Ingvar Kamprad, arranged to get his furniture made in Communist Poland for half of what it
would cost him in Sweden... Would we so revere risk-taking if we realised that the people who are
supposedly taking bold risks in the cause of entrepreneurship are actually doing no such
thing?
Only Gladwell could:
1. Be dazzled by the innovation of something as ordinary as wage arbitrage, and yet
2. Think that opening a factory in a communist country is not an example of "risk taking".
Long after he became wealthy, he would take the bus to his offices in midtown, and the train out to
his summer house on Long Island.
Surely a man of the people would take public transit to his mansion!
I agree with you on that. The Ikea anecdote was really not well fleshed out at all. Not only does it not really come inline with the essay, but it's barely explained and touted throughout the paper as a name-drop.
I also thought the detail that he rode his bike around the Hamptons as a testament to his thrift was dubious. So someone who buys a house in the Hamptons is thrifty because he rides a bike? Could it be that he's biking as some sort of recreation perhaps? Big loss only driving the Lexus in a and out of the area.
The first key idea is that the successful entrepreneur is one who executes transactions where she has a different model of value than the other party. This is why it pays to wonder about the things "you can't say" and pay attention to the fringes.
I think that the predator mindset is also key. If one is running scared with the herd and if one's hope is based on a vague notion or an outside chance, then one is the opposite of a predator. (The dot-com and Web 2.0 booms were full of groups with this mindset.) If one has an insight that others do not and prepared to execute on it, then one is like a predator stalking prey.
How does one study and internalize such a mindset? Is there a safe way to practice it?
An evolutionary mindset is probably more effective. Instead of saying "What can I prey on," you can say "What ecological niche is under-exploited or improperly exploited?"
I'm not sure it's necessarily more effective. Perhaps it's less sinister sounding. The problem with ecological niches as a mindset, is that some ecological niches are quite small.
Then again, perhaps it's a useful metaphor, in that ecological niches are not static. In the case of social news/networks, sites often started out quite small, then changed their ecological niche over time. In fact, one can argue that reddit.com, Digg, MySpace, Facebook all shifted in this way.
The pattern I see here, is that the ecological niche viewpoint is more strategic, whereas the predator/prey viewpoint is more tactical. When one is planning a site's entry into a certain market, one can choose a small niche that can be strategically grown into a larger one. When one is executing on that entry, look for a place where your understanding of the value proposition is better than those on the other side of your transaction. (Perhaps this is what Facebook's founder was thinking when he made that comment on people giving him their data.)
I would recommend reading the whole thing, but the second paragraph on page 7 is packed with real world advice. This is what it says _failed_ entrepreneurs do most:
- Wildly under-capitalized
- Organize as a sole proprietorship rather than a corporation
> - Wildly under-capitalized
> - Organize as a sole proprietorship rather than a corporation
> - Don’t write a business plan
> - Start from scratch
These sound like they probably correlate with noobishness, as in by the time you know what you're doing you probably have more money available and are more familiar with complicated corporate structures (and more afraid of lawyers) and have been taught to like business plans.
> - Sell to consumers rather than businesses
"Ninety per cent of the fastest-growing companies in the country sell to
other businesses; failed entrepreneurs usually try selling to consumers, and, rather than
serving customers that other businesses have missed, they chase the same people as their
competitors do."
Most failed new businesses try selling to consumers; but how does this compare the the fraction of all new businesses that try selling to consumers? Most fastest-growing businesses are in B2B; is the market growing or are they cannibalizing their competitors?
> - Don't understand financial controls
Does this mean budgeting and such?
> - Under-emphasize marketing
> - Try to compete on price
These sound reasonable, in that I wouldn't expect them to be confounded by being a strong demographic selector like the first items.
Only Gladwell could:
1. Be dazzled by the innovation of something as ordinary as wage arbitrage, and yet
2. Think that opening a factory in a communist country is not an example of "risk taking".
Long after he became wealthy, he would take the bus to his offices in midtown, and the train out to his summer house on Long Island.
Surely a man of the people would take public transit to his mansion!