I recently sat down with a VC who invests across the US and China. We were talking about the geographic expansion possibilities of a tech company that currently operates successfully in a single geography, Turkey.
I focused on the company’s core value proposition and business model to suggest that there would be greater demand for what the company is doing in China than in the US, and that it would be able to operate with superior unit economics in China. I therefore shared that I was in favor of entering China rather than the US.
My counterpart shared that, while the factors I had pointed out were important, I was overlooking the most important variable that the company needs to consider when deciding which geography to enter. That’s competition, and when it comes to competition, doing business in the US is a walk in the park compared to doing business in China. He therefore recommended that the company expand to the US.
I have yet to do business in China, so, until I experience it for myself, I need to take the investor at his word.
I will, however, be visiting China soon. Although a visit is far from enough to understand the true extent of competition in the country, I look forward to getting my first glimpse.
There are two ways to get accepted into an institution. Examples of such institutions include companies and schools.
The first is to apply using the institution’s formal application process, and the second is to offer up your candidacy through informal means, by getting directly in touch with people at the institution.
If you take the first approach, you’re competing head-on with thousands of other candidates. It’s hard to differentiate yourself.
The second approach makes you stand out. It shows that you want the position more than the thousands of people who applied through the formal process, and that you’re entrepreneurial in getting what you want.
Desire and entrepreneurship are important predictors of success in the eventual role, so most people respond positively to seeing them in a candidate. If they don’t, you might want to question whether you want to be part of an institution where these qualities aren’t valued.
This doesn’t mean that you don’t need to be qualified for the position. I’m not advocating for cronyism or nepotism. Although these unfortunately also often produce results, these results are hollow as you haven’t earned the position.
But the formal process has so many qualified people that you need to do things to stand out. You need to do the informal.
After a new venture begins to take off, many people want to get onboard. Competition to join the venture increases.
However, at the same time, since the risks of the venture have decreased, the potential intrinsic and extrinsic rewards it offers also decline. So you’re faced with an environment that’s simultaneously more competitive and has lower prospective returns.
This is why you want to get in on new ventures on the ground floor. That’s when there’s little competition and it’s easiest to get in. It’s also when there’s the prospect of disproportionately high intrinsic and extrinsic returns.
The challenge, of course, is identifying the right new ventures to get into on the ground floor. Fortunately, you can take multiple swings during the course of your life. And with each swing you learn a bit more about the defining characteristics of the right new ventures. So your probability of getting in on the right one improves with time.
And you only need to hit one home run in your life. You only need to get in on the ground floor of the right venture once. The intrinsic and extrinsic returns of doing so are often enough to keep you feeling happy and successful for a lifetime.
But chances are that once you experience this thrill once, you’ll want to experience it again.
While each of the US players was individually talented, together as a team they were much more than the sum of their parts. Their performance during the games was simply the outcome of the underlying practice sessions that they had in the run up to the Olympics. In fact, in the video below Michael Jordan refers to the scrimmages they had during these practice sessions as the best basketball games that he has ever played in. This is because he was competing against the likes of Magic Johnson and Larry Bird.
Practice doesn’t make perfect. Practicing with the best competition does.