Tech startups and war: domain knowledge

A short post, leaning on a wonderful story by Nike’s co-founder and current chairman emeritus, Phil Knight, to explain the concept of domain knowledge, and the challenges and opportunities for businesses playing in high-barrier-to-entry domains.
Giap CRE domain knowledge

The below excerpt is from ‘Shoe Dog: A Memoir by the Creator of Nike’ by Phil Knight. The background: Phil Knight, CEO of Nike is in Vietnam, being hosted by the Vietnamese government.

“At one point my hosts graciously asked what they could do for me, what would make my trip special or memorable. I got a lump in my throat. I didn’t want them to go to any trouble, I said.

But they insisted.

Okay, I said, okay, I’d like to meet eighty-six-year-old General Vo Nguyen Giap, the Vietnamese MacArthur, the man who single-handedly defeated the Japanese, the French, the Americans, and the Chinese”

The Vietnamese government duly arranged for this meeting between the two heavy weights. (Knight was a huge admirer of Giap, the “Red Napoleon”)

“The first thing I noticed as General Giap entered the room was his size. This brilliant fighter, this genius tactician who’d organised the Tet Offensive, who’d planned those miles and miles of underground tunnels, this giant of history, came up to my shoulders. He was, maybe, five foot four.

And humble. No corncob pipe for Giap.

I remember that he wore a dark business suit, like mine. I remember that he smiled as I did – shyly, uncertainly. But there was an intensity about him. I’d seen this kind of glittery confidence in great coaches, and great business leaders, the elite of the elite. I never saw it in a mirror.

He knew I had questions. He waited for me to ask them.

I said simply: “How did you do it?”

I thought I saw the corners of his mouth flicker. A smile? Maybe?

He thought. And thought. “I was,” he said “a professor of the jungle.””

What has this got to do with tech startups?

Clue. It’s about the challenge of providing tech solutions to high-barrier-to-entry-domains.

Please let me explain….

Tech businesses live in roughly two “families”:

1. Low domain knowledge required

Businesses solving problems in domains that are accessible to your everyperson – for example Uber, Facebook, Instagram. You don’t need to be a particular expert in a specific domain to know what features will or won’t work for Facebook. You just need to be a human.

2. Domain knowledge required

Those businesses operating in domains that require deep knowledge of a specific industry niche. For example birding, or sailboat safety, or commercial real estate. In these domains, if you are not a “professor of the jungle” aka an expert in that particular domain, you will get lost at best, and die at worst.

Ask the Japanese, French, Americans and Chinese!

Business can be similar to war. Tech startup graveyards are littered with businesses played in category 2, but who didn’t “know the jungle”. The failed businesses didn’t know what they didn’t know, and their lack of knowledge got exposed by subject matter experts (aka customers) who do “know the jungle”.

Conversely, if you are a “professor of the jungle”, you have paid your dues. Unlike domain outsiders, you will understand the success factors such as:

  • non-obvious trade winds and currents (to avoid sailing against),
  • the concealed landmines (counterintuitive actions that only make sense to industry insiders),
  • the industry’s various user personas (stakeholders or verticals), their unique pressures and their critical success factors,
  • who lives where in the tech adoption life cycle, who the influencers are,
  • (specifically for enterprise SaaS solutions) what the architecture and foundations of the solution needs to cater for – how to achieve a “minimum viable product” (MVP) without painting yourself into throw-away-and-rebuild-corners for the next product phases
In summary

Only ever build product for a domain you understand. In the high stakes world of war and tech startups, only the “professors of the jungle” survive.

This pithy quote sums it up:

CRE domain IP

 

And spare a thought for the VCs out there. They have to upskill to “professor of the jungle” status to meaningfully evaluate every investment they look at. Every time, for businesses 98% of the time they pass on. As a domain outsider, which many times VCs are, it’s extremely difficult to be able to distinguish between the good talkers only, the good talkers and noobs, the good talkers and jungle professors, and average talkers and jungle professors. Further, what about VCs who have acquired IP in other domains and provided this IP, with best intentions, to businesses operating in other “jungles”? Business principles and grey beard experience is and always will be indispensable. It is our sense that this perception, 70% to 80% of VCs add negative value, is isolated to challenges relating to domain IP challenges.

Thank you to Paul Smith for agitating the need for this post, and for reviewing drafts of it.

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