The Jew and the Chinese

A Jewish man saw a busy highway exit and thought: A great opportunity to open a gas station here! The second Jew saw the first man doing very well, so he opened a restaurant next to the gas station. The third Jew came over, thought: Wow they got so many customers everyday! Wouldn’t it be nice to open a convenience store here! Not long after, this never-heard-of highway exit has grown to be a prosperous little town.

On the other side of the world: A Chinese man saw a busy highway exit and thought: A great opportunity to open a gas station here! The second Chinese saw the first man doing very well, so he opened another gas station just across the road, and priced his gas slightly cheaper. The third Chinese came over, thought: Wow they got so many customers everyday! Running a gas station is indeed a promising business! ... Not long after, everyone went bankrupt.

No intention to dispute the cultural stereotypes - I need to tell this story because I came across a question on Quora: what questions would one ask a candidate for a mid-to-senior role in a startup, to gauge their entrepreneurial mindset or spirit? The top voted answer included questions like:

  • Tell me a company you admire.
  • Then tell me how you are going to compete against it.
  • How Google should compete against Facebook
  • Why do startups fail?

The top voted answer got so much attention that someone started a new thread to invite answers to those questions.

Seeing the full set of questions I already know that I wouldn't want to work with this hypothetic company because of our value conflicts, unless the interviewer who asked those questions meant to trap, and was expecting an out-of-his-box answer.

I drew the story of the Jew and the Chinese stereotypes to show that it's a very bad idea to admire a business model then emulate its success. In stead of thinking "compete against", think about "mutual benefit". Instead of thinking "seize the market share from you", think about "expand the market".

I'll give an open answer to the question bundle:

When I think about competing, I think about collaborating, borrowing, extending, and differentiating.

In the early years, Google probably admired Apple - But Google is about the internet, and Apple consumer electronics. Why would they "compete against" each other? They cultivated a very collaborative relationship: Google was the default search engine on Safari. Google Map and YouTube were the default map and online video apps on iPhone. The relationship only went sour when Google insulted Apple by launching Android. Android threatened iPhone not because it decided to "compete against" iPhone, but rather because Google executed something on its own belief - the techie-geekie-open-source culture that Google stands on, not the designer-elitist-Apple culture that Google wasn't part of - and executed very well.

I'm very impressed by the recent growth of Khan Academy. But why would I want to compete against it? The founder Sal was a hedge fund manager who happened to be very good at explaining abstract concepts with simple drawings. That's how he started the entire thing: teaching maths and finance on YouTube to his nephew. It's unique and intrinsic to Sal. 

If I have to do something about Khan Academy, I would think about the strength and value that's unique and intrinsic to our company. What is the founder good at? What is the founder's life experience and vision? What is the core skill set of this company? Can we do something to extend Khan Academy's platform? Every successful company has a value proposition that's true to its founder.

The online teaching and social learning is quite phenomenal now. My other places to go include CourseraCode School and Codecademy. All these entrepreneurs believed in knowledge and empowerment, for sure, and they may or may not used each other for benchmarking, and probably borrowed working features from each other. But I don't believe they set out to "compete against" each other.

Coursera, as opposed to Khan Academy, is founded by two professors at Stanford. aturally, they took advantages of their national university network. The courses offered on Coursera is very academic, all spun off the university curriculum. "Explaining abstract things with simple drawings" is not part of their offer.

imilarly, Code School is founded by Envy Labs, a digital agency which has a strong design team. Their courses are offered under a monthly subscription fee, for the well-planned course structure, their signature visual language and story metaphors, video lessons, TV broadcast and the interactive learning environment. On the other hand, while offering a similar interactive learning environment, Codecademy wasn't knee on visual branding or storytelling. They focused on making the classroom open and free, and they provided tools for their users to create their own tutorials, encouraging social learning.

Speaking of Google against Facebook, I think the Google Plus had been a sad attempt trying to compete against Facebook, until Google Hangout was introduced. Hangout was a true innovation because Google introduced the group video chat right in our browser for the first time. No software needs to be installed. This has opened up many more opportunities that's beyond the Facebook breadth.

think what we were always told in Art School should also be told to the engineers and the business people:

Whatever you do, do things that you truly believe in; Whoever you want to be, be yourself.

Finally, why do startups fail? Because startups are meant to fail.

On a socioeconomic level, exactly because startups can afford the cost of failing, they should fail, and fail fast. The value of startups doesn't lie in their success, but lies in them taking risks, trying out new ideas, and doing things that big corporations dare not to think of. No one knows the recipe of the next big thing. We just have to try as much as possible. One single success is built on thousands of trial & error. Trial & error is the only road to innovation.

On an individual level, every failed startup has its own reason: money, team, timing, luck... but generally startups fail because the idea didn't work out, and the founders, the investors and the early employees stopped believing in it. It's time for them to move on. When the key stakeholders stopped believing in this venture, to fail is to minimize the loss.

Ultimately, tartups fail; entrepreneurs remain. We can't count on a startup, but we can always count on an aspirational entrepreneur.