Course "Blitzscaling" Lecture 4.2. Ann Mura-Co: Grocery, corporate and categorical value

This lecture was given by Ann Mura-Co - one of the co-founders of Floodgate - which later, during the answers to the questions, joined John Lilly.



Lecture 1: Introduction

Lecture 2.1: Stages of growth of a startup, "family stage"

Lecture 2.2: Stages of growth startup, "family stage"

Lecture 3.1. Michael Dearing. A bit of the history of entrepreneurship and management

Lecture 3.2. Michael Dearing. Questions and Answers with Reid Hoffman

Lecture 3.3. Michael Dearing. Questions and Answers with Reid Hoffman

Lecture 4.1. Ann Mura-Ko: The Thunder Lizard Theory. Author value

Lecture 4.2. Ann Mura-Ko: The Thunder Lizard Theory. Product, corporate and categorical value.

Lecture 4.3. Ann Mura-Ko: Questions and Answers with John Lilly

V. Product Value

Product value is the ability to achieve product compliance with the market. Many startups cannot achieve the transformation of their technical innovations into a real product. Many startups are based on technology that requires a problem that they would solve.

')

Product conformity to the market is often discussed, but few understand this concept correctly. Some people say “if someone in the world likes your product - the product matches the market” - this is not true.



A product corresponds to a market — this is when there is a large and growing market for your product, and demand seems limitless.



Take, for example, Instagram - at the moment of launching Instagram, its founders specially designed technical support so that from the very first day hosting was not on internal servers, workstations and systems. After the first 12 hours after launch, their use exceeded the current demand for internal services and required scaling even higher than what was originally planned. The founding team immediately understood what it was necessary to strive for from the very first day.



Usually, if you are the founder of a startup, and you ask yourself - “Does my product fit the market?” - this means that it does not yet exist. As soon as this happens, you will feel it.



Question from the audience - Is it possible to create a new market if you have a revolutionary product?



Of course, this is possible, but it is much more difficult. One example that comes to mind is VMware, which created a completely new market based on virtualization that was not there before.



One of the types of companies that find it harder to feel that a product is in line with a market is a market business. The reason markets tend to grow slowly is that they need very careful balancing between supply and demand, and it’s very easy to break the balance in the early stages.



Question from the audience - Can you check the market for product compliance with the market before you start creating a product?



Yes, Ann Mura-Co helped Steve Blanca to teach in courses on business development for clients, which is exactly the same thing.



It is possible to test various hypotheses of our clients and try to conduct various experiments before starting to create a product. What can go wrong is the development of a client's business, which has more in common with art than with science.



It is very difficult to understand where the experiment went wrong, or in what its results were mistakenly presented, and where correction is required. At the same time, real ideas about the actions of the buyer usually do not arise where you expect them - they arise from observations.



For example, when conducting surveys among customers, you should not look for confirmation of your ideas and thoughts - you need to ask customers about their life and their problems - and then use this information to look for inspiration when creating a real product.

Vi. Corporate value

The concept of corporate value can be divided into several elements:

• scalable business model, which is the foundation of your company;
• cultural values ​​of the company;
• the idea of ​​the existence of your company;
• compensation model for the promotion and development of talents;
• career paths for your employees;
• ways of communication within the company and the culture of communication.

Many startups with a market valuation of more than $ 1 billion today are looking for scalable business models, and if you don’t think about it in advance, you will have a lot of organizational problems over time.



For example, in the later stages of development, some companies start to face the following problems:

• Why do I need these eight general directors? - this is an organizational problem.
• Why does our system of compensations and rewards have a lot of shortcomings and does not encourage employees who have made a really big contribution to the company's activities? This is an organizational problem.
• Why our employees do not see adequate career prospects for themselves? This is an organizational problem.

In the early stages of development, when evaluating a company, we first of all pay attention to whether the founders pay due attention to these issues. We are trying to understand whether this founder will manage the company for a long time, whether he is going to grow to his position and really get into the subtleties of the organizational side of the business.



Question from the audience - How do you define these cultural and organizational issues in the early stages?



In the early stages, you can pay attention to how they pick up staff. What are they able to give up in order to get the best workers?



One of the companies in which we invested successfully lured the best employees of leading companies from the vicinity of Silicon Valley, even despite the extremely high competition in this market. We saw that the founders spent a tremendous amount of time thinking about who they want to hire, how they interviewed, the compensation structure, and so on. They spent as much time on this as on the product itself.

VII. Category value

The final value from the Thunder Lizard value system is the concept of “categorical value”. It is the ability to take the previous three levels of the system and turn their advantages into absolutely insurmountable power.



One of our observations was that the most successful companies spend time creating an absolutely new market category for themselves, because they do not want to compete on someone else's terms. They want to be the only Thunder Lizard in their valley.



For example, Netflix did not read from being an improved version of Blockbuster. They created their own category, and then completely destroyed Blockbuster. Another example is Starbucks: who would have thought that people would buy coffee for $ 5 while others sell it for 50 cents. They created a new category.



Categorical value is the ability of founders to reflect on the language of the market into which they enter and how they see their company in it. If they allow the market to determine who they are - we pay attention to it.



Question from the audience - Is it possible to create categorical value before the grocery was created?



It is theoretically possible only due to the fact that these two concepts are individual. The categorical value is more that you see when you look at yourself from the inside, how you position yourself, and the product value is an external characteristic.

---