The Unfair Advantage

1. Life isn't fair, but everyone has unfair advantages

An Unfair Advantage is a condition, asset or circumstance that puts you in a favourable business position.

Recognize your advantages. Everyone has some form of unfair advantage, whether it's money, intelligence, location, education, or status. These advantages can't be easily copied or bought and are unique to each individual. For startup founders, understanding and leveraging these advantages is crucial for success.

Overcome disadvantages. Even apparent disadvantages can be turned into advantages with the right mindset. For example, Oprah Winfrey's difficult childhood experiences helped her develop powerful emotional intelligence and empathy, which became key to her success as a talk show host.

Examples of unfair advantages:

• Inherited wealth or connections
• Natural talent or intelligence
• Growing up in a tech hub like Silicon Valley
• Access to elite education
• Being part of a certain demographic or subculture

2. Success is a combination of hard work and luck

'Luck enters into everybody's life.' Warren Buffett

Acknowledge luck's role. While hard work is essential, it's important to recognize that luck plays a significant part in success. This includes the circumstances of your birth, timing, and serendipitous opportunities. Understanding this can help maintain humility and compassion.

Increase your luck surface area. While you can't control luck, you can increase your chances of getting lucky by taking more action, meeting more people, and putting yourself in situations where opportunities are more likely to arise.

Ways to increase your luck:

• Attend industry events and networking sessions
• Share your ideas and work publicly
• Be open to new experiences and connections
• Take calculated risks and pursue multiple opportunities

3. Identify your MILES: Money, Intelligence, Location, Education, Status

Your Unfair Advantage is your personal economic moat.

Assess your strengths. Use the MILES framework to identify your unique unfair advantages. Money provides capital and runway, Intelligence includes creativity and problem-solving skills, Location affects access to resources and networks, Education encompasses formal learning and expertise, and Status includes your personal brand and connections.

Leverage your advantages. Once identified, focus on maximizing these advantages in your startup journey. If you're weak in one area, consider partnering with someone who complements your strengths.

Examples of leveraging MILES:

• Money: Use personal savings to bootstrap your startup
• Intelligence: Apply creative problem-solving to find unique solutions
• Location: Utilize local resources and networks in a startup hub
• Education: Apply specialized knowledge to solve industry problems
• Status: Leverage personal connections for funding or partnerships

4. Mindset is the foundation for success

Reality-growth mindset is the balance between self-awareness and self-belief.

Cultivate a reality-growth mindset. This involves balancing realism about current circumstances with belief in your ability to grow and improve. It's about setting achievable goals while still pushing yourself to reach your full potential.

Develop key mindset characteristics. Focus on cultivating vision, resourcefulness, constant learning, and grit. These traits will help you navigate the challenges of entrepreneurship and persist in the face of setbacks.

Key mindset characteristics:

• Vision: Ability to see and work towards a future goal
• Resourcefulness: Finding creative solutions with limited resources
• Constant learning: Adapting to new information and skills
• Grit: Perseverance in the face of obstacles and failures

5. Choose between lifestyle and hyper-growth startups

Startup = Growth. A startup is a company designed to grow fast.

Understand the differences. Lifestyle startups aim for sustainable profitability and work-life balance, while hyper-growth startups focus on rapid expansion, often requiring significant investment and intense work schedules. Choose based on your goals, resources, and unfair advantages.

Consider your resources and goals. Lifestyle startups often bootstrap and serve niche markets, while hyper-growth startups usually need external funding and target large markets. Be realistic about what you can achieve with your current resources and what kind of life you want to lead.

Comparison of startup types:

• Lifestyle: Lower risk, slower growth, more control, work-life balance
• Hyper-growth: Higher risk, rapid growth, external pressures, potential for massive success

6. Find the right co-founders to complement your skills

It is exponentially more difficult to succeed in your startup as a solo founder.

Seek complementary skills. Look for co-founders who have strengths in areas where you're weak. A typical founding team might include a visionary creator, a skilled communicator, and a technical expert.

Build trust and alignment. Choose co-founders you can trust and who share your vision and values. Conflicts between founders are a leading cause of startup failure, so take time to build strong relationships and clear communication channels.

Tips for finding co-founders:

• Attend industry events and meetups
• Join online communities for entrepreneurs
• Leverage your existing network for introductions
• Consider working on smaller projects together first

7. Start with a minimum viable product (MVP) and iterate

If you're not embarrassed by the first version of your product, you've launched too late.

Focus on core functionality. Build an MVP that solves the main problem for your target users, even if it's not perfect. This allows you to get real feedback quickly and avoid wasting time on unnecessary features.

Iterate based on feedback. Use customer feedback to improve your product continuously. Be prepared to make significant changes (pivots) if necessary. Many successful startups, like Instagram and WhatsApp, evolved significantly from their initial concepts.

Steps to build and iterate an MVP:

1. Identify the core problem you're solving
2. Build the simplest version that addresses this problem
3. Launch and gather user feedback
4. Analyze data and user behavior
5. Make improvements based on insights
6. Repeat steps 3-5 until you achieve product-market fit

Last updated: August 15, 2024