly becomes your moat.”

COVID—19 is a time machine that has pushed certain industries forward by five years while setting others back by a decade. It has changed a lot of our behavior. Some of those changes are temporary while others are permanent.

In Tier I and II cities, for example, hobby-from-home activities and could be temporary because people might return to a semblance of normalcy soon. But we could see widespread adoption of online hobby-classes in smaller towns where people historically couldn’t access to them. In a nutshell, the problems of access for non-consumers are permanent ones and are more useful to solve.

So while examining a problem, ask yourself: Are we solving a temporary or a permanent problem? Are we solving problems of access to historical non-consumers? Are we solving for compelling consumer friction?

Intel designed laptops with longer battery lives and dust-resistant cases for India’s rural consumers. MittiCool built home appliances for people with poor access to electricity. Unacademy empowered students to access courses from the country’s best lecturers regardless of their location or test scores.

Takeaway: It’s easy—lucrative even—to address problems that appear pressing. But it’s important to ponder over whether these problems are permanent.

5. Unlearn, unlearn, unlearn.

“Interesting.”

This was the second word that Sajith used often in the podcast. It reminded me of an interview with Daniel Kahneman where each time the interviewer shared a different perspective, he said, “That’s interesting. Please continue.”

Sajith is unapologetic about his weakly held strong beliefs. He’s even open to changing his beliefs after two months. (So if something in this article doesn’t align with what he says, please don’t hold me liable.)

But most times, we cling to our strongly-held-weak-beliefs as if they’re life vests on a sinking ship when in fact, those beliefs are the sinking ship. The dearth of 30-plus age group startup founders could indicate how we succumb to the “this-is-how-things-are” mindset. We refuse to learn and unlearn. We focus on the dominos when we should focus on the space between them instead. Those spaces are where the real opportunities lie. And spotting them takes a lot of unlearning.

how to spot opportunities that change the world

One method to unlearn is the Socratic method to navigate through arguments. Another is to replace every period with a question mark (especially those attached to your thoughts) as James Altucher suggests. You’ll collect plenty of questions and get better at thinking for yourself.

Takeaway: Unlearning is integral to learning. Sustainable growth comes from mental and emotional growth, which come from learning.

Summing Up

My five key takeaways from this podcast are:

  • Focus on the process more than the tool or the outcome.
  • To build a powerful brand, share insights instead of selling.
  • Your consumer’s data is your biggest moat.
  • Solve for huge consumer friction.
  • Unlearn.

Success results from the right things happening by default, not from individual flashes of brilliance or passion.

Focus on the important things that don’t scale. Building something meaningful on those strong foundations becomes easier to scale.

This article originally appeared on LinkedIn.

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