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The following video transcript is generated automatically by a computer algorithm that learns and gets better on a daily basis. Please accept our apologies if some content below doesn’t make sense:

Welcome, everyone, to the Daily Dose podcast. This is the podcast where we pick out things from the news and social media that’s interesting to us as entrepreneurs and as business nerds. I’m James and I’m joined by my co-host, Marcella.

I met. How you doing?

Not too bad. Thank you. So we’ve got a few topics for you today. A couple from Twitter, one from the Financial Times.

First up, we’ve got a tweet from a little while ago, but I think is generally applicable and it’s kind of a viewpoint on where you should start with an idea or why you should take an idea. And this from a guy called Amjad MassArt on Twitter and he tweets something really strange that happens again and again. Then technology, things that are built to be general from the start, fail to gain traction or those that are built for specific use cases generalise over time. The Web is a great example. GPP is is another one. GPE there being the A.I. learning model that we talked about a while ago.

And in a previous podcast, we also talked about bundling and unbundling, which I think has is kind of in the same ballpark here. And.

Also, actually, from programming being a programmer. You can. There’s a concept which is kind of like a premature abstraction, which is basically where you are trying to solve a specific problem. And whilst you’re solving that problem, you get the idea for actually this can be generalised into something far more broader, which is in general is a good thing when you’re doing programming, because it means you can reuse it. And it could be more applicable in other cases. But you don’t really know enough about the problem space at that point to be able to generalise properly. And it’s not until you’ve seen two or three different takes on the same specific takes on the same topic or the same problem, that you are able to actually successfully generalise it into a more something that’s more generally applicable. What you tend to find is your programme, something which you think will completely sort of solve this class of problems. And all of a sudden, something a different class, a problem you have to consider will come along and blow it completely out of water like it’s the programming equivalent of a black swan event. Right. And I think this guys is is correct in stating it’s the same with ideas and business models and things like that. It’s. If you have this cunning idea for something and you try and I met up everybody or a wide range of things, and it’s not specifically applicable to any one smaller area. And so there’s less reason for any one person with a problem to pick your thing over something else. And if you look at what are now very general technology platforms. So he gives the example of Web and the GP. But there are other ones. So if you look at things like Facebook quite famously, you know, Facebook is growth came from the land and expand model, which is where it was. It was essentially hot or not for a single university campus, which then expanded into other university campuses. And then and then they said they started quite specific and solving a specific kind of problem in it for a specific group of people and built technology applied to that and then realised, oh, actually, this technology and this set of functions applies far wider than that. So let’s let’s build out from there. And, you know, part of the reason you could say for their success was the fact that they were able to sort of build on previous successes rather than trying to be the total global social network. From day one. Which means that, you know, network effects don’t kick in if you try and, you know, if you get an individual over here from India and you get an individual over here from China, you get an individual over here from America. It’s like there’s no network effects. No. Great. Whereas if you call to the market in Harvard and then go to the market in like the Ivy League universities and then go to the market and colleges in the US and general. And just keep expanding, expanding, expanding, then you can build something general out, something specific. And that pattern repeats itself often enough that it feels like it’s probably kind of an axiom of start-ups and technology products that that that that is actually true. They’re obviously they’re all accounts counterexamples to it at the same with any good role. You know, there are counterexamples that pretty well disproves the rule. But have you got any thoughts on that?

Yeah, I agree. And also. Amazon is another example. They started selling books and now they sell pretty much everything. So. But it was not the place you and Amazon. They don’t operate in every single country. They are very selective that they operate in. Well, at least they’re read that like their marketplace. It operates in five countries, I think. So I think yes. As you were saying, you need to solve a problem. So then that problem should be fine. It finance as well as, say, a solution. Then you can it’s easier to grow it.

So but I would also probably point out that there is another limitation, which is the cost of customer acquisition or your distribution costs. What we took in previous episodes about the importance of this solution. So if you are trying to sell something that it’s too broad, it will be too difficult to explain. And therefore, we’ll be way too costly as well as well.

So people will struggle to tell what’s all this about? If it doesn’t, too many things, you know. And also, you can not narrow down your audience. So then you need to go just you you will overpay and it will not work anywhere. You will struggle to communicate what the does. And also, people nowadays, they they have they are bombarded with way too much information. So you need to be very specific on what are you putting out there. And after they get to know you gradually, you can grow it from there. But I think yeah. Ultimately, like companies or group groups of people trying to solve problems, but users attach to brands or. Which is similar to a story. So essentially we are hardwired to understand the stories. So if the story is complicated or it’s not clear, then you will struggle to to attract attention and drive users to your project.

Yeah, I. Another tweet which caught my eye, which I think is kind of related to.

Ideas and proving out ideas and building products. And, you know, maybe specifically to building generalist products versus specific products and land and expand and things like that. And there’s a guy on Twitter called of it, Karl, who’s been doing the rounds of a lot of podcasts and things of late. And he was tweeting about this idea of validating and building and in which order you should do that, which is a very classic, particularly sort of SAS problem. But he’s actually, you know, quite a problem that’s applicable to more than just sort of technology businesses. It’s kind of like if you’re going to build a business, do you invest time and effort in building the product or service or infrastructure and then go out, validate in the market? Or do you try and validate it first and then build to the validation that you’ve already done? And the temptation again, as as like company builders or people starting start-ups programmers, creatives of many different sorts, is to get involved really early into deep into the weeds and actually building the products. So from programmer, I want to be building the infrastructure. I want to be building the Web site. I want to be building the back end the app, the databases and all the lovely bits and bobs and then. So many times, you know, I’ve done this personally and I know many other people have done it as well, as, you know, you come up with this amazing idea. Craig spent time and effort creating this amazing thing and then take it out to the market and then just complete silence, crickets. And you then have this massive slug of like, well, is it because nobody wants it or is it because I’m mixing it in the wrong way or am I not, you know, going after the right group people? Is there a different group of people? I the blame for this, I think falls squarely well, is probably human nature in general. But like the Kevin Costner movie Field of Dreams, which is where you get the classic build it and they will come, you know, where he gets told by a magical baseball ghost that if he builds his baseball stadium out in the cornfield and all the ghost will turn up and play baseball. This is the same peop people just think like if my mouse trap is good enough, then people are going to be, you know, knocking, forging a pass on my door, try and buy this better mousetrap. And it goes against all of your best, all of your instincts. But you’ve really, really got to try and concentrate on as much as narrowing down what it is that your product does. It might be that you actually find a mark and find a group of people who might have that problem in the first place. Now, there’s there’s two angles, two different ways of doing this. One is you can have an amazing idea and then you spend time and effort going out and finding, okay, who exactly are the group of people who might benefit from that idea? Can I reach them relatively cheaply, profitably, based on what it is that I’m going to be charging for this product or service? And then once you’ve validated your marketing, your sales, your pricing, then reverse and start building out the thing and then bring it to market. And then the completely other direction of doing it is you actually go out and you find an old without an idea in mind. You go out and you find a community of people or an audience and, you know, get to know that audience, wherever it is, they might may be online or run some community groups or whatever it might be, learn about what their problems are. Talk to them, try and discover is there a consistent set of problems or something like that which would be amenable to some sort of product or service.

And you then generate the business idea or the products of the service idea out of a pre-existence pre-existing audience of people which you already know about, you already have connexions with and you know, you already know how to reach. That is less appealing to this sort of inventor mindset, the tinkerer mindset for sure. But is is actually a pretty successful way of doing it because you are pre- you can never completely take risk out of the equation. You know, your products could always fail. But if you go in having ticked off, I can reach an audience. I could recent probably. And I know the pricing I could sell them to. And I know that I am able to produce my widgets or services or whatever it is for less than that is the I’m selling to them. Then, you know, the 80-20 is that you’re got to be successful. Have you had any experiences with these kind of build it before validation or validation before building either either way?

Yeah, a lot. By failing as well. Some aren’t lessons learnt. So actually. So it’s you will fail when starting companies. So that’s that’s for sure. But it’s better if you learn from other once someone else’s mistakes. So sorry. It will be less costly at least. So you should do your research, which is basically what you are saying, and you will be surprised many entrepreneurs don’t do that. So you should first of all, identify who, if if there’s any others out there, what are they doing? How do you compare, differentiate from them. And but yeah, also maybe there is no one out there doing that and that that’s not necessarily a good thing.

That could be a bad thing because it may mean that it’s not feasible or economically viable. So that’s also maybe there is not a company at the moment doing that, but there was before and they failed. So you should yeah.

You should take your time research on for sure. Try to test the market or the audience first. That’s highly recommended. Yes, of course. It depends on the products and on your circumstances. So how much money would you have to, you know. By advertising dollars. So for how long? ET cetera. So how much time do you allow yourself or your business to to be, you know, losing money or not making money?

So all those factors will influence a lot. Maybe you have like a very long term plan on something that you are doing as a side business. Then over time, probably. Yeah, you are. You are most likely to get there. But if you don’t have much time or much budget, which is usually the case, the best would be to do your research or test the market, just offer the products or a mock of the products or or whatever without having it and see if there is a month in social media for free. And then if there is, you can tell them to pre-order or this or that and go build it. Yeah, hopefully at a profit.

I would I would as as a piece of advice to anyone who’s kind of pre starting, I would choose your path based upon what your inspiration is or what away your interest lies if you’ll primarily motivated by making money and you’re inspired by making money. And so you’re less kind of wedded to either a market or a product idea. Then I would definitely go community first, audience first. Otherwise, find a group of people, work out what their problems are, and then develop products and services for them, because that’s the that’s the most solid path. If you are inspired or passionate about a particular audience or a group, people then again take the same path. But do it because you are motivated by. That group, you’ll you might already be doing that as a hobby, or it might be people you already sort of get along with or something like that. And so that makes my sense. If you’re most motivated by the product or the idea or the inspiration or creating like an inventor sort of tinkering, then I would take the approach of flesh out what your idea is just on paper and then go and as you suggested, do your research, find the audience, find the market and do your validation at that point. So so for the first two, it’s like backing products and services out of an audience. The second one is validating an audience for I just paper idea that you’ve come up with before you start coding anything, before you start creating anything for you start spending too much money. That’s, that’s what I would said.

Yeah. Another shortcut maybe that could be useful for entrepreneurs that I’m sure that they have just as well is. So once you have the idea on what you want to build first, just exchange that idea with your inner circle. But there needs to be those would need to be maybe not your friends that you need to talk to.

You need to talk to people that know that at least build a business before in that industry. And so that ideally they or there will be people, you know, in that industry, friends or colleagues or whatever, then better feedback broadly or a more qualified feedback will be entrepreneurs. So someone who is on or has to be an entrepreneur, especially if it’s in that industry that does a qualified opinion.

Then after that, if you if your idea is still standing.

Then go create a pitch deck and start talking to investors, because all this is they have their own teams doing research and they know a lot. So that’s what I do for a living professionally.

So after you pass their first filters through, like qualified feedback from entrepreneurs on criticism. So if you’re still alive, then you go presented to BSE, to some of them, just some burn out. All your options right away. Just don’t talk to too many of them, but talk to five or even less. So until them your idea. Let’s, um, from what they tell you. Feedback you will get after all that you will get a pretty good impression if you have something there or not. And then, yeah, you can take action accordingly on what are your next steps. Prolly test the market. Yeah.

Excellent. Next on our list. This is possibly opening a can of worms.

There was a particular piece of cryptocurrency news which caught your eye this week.

Yes. So I’m a big, big fan of crypto in general. Although I did make money with it. Unfortunately, I was mostly curious on on the tech where. Bitcoin. Bitcoin. I think I bought that. Two hundred dollars. But then just for testing the technology. But I don’t regret. So I don’t know how to gamble on that. So there is this article, though, today in the Financial Times saying that is picking out a ripple. So with 16 billion in cryptocurrency, ripple attempts are reset. And essentially what they’re saying is that the Start-Up is still trying to find a compelling find compelling uses for the block chain technology that they built. They are trying to become the Amazon of the cryptocurrency world by essentially other than allowing more users beyond cross-border payments. So here are the million dollar questions that has been. It has been open for Wylie’s. What do you think? Like lock chain or cryptocurrency in general will be globally adopted or will definitely take off at some point because the narrative has been changing quite a lot. So initially, what Bitcoin was seen as a stop payment revolution. But then nowadays there is more of the concept of storage of value because it’s not very efficient for transacting. So what what are your thoughts on this? I have some some stuff.

Yeah. The can of worms as is as I said, and. I yeah, my. I don’t hold any crypto personally.

I I’m not a particularly sort of gambiae type person when it comes to things like that, I don’t bet on sports or play poker or do any of that stuff. But I think that I’m not saying anything basically new here, but there’s definitely sort of two two chunks to crypto. Right. There is the currencies as a thing, as an idea and as the underlying technology and one enables the other. But I think that all the technology associated with block change, a distributed trust goes beyond currencies.

And so in terms of mass adoption of block chain, I think that is just that is just gonna happen over time. More and more use cases are coming out all the time. The underlying technology associated with it is quite robust, even if any one particular implementation of it may or may not win out over another one. The ideas behind it and the sort of general implementation details of it just make a lot of sense because it just removes a whole class of friction from the financial services industry. Essentially, all of a lot of the services that large banks and financial institutions provide to the financial services industry that are effectively like rent seeking things like custodian trusts transaction or any of those kind of things, you know, where they’re of charging and taking five to 10 per cent of transaction volumes or they’re charging sort of significant chunks of whatever the money movement is going on can be achieved via block chain for, you know, fractions of a percentage. And you just know anyone. Anyone who wants to carry out those kind of transactions is going to go to where it costs less to do it as long as it’s trustworthy. And, you know, just it’s just a different class of quality of product in terms of, you know, from on a pure commodity basis. Do you want to go over there and pay ten times as much for something or you wanna go over there and pay, you know, one times as much? Think so. I think the general move towards the you know, the use of block ontology will continue over time. You know, banks themselves are looking, you know, even today are implementing backoffice services using block chain on their own thing. They’re still going to try and sell it through the old kind of systems and for the old mark-ups. But, you know, there’s one of the banks is going to break ranks and can say no on actually let’s drop our price slightly. And so over time, it’s going to, you know, the prices of all these things that are going to come down to the point where it’s just gonna be the commodity value of whatever the block changes from a currency perspective. Yeah. I think that’s a bigger question. And I think you’re right. Like Bitcoin is Bitcoin in particular has very much become, as you said, like a store of value, particularly over the last, but particularly because of the financial crisis of 10 years ago and the current sort of pandemic crisis. You know that the central bank solutions to the sort of financial problems that all of that causes is quantitative easing, which is the, you know, massive printing of money, which effectively, you know, mass devalues currencies, particularly the US dollar as the world’s currency, so to speak. So if anything that you’re holding as an asset that is, you know, valued in US dollars or in or in the cash is just going down in value over time, whereas bitcoin, because of constrained supply, just will retain its value as as long as people believe that it’s worth what it is worth. And, you know, that’s the same as any fiat currency. You know, most currencies in the world, if not all currencies, the rules of fiat currencies these days, you know, it’s not backed by assets. Bitcoin isn’t backed by assets. There’s enough money being transacted on that platform that I think, you know, trust can be there. Also, it’s a very volatile currency, but that’s not necessarily a bad thing. Over longer times, it makes it more sort of speculative, gives reason for people to do transactions on the platform. So, yeah, I don’t have a crystal ball to say which of the currencies may or may not succeed. And I think probably. Although no money solves a number of different purposes for us as humans. There is the store of value. And there is also the transaction, you know, exchange of value. And those are two different things. So I think, you know, it may well be the case that different crypto currencies achieve, you know, primacy for each of those different things. So maybe Bitcoin could be the eventual sort of global store of value. And then another cryptocurrency could be the global transactional instrument. Who knows? You know, it will be dependent upon what the sort of underlying rules of the cryptocurrency are. I think the longer that it exists, the more trust there will be in it, the more likely it is that this will come to pass. I think the only thing that can knock sort of crypto off its perches, if one of the main major crypto currencies suffers some like mega encryption attack, or there’s just some deep rooted failure of the algorithm, which no one has been able to detect as yet. But some, you know, someone some evil masterminds with a volcano lair and who’s got, you know, supercomputers working on it. What works out a flaw in some of the encryption algorithms all of a sudden, you know, where you got the chance of that happening? Gets less with time, although obviously with the ramping up a computer power, who knows in quantum computing, who knows? But, yeah, so I think I think it’s block chain as a technology for sure. And store of value, crypto currency, probably transacting money, crypto currency. Not sure, because if I think you have to have for a transaction currency, I think it needs to be inflexional, which is the opposite of what is a store of value. Well, yeah.

Anyway, that that was my take on the transaction side. Sayako experience on FinTech, as you know, on this my company. That is still around. But their thing is. The Facebook tried to launch a stable coin, which is an interesting concept, basically a basket of current cryptocurrency is linked. Well, actually. Was there a cryptocurrency Libra? A link was correlated, let’s say, with a portfolio of other fiat currencies to give it stable. So so you got so with less less volatile on liquid. And allow cross-border payments with almost no fees, maybe zero fees. So then I’m curious why I think crypto will struggle because of regulators. So yeah, if they manage to crack down face, we’ll give them even before they launched. And I, I seen that by being involved into a peer to peer lending scene. So so regulators, they have, you know, the power of the pen. They can wipe out companies out of existence just by because they they decided that, yes, it’s either risky or or or they just don’t want to.

They are. They let central banks, by definition, they want to centralise decision making. So they don’t want all these decentralised stuff. So I don’t think from a financial point of view, it will take off the cryptos as a payment method unless there is what it can happen, though, and probably I think China is attempting to, is that maybe the fiat currencies will be digitalised, but they will not be decentralised.

It will still be the central bank issue. And to the the counter argument that fiat currencies are backed by nothing. The counter argument to that is that they are backed by the taxpayers. So given in the US, people will need to pay their taxes in dollars, then there will be demand for dollars. So if you if the. On top of that. So if you follow if the US has a productivity ratio or like a GDP of X, then there will you expect a demand of X amount of dollars. And that’s why if there is demand, there will be volume. But also, if you all consider that debt that many other countries have in U.S. dollars, then they will need as well dollars to pay back their debt. So while China China now is is this they have issued debt to many countries. And so so their currency as a trade with more and more countries, that currency could potentially challenge the U.S. dollar as the most widely used in the world. We’ll see that saw. So I think crypto is not.

It’s not going to replace yet, unfortunately, because of regulators, unless there is a super big change on like like a worldwide agreement.

But even with that, it will be difficult.

And then on block chain.

I think it’s very linked. So if if cryptos are not globally adopted for the day today, then that puts a cap on the financial use of block chain, maybe as a search of value. That’s fine, but it probably could be used for something else. I’m looking forward to see if there is any breakthroughs on all of them. I like like a digital I.D. that can replace passports and all that. So it can speed up like, you know, travel or also maybe boating. You can vote safely and digitally.

And there is block, block, block, Chinese distributed, decentralised ledger. Right. So anyway, you need to truthfully and trust fully record things with cast iron trust guarantees any anywhere where there are services or products which meet those things that block trade works really well at scale.

Yeah. So I’m, I’m looking forward to. Yeah. Any more applications on that. As for Ripple. Well as the article says as well, they made a lot of money, the founders, but is still lagging behind. I mean, it’s still a major cryptocurrency buddies. It’s not transacting a lot compared to the peaks they had earlier on. So let’s see. I mean, I encourage all of those companies to keep pushing. Yeah. I will be always there. Fine. And use user of all approach. So, yeah, I also I think.

As new generations coming, there will be more and more inclined to use all these digital probes. It’s fair to say as well that some fine texts are digital. Banks are catching up very quickly. The online revolution. Transfer wise. They’re doing a great job. Monzo. So there are there many other in the US? So, yeah, I mean, if if they become radically better, as they say, the banks, then that again, that creep, the margin for demand on crypto will just won’t be there. But that’s it.

Yeah, I think I think there’s there’s a friction problem. I think if they if whoever can solve.

If if a company or a group company is whatever it might be, you can come up with a way of allowing you to exchange, strike earned straight transact this easier than cash. For the average Joe on the street, then, you know, then then then the part that is downhill, you know, it’s a it’s a slippery slope down then into like using it on a regular basis while it’s while there’s more friction than using cash or, you know, current forms of payment. And then that that’s that’s where the tipping point is going to be. I don’t see it being is there in the next two or three years. But wait, you know, we’ll see if that comes along when. Yeah. Exactly. Thanks very much for listening, everyone. We’ll be back next week with some more nuggets of knowledge. In the meantime, please do cheque out our YouTube channel, which is where we post this and our other podcasts. You can search for net workers. Two words. You can find the link in the show notes as well. If you’re interested in a deeper dive into all things entrepreneurial, including more detailed information, help mentorship and courses, please to cheque out our Web site. And that is that network is DOKO Celexa.

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