I recently read a book, Zero to One, by Blake Masters and Peter Thiel, recommended to me by an article on Inc.com. And having written my first book, partly as a commercial venture to revive my online bookstore start-up—which had failed twice—I could quickly see why I needed to pivot back into retail but not without a new perspective as to how to make it work.
In the book, the authors broached the subject of affirmatively answering seven questions without which a business was prone to failure, no matter what.
Here are the seven:
- The Engineering Question
Can you create a breakthrough solution or technology? Not just an incremental improvement but something out of the ordinary that is useful and needed. Uber for instance answers this question in the affirmative. You might consider creating an Uber-type business for dispatch riders that allows companies to order nearby dispatch riders and mail stuff on a just-in-time basis without having to wait until the next business day.
- The Timing Question
Is this the right time to launch your product? Many dot.com companies in Nigeria before 2007 would have faced payment gateway problems coupled with the fact that the cashless policy was not even in place at the time to support online payment processing in the country.
- The Monopoly Question
This book devotes a lot of time to explaining why establishing a monopoly is good. The world’s biggest brands often operate as monopolies because while the typical economic theorist would debate that competition is the best market structure, competition thins out profits. As an entrepreneur can your solution be 10 times better than your closest rival company? For instance, Google controls 64% of the search engine market while closest rivals Bing and Yahoo are 21% and 13% respectively leaving the remaining 2% to other search engines. The issue here’s not whether you have a great product but whether your company can dominate your market.
- The People Question
Can you assemble the right team to execute your mission as a business? A great company should be somewhere between a cult and management consultancy. By this, a great company should have the cohesion and convictions of a cult and at the same time have the versatility and competence of a management consultant firm. You will agree that in Nigeria, very few companies answer this question well. Perhaps Access Bank does but for me America Company, Space X with its nearly 3000 strong workforce mirrors the ideal answer to the People Question. The Space X team with its closely-knitted work style and Spartan efficiency equates itself to the elite US military Special Forces.
- The Distribution Question
My start-up still struggles with this question. And the point here is that having a great product without a great distribution mechanism is equivalent to having a bad business. Sales are as important as the products you create. And to cap it all up, people are least likely to buy from you if they don’t even know your product even exists. The distribution question demands you are in touch with the flow of your product from your factory/lab to the final end users.
- The Durability Question
Is your market share defensible? I mean, is your business so replicable that another company can encroach and even steal your market share from under your company by simply copying and bettering what you offer. An example of a company that answers the durability question is Linda Ikeji’s Blog. While blogging has an easy entry, stealing market share from ‘Aunty Linda’ as many call her may be impossible. The only problem an LIB may have eventually is if the company continues to operate as a sole proprietorship, in which its existence is tied to that of its owner.
- The Secret Question
No matter how Pepsi and Virgin try, the Coca-Cola recipe will always be the secret and undue advantage of the Coca-Cola Company. Phone retailer, Slot leveraged on bank loans and buying low priced phones at the beginning of the boom in the Cellular phone market in the early 2000s to establish its leadership of the market in Nigeria. By the end of that decade, Slot had pivoted to franchising when other competitors were beginning to latch on to more market share in that space and continues to maintain a good share of the market, even today. So the question remains: What is the undue advantage your business has over others in your space? Is it access to capital? Or is it customers like Linda Ikeji’s blog boasts of? Every business that is successful is monopolistic in nature. And monopolies are about keeping your secrets secret.
So it’s time to score your Start-up venture. And the rule of thumb is that you would more likely succeed at your venture if your product/company can answer—in the affirmative—at least 5 of the 7 Zero to One questions.
Otherwise, failure is inevitable whatever you do and you might as well abandon ship now and save you and your company the debts and frustrations that will inevitably pile up.
If like me, you have tried before and failed at some entrepreneurial venture or ventures, you’d have learnt that being brutally honest with yourself is better than pursuing a start-up that at best, only scaled four of these questions. DO NOT DO IT!
If you are to succeed, you must have at least six or seven answers to these questions. Otherwise let me say it again: DO NOT DO IT!