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Hey, how are you, James? Good. Yeah. So we pick this from Twitter. It’s a thread saying that first time founders are obsessed with product and second time founders are obsessed with distribution. So what’s more important?
Yeah. That’s on an open debate. So, yeah. What are your initial takes? Because, you know, I get deep into this. Yeah. Yeah.
So, yeah, no, I, I, I definitely agree with this guy. Jeff Morris Junior was the guy on Twitter who was who posted this. I think it’s because when you first when you first start thinking about entrepreneurship and when you even first learnt about it, you know, when you’re sort of younger. However it is that you came across it in the first place. You’re like, wow, this is this is this is amazing. There’s this giant sort of world has opened up in front of you and your brain immediately starts getting ideas, ideas, ideas, ideas. You know, I kid, you know, the classic ones are all we can start a nightclub or start a restaurant. Let’s do it. You know, the only sells cookies or something like that. And so the thing that always pops into your head is ideas, ideas, ideas and. Those ideas are essentially product ideas that very rarely sort of distribution ideas. Right. And so you get. Instantly sort of in love with your you know, your favourite idea. And so you get obsessed with it and you just go on that deep dive with the idea and continue trying to make it the most perfect, amazing products ever. And what what people typically find is is like, you know, if they’re anything like me or or if if they’re not incredibly lucky, whereby they’re first thing they ever tried. Just. Absolutely. Fliess, you find that actually most people aren’t as obsessed with this thing as you are. And you can spend lots time and effort on creating this thing. And then you can take it to the market and you find out, you know, just like crickets. There’s just absolute silence. What you when you try and do it. Classic, classic. And so and so next next time round, you try, you kind of go you’ve learnt a bit of a lesson you go wrong on. I I don’t want to throw as much of myself and my ego and my effort into sort of crafting this perfect product, if it if it’s just gonna be crickets again. Like what? What what’s weird? What what can I change about this? And then the obvious next answers that is is like, okay, well. Let’s start with a market first. Is there anyone else out there who, you know, even likes the same kind of things or does the same kind of things? And, you know, your mind starts ticking across, too. OK. Well, how how would I get this product that I’ve just imagined into someone’s hands? And then, as you’re sort of thinking progresses, as you try various different things, like eventually, you know, you get to the point where it is kind of like, I don’t care what the product is like, just. Is there a group of people out there who have got a problem that I could service? Can I can I reach them easily, quickly, cheaply? Can I help solve their problem easily, quickly, cheaply? You know, there’s still your basic checklist and. How how how do I find them? And so if I start an audience, then like, OK. Given this audience I’ve had like what sort of products or services can I try with them to try and get it over the over the line? Have you. Have you had experience with, you know, sort of products or ideas where you’ve sort of taken it to market and it’s just been upset?
Yeah, I’m a lot. So I, I, I agree with his stance. I think it’s common. Come on. You know, sequence of events that initially you get more get interested on the product and then you learnt by experience that you need sales basically. So yeah, I would say probably distribution is more important. And as you said, you probably test the market first. So have an idea of the product, but build a prototype of that broked that you think is gonna be like the end product, test the market and learn, get feedback from the customers or you can print customers or Aradale up there or whatever and yeah, adapt your product. It may be a band of being something else, but it’s still within the same category. Bodh could be way better because you listen to the audience and just adapted to what they needed. So all companies need sales. So you need to make sure you have those sales. Otherwise you will be put out of business. But with that said, though, there are certain exceptions. So I would say then my second comment would be that it depends on the industry. So if it’s let’s say it’s not the same consumer goods, you can gather a lot of feedback you’ve got. I. You can build prototypes by denying industries like rockets. You can get as much feedback. And you need to have a clear and a vision or even an ultimate wiler. Yeah. It’s not something that you can you cannot build a car that kind of works. So car safety, you know, like a plane. And it takes years to build. So you you will onboard into that long, capital intensive journey to build something that better works as expected and usually cost more a functional goal less than design.
Or, you know, arbitrary what people will like or fashionable, you know, not go out of trend or this and that, like social media sites or clothing or decent that. So, yeah, what I would say that’s the exception. Like industry in general, ASOL, these maybe even robotics. And there’s not I mean, robotics is a very wide spectrum, but all a heavy industry stuff. It should be more pro driven than distribution because usually distribution, maybe you have just one buyer. Like the government or or like you if you are serving the NHS or big pharma companies. So, yeah. Oh, but those are usually not for first time entrepreneurs.
So yeah, for sure. So I think another point here is that.
As well as approaching things you can approaching from a product, direct direction, you can approach things from a distribution direction. One thing that I found, the way that sort of my head has changed over the years is that I was very I always thought that like a bit if you start a business or if you sort of want to create new business as an entrepreneur, that has to be very sort of innovative. Husby, something brand new to the market, something the markets never see before or, you know, like amazing Whiz-Bang. You know, if you’re sort of treating yourself like an inventor, really, like, you know, it’s like I’m going to you know, I’ve invented this amazing new thing and I’m now going to take it to market and do whatever. And that’s the kind of like innovation or sort of invention, product, focus, staff, things, so you might still have a big focus on distribution. But effectively, what you’re trying to do is you’re trying to take something brand new and educate the market as to the reasons why they might want to buy this thing, this products or service that hasn’t existed. And I think what a lot of entrepreneurs come to you over time is they they start thinking about things from the opposite direction, which is like, OK, well, let’s let’s look at what already works in the market, because then you’ve got a proven market. You’ve got a group of people who are already spending money to solve that problem or are already buying these classes of products. Can I just can I start an equivalent company or can I start an equivalent business where I am serving those exact same people and solving exactly the same problem that they’re already, you know, paying money to solve, but with a slight angle on it? A slight twist so they can position myself relative to my competitors so that they want to choose me over my competitors, be that a price or a luxury or whatever the angle that you’re coming at it from or even you just you create something which is an exact copy or something is already in the market. Issue out, execute the people who are already in the market in some fashion or you have some leverage like some cost saving thing, which they don’t have. So you’re able to sort of bring it to the market cheaper than they’re able to do. And so that’s very much kind of like a distribution in Asian kind of mindset as opposed to a product or service innovation kind of mindset.
Yeah. How many salesmen? It’s a good point. I think adding to that to wrap it up. I think there are these two concepts that either on successful approaches to probe distribution. So either you create a product that it’s a high order of magnitude better than anything else out there, like 10 times or 20 times better. So it will have sales because he’s continually better and then you get differentiated a lot or that approaches that you can do an incremental improvement on something that works. I’m done. It’s out there. But that incremental improvement helps a lot of people. So let’s say you increment is like the technology on five GS, for example, in telecom. So a lot of people use Mollet. So if you add any incremental improvement there, you will have like billions of people. Therefore, it’s worth pursuing it and it’s big deal. So on any mass adopted, broked, any incremental improvement, you have a market there, you have an opportunity or just go radical way, make something way better and you can capture a lot of market share. So I would say you can think it that way as well.
So that was Jeff Morris, Junior on Twitter. First time founders are obsessed with product set and time founders are obsessed with distribution. And another tweet I saw, I think three, four days ago now, sir, hail Lavinia, who is the CEO of Gum Road, which is an online platform for selling digital products. So if you’re an artist or creator of some sort, you can go in there and sell your or so your wares. I’ve used them successfully in the past for selling PDAF tests and courses and things like that. And it’s a great platform. But he put up a thing on Twitter saying a CEO’s first job is to get the company capsulised CEO’s second job is to recruit team CEOs. Third job is to provide them with clarity so they can solve their customers problems. And a CEO’s fourth job is to get out the way until one of the above is no longer true. So I thought this was quite a good little tweak because it quite pithily conveys the path that you go through when you start out from the very beginning. With with, like a small table, no team, and just that sort of nugget of an idea, and then it’s like it’s like Maslow’s hierarchy of needs.
But for companies, right, from the CEO’s perspective, it’s kind of like you got your baseline foundational thing, which is the company needs money to be able to invest into becoming successful and profitable. That’s you know, if you don’t have that, then all the other layers that stack on top on oppositely useful. Once you’ve got that money sort of in place, then the next thing is, you know, you need the force multipliers of people. You know, you can sit there and do it all yourself, but you’re gonna be more successful way if you have, you know, a group of people, Randi, who have specialist skills and, you know, all the things that you need to sort of flesh out and build out your team, you’re gonna be fostered like that. Once you got the people, the next layer above that is is okay use to see, I need to sort of drive the vision. So you may well have started out some quite deep in the weeds in the business, like doing all of the tasks associate with business, like finding the customers, doing the sales, you know, getting the product made, whatever it might be. But at a certain point you sort of like move up the hierarchy and you’re now just trying to sort of be the vision for the team and telling them, giving them the direction that they need to go in and give them some points. So far, less involved in the coalface. You have sort of higher up the ramp. And then the final one is essentially you’ve done almost done yourself out of a job because it’s like, you know, you’ve you’ve created you know, you’ve got the money, you’ve got a great team, you’ve pointed them in the right direction, that the machine’s humming along really nicely. And the worst thing you can do then is start micromanaging and stop sticking spanners into sort of, you know, the work work life of people who are far better at the individual jobs than you are.
Yeah. It just struck me as a very interesting take on that. And and. It’ll be interesting to see, like no matter what stage you’re out with your business, even if your start your business. Yeah, it’s okay. How can you see your way to sort of taking yourself through those different positions? And how do you think that you would like operate and cope in those different areas? Because, you know, each of them are hard in and of themselves. Are they are there are different skill sets as well. And you have to, you know, to be successful, you have to sort of take yourself through those different things. I mean, your company might not get to the size where you know, you’re going to be, you know. So I’ve delegated so successfully that you’re so completely out of work and I don’t have to do it. But having sort of a mental model of how you’re gonna get there and how suited you are to those different levels can be quite important. I know myself. You’ve been a CEO of at least a couple of companies. What was your thought?
So I. I agree with you. It’s an interesting take on on on that process, especially on the last point on how that sets up when so so you say less intuitive. How the founder. So when you go out from being the critical member, essential to every step of the organisation’s growth to be redundant. So how do you realise about that? Because it’s unlikely someone else will tell you or you what you will learnt by force. So that, yeah, that’s broadly linked to what I also consider is the best skill or the most important skill of entrepreneurs to be self-critical and unbe all the time. Questioning. Yeah. Not exaggerating and so critically thinking are on what you should do next. What the company should do next. Getting out of the way. I think it’s a good way to put it. So I would though say that or also add that not every company needs money first. So I would I would say the team goes first. Certainly a company needs a team. Otherwise, you’re just a service provider, like a freelancer, which is great, but it’s not an investable company. So in order to grow. So, no, I will. Investing on a one man company because it’s too risky.
It has no growth potential because you can do so many things in one day. So. So Tim goes first. I think even then, maybe you will be able to grade some products. It depends if you sweat equity initially or what at some point. Yeah, for sure. Nowadays it’s becoming more and more demanding too, to raise some money to compete with the big players or or even start-ups are well capitalised. In some sectors not. So it depends on the industry. But yeah, you will need some funding. And then it’s also I would add that he should be you should maybe you make yourself out of their daily operations so you don’t interfere with that for sure. Not micromanaging, but you should keep the team motivated. We got it because people don’t like change. They like to if they can get paid to do the least possible every day that we try. Or or just, you know, all within less possible risk or change that we just keep doing the same. So they they will have little incentive to innovate, for example, or to anticipate risks. So you should stay on top of that, even if it’s so you can do a few things that can add a lot of value. Yeah. So or that can prevent something bad from happening. Read about. So life threatening for the company or so.
So yeah. It’s not that you should get out of the way on it. Just go away and forget about it. Yeah. You should let the managers run the company but you should still be on edge on the mission.
Yeah. I think it’s like you have to be careful about what the impact of your actions are in terms of are you doing this to micromanage or are you doing this to help other people do their stuff better? You know, there’s a very there’s a sort of a fuzzy line between those two things. You’ve got to be quite self-aware to know which side of the line, because also I think a lot people, just particularly if you’re so quiet, driven person.
You want to feel busy to feel like you’re making forward momentum and then you’ve got that danger zone is like you’re just being busy for busi sake. And if you are making busy work for other people just to keep yourself busy and feel like you’re being productive, then that is like net negative to the outcomes and in these kind of things. I think for earlier earlier stage CEOs and earliest stage founders, I do like my aphorism. That’s my little sort of one liners. I think there are a couple that I like to keep in mind for this kind of thing. And I’m not sure who said these. Possibly. Yeah, who knows?
Tim Ferriss, they’re saying this this Winston Churchill. So Winston Churchill said you need to make sure that you are working on the business rather than working in the business. So that is something which is very, very easy to get caught in that sort of loop of problems, come up and go solve that and you find yourself end up working at the coalface of the company. Whereas you don’t want to be working on the coalface of the company. You want to delegate that and leave that to your team. And you should be trying to work on the business itself rather than in the sort of, you know, if you’re a sausage factory, you don’t want to be on the production line filling sausages. You want to be creating and managing the factory, which creates the sausages. And the other one is, you know, you are building the machine that makes the machine. What meaning? The business itself is kind of like a product, you know, you’ve got lots of moving parts. People, Tienes processes, whatever it is, you should be working on building those things and making sure those kind of things mesh together. And then the output of that machine is whatever the output or service of your company is. So it might be a service, might be a product, whatever it might be. But your focus should be on creating that massive machine, which is your business. And it’s so easy to get cool in the everyday sort of, you know, the service, a blown up run-arounds, you know, everything’s on fire about. So, yeah, you’ve got to be very careful about that. Make sure that you’re actively sort of putting aside time to do that higher level stuff and cheque to make sure that you’re not too deep in the weeds.
Get some ice on. Sorry, go and get some practical advice for independence in general. Also, if you are just starting. So I would say because it could be quality, as you were saying. Yeah. Like burnout. But yeah. Just putting out fires. He’s not going to it’s not going to help a lot to sum up. So your main goal or ultimate goal should be sales. So if you just keep dot your north, then you will find your way on what’s your best contribution towards that end and goal. So that’s us simplistic. But don’t forget that sales is the most important part of the business. And then I would say also, if you are mature or you need the guidance or you’re struggling, a go find a mentor. You can add non-executive directors or directors or just mentors to your Start-Up, to your company at any stage, actually.
So that could be really helpful. And these very cost-efficient many times you do you don’t need to pay at all. And you can bring on very experienced people that they they have gone through all of these and they are keen to help others now.
And they have time because they made redundant of their business a state created or or just they want to help others. So you will be surprised if you reached those people out. Those mentors or an exec directors, they can provide you great or really valuable input. If you don’t know what’s what’s next.
Yeah. Code for show. Scuse me. So. A final tweet which caught my eye. Again, a few days ago.
So this one is more. This one is less generally about business and entrepreneurship and this is more specifically about the current situation with kov it and the something which is particular interesting for us, because we we’re very interested in the cloud kitchens business and we have a course all about starting cloud kitchens, things like that. So this one particular caught my eye. A guy on Twitter tweeted out, Northern Hemisphere restaurants have 90 days to develop a delivery business, outdoor anything will crater come October. And this Absi stood out because it’s quieter, sort of a stock end of the world doom kind of tweet. It was in about the restaurant kind of things. But there are lots of moving parts here. And I thought it was particularly stark and particular interesting. And the reason being is because. When we’re recording this podcast, a few of the restrictions, things like that have been going on to do with the lockdown around combatives, been starting to lift in the UK, pubs and restaurants have been reopening with stricter rules. But, you know, they are reopening and so they are serving customers again. But these are very low margin businesses that have it like supply chains and delivery of the product. Things like that have been fairly well optimised. And so all the new restrictions already mean that they are there already. Slim margins are. If not gone, then or already gone negative. But we’re currently in the middle of summer. And so, so practical steps like having outside seating and take takeaways where you can take your sort of drinks of food and go and sit in the park and eat there and all that kind of things that are currently viable. But, you know, with the weather in the northern hemisphere being what it is, we’re in the next two, three months. We’re moving into autumn and then winter. And a lot of those mitigations just completely go out the window. So even if businesses are currently sort of staggering along with, like government support and things like that. Fundamentally, they need if they need to be already working on different sources of revenue or different delivery models for their products. Because. If you know, depending poll where things go. This is very dangerous time for them and they should be taking the worst case scenario and they should be investing in other business models and other ways of doing business. Otherwise, there’s just got to be sort of like a mass loss of a particular lot of independent restaurants and people in the food industry. But, you know, even large change we’re seeing already is cutting back. Obviously, we’ve done a bunch of work in this sort of cloud kitchen business. What’s your kind of take on this? And what’s your what’s your thoughts about that, those sort of tweaks of the business model that they can go through?
Yeah. Share with you their vision on their need for restaurants to add up. I think that certainly they are most likely already doing delivery, but probably don’t have a whole business model, as you said, maybe they just do delivery from their premises. Taking orders by phone. I’m not sure how it day. Online ordering works. They’re full for, like, you know, Opsahl like smaller restaurants, like like family owned family businesses. So, yeah, they would certainly need to get advice on the look out for options. I mean, there are several start-ups and apps that are trying to facilitate these for them. You have all these online ordering apps. We mentioned your course. Well, you can go cheque the course to our website. This just, of course, is not to promote our course. So it’s just to give our opinion known on the industry. So also, I was checking I was watching Bill Gates. They bloated. They they did a new interview with him. And that, I think was last week or so. So. Very controversial. All their things being mentioned about him. But he certainly is a guy who has a lot of information and insights on what’s going on on what can happen.
So he was suggesting listen to us, but probably could be extrapolated to other countries that in the fall things will get worse, that there is certainly weather like heat, humidity factor that slowed down day virus in the northern hemisphere and actually accelerated probably in the south and Mystere like Brazil and South Africa and so on, with exception. So if Australia, New Zealand, who were very diligent to keep it down since inception. But yeah.
So with that said, you’re seeing second wave things being already in summer. So, yeah, it’s although there are some promising advances, some on new tools to fight back then. The virus treatments or some promising vaccines. It will take time. So and governments are just pushing to a limit on how much funding they can pumping into it. And also, as you said, OK, there. So I’m I’m hesitating, numb if they dare. Restaurants should go online only.
Or also increase the prices. So that’s a fairly straightforward one. Just increase the prices. Of course, it’s easy to do. But if you if you if it’s not coordinated, then you just increase your prices versus the other restaurants in your area. You want compliance on ISIL, that people have a lot of money to go out anyway. So you should be careful with that. But I think I wouldn’t be surprised if that happens. That’s my take on it. So even their supply chains have been affected. So probably the you know, the raw ingredients for restaurants will go up and therefore their prices won’t increase their margins per say. But if their costs went up 10 percent, maybe they can increase it like not 10 percent, but 24 percent. We’ll see what happens on that. But certainly at the very worst case, they will need to it to target to have at least 50 percent of their sales online and improve their margins. That’s that’s for sure. And moving forward, not for these for just us as a business model for the restaurants or bars. Yeah.
All that dine out industry. So I stopped going to work long term without being affected by many other factors. It could be not even a virus, but just changing spending behaviour from people.
Yeah. Yeah. So I if you just go through the sort of.
Thought processes, if I had a restaurant, how would I sort of trying to approach this problem? I think you’ve got to look at it as a system, right? And any system has inputs, sort of processes and outputs and.
You want to be trying to.
Limit the inputs, minimise the costs, etc. on your inputs. Make your processes as efficient as possible. The ones which are sort of more expensive or take too much time. And you won’t be maximising your output. So if I was a Russian, I would what I’d be trying to do is the first thing I do is I would massively deistic decrease the scope of my many. I would go and I would pick like maybe eight to 10 best selling, the easiest to produce, the cheapest raw material, quickest things that could be produced in batches. So say, for example, you know, with some of your costs are going to be like chefs and bromet raw ingredients like it. Can you find some sort of subset of your menu, which is popular but can be created on a batch basis? You get your chef in for one day crates of the stuff and you can then sell out over the course the next few days. So you’re sort of limiting your your cost base. And then secondarily, you want to be trying to find new ways of selling the same kind of mails or food or products to people outside of the traditional times in which they’re going to be purchasing them. So normally, if you’re a restaurant, then you’re serving food for, like the evening meal. Can you find some part of your menu, which means that people are going to want to order it for lunch or they can want to order it for breakfast or if they going to order it like on a snack basis? Can you sell it? Is there some sort of like side dish that you could sell in a bulk pack which people would want to buy so they can snack on it during the week? Well, something like that. You know, expand the sort of food places, the sort of the food events that you’re catering for. And then thirdly, I try to look for like ourselves. Are there sort of high margin, classically high margin products that you can bundle in to increase the sort of like basket size of the order you’re getting and also make sure that high, high margin products. So, for example, soft drinks are a classic one alcohol. If you’ve got an alcohol licence, you know, can you bundle that in as well? All the packaged goods of some description that you can sort of put alongside it. And as part of your checkout process, the sales process, it’s like actively trying to sell people into the grace of bundles, try and actively upset people into the, you know, the mail deals and things like that. Any chance you get to sort of like try and up sell those? Those are the kind of levers I’d be trying to pull on. You any thoughts along those lines?
Yeah, I agree. It kind of percent is something we also covered somehow ending in our kitchens trend. And I would also add maybe that you should think again from the same starting from the same point being, if I were to be a restaurant owner, what would I do with this situation? Probably you should reinvent yourself. But from a practical point of view, I would say just you will need to learn or find someone who knows about e-commerce and just learn a lot about it, not only about the food industry, but about how to sell online.
I think broadly that there could be opportunities of selling. I mean, people will be buying online, not only ordering meals or foods online to restaurants, but they want to do their groceries online.
And not I mean, some supermarkets where that we have seen in there at the peak of COPD, they were not delivering very well. They were just flooded with orders. They couldn’t cope with all of that. Probably they were not that efficient. So there are pretty light, niche opportunity.
So if you are a steak restaurant and you have, you know, you import or you have a direct contact with that, you have the best steak in your town or in your area.
So so your position may be too great. A simple site to sell steak only just for cooking at home. But, you know, then there are the just the options that people like on that they will struggle maybe more speciality.
Let’s say speciality foods could be like steak, could be casinos, Chinese, Indian, whatever, but yet that they’re special either ingredients or foods per say that are more special that you won’t find in your local supermarket if you’ve got any will be it will rank fairly well because your great website just about that. So then it’s like multiproduct or monochromatic. Or maybe you have two probes. And then from a marketing point of view, you become an expert on that. Your audience will be very targeted because it’s just people who like those kind of means.
You are more likely to have repetition because they eat that every week and they are likely to cook at home anyway.
So if you can, you can even out subscription model for that. So it’s more. Is this smart? An e-commerce approach on finding those niches and then deliver those. It should be fairly straightforward to deliver those foods.
Yeah, it’s more about this, the customer acquisition online for those products and it won’t be a ready meal. You will be selling off products. So it’s more about customer decision that how much can you charge them? I’m sure that they vaughters or. Wholesalers are by definition, they don’t sell directly to consumer. So they goes through the supermarkets. Those are one of the main hubs. But supermarket you in online supermarkets like Ocado and UK, for example, they didn’t deliver as expected. And we saw huge. I mean, they make up sites for sure. I mean, not a lot, but they can’t serve everyone just on time. And they’re not definitely not in their speciality business. So you can differentiate deadweight. Yeah. Because I will be careful on on doing focussing on delivery only for your restaurant without a proper plan of your meals, as you said, you you would need to really pick what people order online because people have a different behaviour when O’Daniel online versus food versus going out. So it’s usually Sinja.
I mean, from the stats we had seen in the Dark Ages, the best sellers were pizza, some hamburgers, some maybe some Chinese food or Indian. But they were not necessarily was some healthy categories, although it was growing made for need. You need to understand how they behave. I’m not sure if they are going to order your delicious pasta or if they may prefer to go out because of experience. So you keep keep an eye on what they order online and find your niches. I would say so. So become expert in newcomers and find your niche and probably just sell the products down so that they’re ready meal.
Hundred centigrade. OK. We’ll rough out there. Thank you very much for listening. 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 or other podcasts.
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