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People worry about starting projects in crowded spaces. Peter Thiel says competition is for losers($). Kevin Kelly, the founder of Wired magazine, says you should work on something nobody has a name for. Everybody wants to work on a new thing or do something that has never been done. 

However, for every company that created a category, there are more that entered crowded markets. Facebook was not the first social network, and Google was not the first search engine. This is as true for individual creators as it is for businesses. 

When does it make sense to go where others rush in? 

People have been concerned about crowded markets for centuries. Everybody was printing books after Gutenberg’s invention¹. I’ve read that reducing the cost to create content reduces the value of all content created. By this logic, the mobile phone, which makes it easy to record audio and video, reduces the value of all created content. 

This isn’t true. In fact, the opposite happens. The more people can create content, the better the best content becomes. For example, it’s trivial to write and share a newsletter, but few do this as well as Byrne Hobartor Packy McCormick. Something else is happening. 

The lower barrier to entry creates new opportunities. It allows creators to differentiate themselves. Some do by finding a niche. For example, the most popular newsletters create content for a narrow niche, or 1000 true fans. At least they start there; Matt Levine’s newsletter is for finance nerds but has gone mainstream. 

There is also the opportunity to differentiate by providing higher quality or a different approach to solving the problem. Google developed a better way to search by analyzing the relationship between websites. Facebook took advantage of network density and engagement in US college campuses. 

The next time you walk away from something because “many people are doing it”, remind yourself that is not a good enough reason. There is second order question to ask about if you can differentiate yourself in this space

1. Fifteen million books were printed in the first 42 years of the movable printing press, more than have been printed in the preceding 1000 years. https://www.uh.edu/engines/indiana.htm ↩︎

The game is won by the team who commits fewer errors.

Jose Mourinho

Jose Mourinho and Floyd Mayweather have built successful careers by avoiding mistakes. Mourinho’s teams concede fewer goals, and are famous for  “parking the bus”. His 7 rules for winning big games can be summarized simply as “Don’t make mistakes”. Like Mourinho, Mayweather’s opponents land only 16% of their shots, less than half the rate of his last opponent.

They’ve both gone on to be very successful. Mourinho has won domestic titles in four different countries and is one of only 3 managers to win the UEFA Champions League with 2 different teams. Floyd Mayweather is undefeated through 50 fights and is one of the world’s highest paid athletes.

Obviously, this is not the only way to be successful. Muhammad Ali is the greatest fighter of all time and was not a defensive boxer. Other football managers play an expansive game that is more beautiful to watch and has led to as many titles. But, that’s not the whole story. Muhammad Ali’s greatest fights are those where he was able to defend well and withstand shots. Guardiola’s Barcelona success is, at least in part, a result of one of the greatest centre-back pairings of all time. Similarly, he struggled in Manchester City until he was able to find the right defenders, despite the wealth of attacking options.

In sports as in life, playing it safe gets a bad rap. Most business advice is focused on how to win instead of how not to lose. Journalists write stories about George Soros’ $1B bet or how Elon Musk invested all his PayPal earnings to start Tesla and SpaceX. You hear more about the times people take risks and succeed. You don’t hear about all the times people take risks and fail. In any case, you can’t become a hero for “playing it safe”. In the case of Mourinho, you can even become an anti-hero, a cautionary tale. Managers don’t get rewarded for the mistakes they avoid, but for the goals they score.

Yet, playing it safe makes sense. The future is impossible to predict and the goal is to be “alive” in as many versions of the future as possible. A strong defense or fall-back plan gives you that. Both Buffett and Munger credit avoiding mistakes for some of their success. This means they avoid some wins, but they also reduce their losses and live to fight another day.

Don’t believe the hype. Surviving is the only thing that matters. For every decision, the probability of unacceptable loss should be zero. Only those who survive can go on to win, whatever that means for you.

You’ve likely faced situations where you felt you were being played, but couldn’t put your finger on why or how. Like a “deal” on a used car, it feels too good to be true, or you felt doomed to make a suboptimal decision.
In these situations, one party has better information than others, aka information asymmetry. It can be a problem if you’re on the wrong side, but it can creates opportunities to build new businesses. For example, Expedia, Glassdoor and Zillow make money by resolving information asymmetry.

How do you know when it’s happening?

• The stakes are high and getting it done is more important than getting it right. Imagine you’re a tech founder, about to IPO your startup. You’ve worked on this company for the last 8 years and now it’s time for your big payday. There are many investment bankers telling you “how it’s really done”, or sharing examples that prove their expertise and usefulness. They tell you how your company is a unique snowflake, and that you must do everything how they tell you to. Few founders are willing to take the risk of getting this wrong. Statements to look out for: “Trust me, I know this space and have done many like this”, or “This time / person/ house is different”.
• The other side makes money regardless of the outcome. For example, no matter what you pay for a house, the real estate agent makes a healthy commission.
• Pricing is opaque and fees are discretionary. Before Expedia, travel agents made money because it was difficult to compare prices. Expedia made that information available, and today it’s much easier to do so. The same thing happened with Zillow and real estate in the US.

What to do if you’re in one of these situations

• Get many sources of information and corroborate everything. For example, you should not trust the recruiter when she says “I can’t offer more”. This is not as easy as it sounds, especially for underrepresented minorities and outsiders. Also, the information you need may be proprietary or difficult. Try cold emails or DMs on Twitter and LinkedIn. It’s a red flag when your counterparty is also your only source of information.
• Move beyond opinions to facts: Keep it fact-based as much as possible. One trick charlatans use is keeping the conversations vague, while appealing to your fear of getting it wrong. For the most part, experience can be reduced to data. If you’re going to trust someone, be sure to confirm that the data proves the experience.
• When possible, every party should have skin in the game. Offer a share of any upside or downside from the results of the transaction. In most commercial cases, these incentives will lead to better behaviour.

One more thing you can do is to ask better questions. You may not get the answer you want, but the answer will tell you everything you need to know. An example of abetter question is “What would you do if you were in my shoes?” vs “What should I do?”. The former tells you more – about the person, if not just the problem.
To learn more about building businesses that resolve this, read this NYTimes profile of Rich Barton, founder of Expedia, Zillow, Glassdoor. If you’re in the mood for a book, read Skin in the Game by Nassim Taleb.

Ah, 2020. In addition to the pandemic and everything else, I discovered that my beloved secondary school song was plagiarized.

King’s College, Lagos (KC) is Nigeria’s most well known secondary school. Former students (or Old Boys) are everywhere in business and politics and include Nigerian household names like Hakeem Belo-Osagie, Bayo Ogunlesi, Lamido Sanusi. Real business gets done at our old boys’ meetings, and given the size and distribution of the class, there’s always someone you should be talking to. 

Most importantly, KC Old Boys are proud of the school’s history. KC was set up in 1909 by the British colonial government to “provide for the youth.. a higher education than those supplied by existing schools”. KC was founded before Nigeria the country (1960) and Nigeria the British protectorate (1914). We carried ourselves accordingly. KC students and alumni fought in WWII and for Nigeria’s independence. It’s impossible to talk about Nigerian history without Kings’ College. 

The school song is an important part of our shared experience. We sing it everywhere. I have joined other old boys to yell all 4 verses as other wedding guests sat confused. We sing (solemnly) at funerals. We sing at Old Boys’ meetings. We sing to remember the old, good times. The song is the soundtrack to our KC identity. We even use the first word of the school song – “Floreat!”- as a greeting to other old boys. It’s our thing.

Then I stumbled on this video.

The title and comments sent me down a rabbit hole that ruined everything.

Queen Mary’s Grammar School, Walsall, was founded in 1554, before the first Europeans visited Africa. Like King’s College, it also has accomplished alumni. And like Kings’ College Lagos, the same school song.

One difference is the first line of the school song. “Floreat Collegium Schola Mariae” or “May the school of Queen Mary flourish” which Kings College replaced with the similar sounding “Floreat Collegium shall our motto be”.

Looking back, it should have been obvious. The first line of the KC version is “Floreat Collegium, shall our motto be”, but our actual motto is “Spero Lucem” (we hope for light).

From the archivist at QMGS, I learned the song was written in 1908, specifically for QMGS. FG Layton, the author said this was the only thing he’d done that would outlive him. He might just have been right.

Sigh. 

Perhaps, it should have been expected. We know now that the school’s founders weren’t creating “leaders for the colony” but an army of subordinates to make the colony easier to manage. [1]

On the other hand, maybe the community is bigger than we thought. KC Boys can think of QMGS as a sister school, and the song as a shared experience across both schools many miles apart. And we will still continue to sing, because the song means more than just words to those who sing it, whether they are from Lagos or Walsall. I choose to remember it that way, and the words still ring true. Service to our living, Honor to our dead.

[1] The British colonial government wanted “African subordinates to serve the [British] central government” and a ‘”…limited number of educated Nigerians..” Check out this paper for more.