Here’s the thing. Knocking off incumbents has always been tough. Switching costs have always been a tradeoff most organizations just can’t justify.

Their operating leverage of growing revenue faster than OpEx goes out the proverbial window.

Economies of scale aren’t the same either, it doesn’t plateau with growth. It keeps going up. Jobs to be done, as they get done, need LLM tokens unlike the marginalized CPU compute.

Incumbents sitting on healthy profits have to embrace going in red (at least pink) and justify reinvesting in their tech, archaic schemas unsuited for LLMs. Whereas, new Challengers, can come in with VC subsidized plans, newer, much cleaner infra and hit them where it hurts – right in their tokens.

Goliaths, the incumbents, are merely enjoying the unearned benefits of switching costs: be it data migrations, integration rebuilds, workflow and training costs, implementation risks, relationship or ecosystem loss. Either or all of these. Healthy enterprises seldom switch a critical piece of their ops workflow because of features or cost.

Even hyperscalers haven’t figured this out, they just have deeper pockets to spend a billion (or ten) today and hope to make it back in thousands later, indefinitely. Only model providers have done this successfully i.e. knocked off incumbents. They’re also highly subsidized, that’s more like Goliath v New Goliath, but worth a look on how they’ve taken down industries and not only managed to kill startups but established enterprises that never saw it coming. Look at Chegg, StackOverflow, Quota, WebMD…all were thriving, untouchable at one point. There’s plenty more to come as the model providers become application providers themselves.

Anyway, I digress. Back to the fumes of switching costs that incumbents are still running on. Besides being (arguably) better or not, how have model providers done this [knocked off incumbents]?

- Low Cost, which is highly subsidized currently

- More Appeal, of a magical, addictive product

But…they also went after people first, not their jobs. May not have been an intentional move, but it was brilliant.

Build tools for the day-to-day use, and people will innately trust you with work too.

This personal and work dependency osmosis, while common in physical world and hardware, rarely happens with software. Gmail and Google Workspace is a good example of being done before, but that’s not David, that’s just Goliath playing David.

For the Davids, now, the key is figuring out how not to face Goliath head-to-head. Not to compete on features, market share, SLA response times, or even cost. It’s guerrilla warfare. Jump out from behind the trees, through the trenches; get to the decision makers beyond their work stations. From outcomes perspective, build and launch addictive daily use tools, tangential to the core business need. Things the incumbents could never justify or prioritize in their quarterly plannings.

Hubspot, I’m not a paid user, does this really well. From their sponsored podcasts, signature generator, Dharmesh’s Agent.ai play…maybe unintentional but brave and brilliant regardless. Way to be in the arena. They’ve managed to go from David to Goliath while keeping all of David’s qualities of being nimble, fast, unafraid to experiment and deliver.

Now, how’s any of this practical, tactical? Great question, Daniel-san (or more like David-san in this metaphor).

Building the next payroll/HR platform? Build the free “what’s my real take-home” and RSU/equity tracker that employees check obsessively. Get the *worker* hooked on understanding their own money, then sell their employer the backend that feeds it.

Starting the next dev/observability platform? Give individual devs a gorgeous free status page and side-project monitoring they’ll use on weekend projects. They drag it into work on Monday.

Creating the next AP / Vendor Management tool for Industry X? Launch a killer app for Lemonade Stand finances, a financial learning aid for kids teaching them how to manage money-in/money-out.

Pick the tangential daily-use tool that reaches your decision-maker *as a person*, at 11pm, on a night out or at home — not as a work-time buyer. That’s the trench Goliath won’t climb into.

Read the official AKOS Blog here: https://akos.ai/blog

In a world where founders, investors, marketers, statisticians, executives and HiPPOs (Highest Paid Persons Opinion); all live and die by data metrics, it's imperative that we're looking at the right data. Data is often considered to be impartial and irrefutable; few have the confidence to doubt it, even fewer can constructively argue its source, sample and presentation methodologies. But, data analytics is a complex amalgamation of puzzles and mysteries.

Puzzles vs. Mysteries

A New Yorker article Open Secrets by Malcolm Gladwell explains the difference between Puzzles and Mysteries. I'm paraphrasing for relevance to our current context:

Puzzles signify a lack of clarity or information available or visible to us. A puzzle may require an information gathering session or a simple restructuring of information to devise an actionable solution.

Mysteries require judgments and the assessment of uncertainty, and the hard part is not that we have too little information but that we have too much.

The KPI Paradox

Doesn't matter your role or rank in the organization, you're accountable for a KPI, or several. Whether you know the exact KPIs or not is a whole other story. We've bastardized KPIs by building dashboards and scorecards, churning and burning through them every quarter. We’ve been writing stories and cherry-picking data to justify our stories, a post hoc ergo propter hoc fallacy.

Trouble stems when we try to define KPIs and “find data” to solve Mysteries, albeit they are really meant to solve Puzzles. KPIs are leading indicators, and each needs to be tied to a definite action, sort of like the gas light going off on your car.

KPI = gas light on OR off → Action = Stop for gas OR keep going

Business decisions aren't as binary as the level of gas in your car, but they require solving both Puzzles AND Mysteries, and countless KPIs or more data isn't going to get us there. We really need to stop using "more data" as an answer to our decision-making problems. This isn't Hollywood, you don't get to have a script and then find locations, actors, costume et al. to match your narrative.

What we need to do is to differentiate Puzzles from Mysteries; and doing so will lead to effective distinctions between actionable KPIs and colloquial KPIs. The distinction sometimes gets murky, and requires practice and restraint. And oftentimes, a Mystery is only uncovered after solving the precursory Puzzle(s).

Solving Puzzles vs. Deciphering Mysteries

With the ability of tracking every visitor/user action and behaviors, we’re in an entirely new era of passive data collection, an enormous amount of data. Some of this data is invaluable in solving linear Puzzles by answering the “who”, “what”, “where”, “when” and the “hows”; and solving them is key to the survival of our marketing campaigns, product roadmap, and our businesses' survival. But, should we stop there? No! Each time we solve a Puzzle - there’s likely a larger Mystery lurking in the end. These Mysteries are often discovered by asking "What if?", "What then?", "What else?", "What now?."

“Solve Puzzles to Survive, Decipher Mysteries to Scale.”

The expected outcomes of asking those questions is also significantly different between the two.

• Solving a puzzle will lead to actionable insights for effective progress towards your objectives.

• Deciphering a mystery will merely lead to identifying uncontrollable patterns in your users and market behaviors. It requires less data, more foresight and risk tolerance.

Question to ask?

Will solving this (Puzzle or Mystery) lead to actionable insights for me to make changes or will it simply lead me to identifying more of the unknown?

• If the answer is Actionable Insights. It's a Puzzle. Dig into the data and find a way to solve it.

• If it's More of the Unknown, you have a Mystery on your hands. You'll need to unravel enough of the nesting dolls to reveal the true mystery. And, at some point, maybe at the last atomic level, make decisions and take actions based on gut feeling, experience, and/or optimism.

For it is this unhinged resolve that could lead to groundbreaking insights towards market-gap and revenue stream opportunities. That said, it definitely does not involve more chaotic data collection. We got enough of it already, and more data isn't going to give us an answer.

“Puzzles come to satisfying conclusions. Mysteries often don’t, rather they are the doorway to a journey towards exponential growth or complete demise.”

In Conclusion

Puzzles are straightforward – questions that have answers, crosswords that can be filled in. Day-to-day business decisions require solving these puzzles, defining your KPIs based on levers you can pull or push to incrementally improve and survive the ever evolving competitive matrix.

On the contrary, Mysteries don’t need revelation; they require prevision, a prophetic foresight based on trends analysis, market forecasting, loony optimism, and plenty of moxie.

Patiently waiting and doing nothing is the hardest thing I do. Most often I fail at it. While my impatient actions may not have a negative impact on the desired outcome, it is the frustration associated with delayed reactions from continuous inconsequential actions that gets to me. I anger, I victimize myself, I deflect blame and act irrationally.

When enough time has passed, slowly, too slowly, I am able to look back at the situation. 20/20 hindsight and my toddler-like ability to connect the dots allow me to deduce which actions led to the desired outcome. That epiphany, in turn, leads to disappointment for all the time vested and wasted towards unfruitful attempts.

What I often forget is that business, family, and friends all require The Compound Effect. That is to say, it is not one grand gesture that wins the heart, it is through the compounding of smaller increments. The author, Darren Hardy, provides a clever metaphor for our impatience towards the compound effect – he explains it as our desire to keep turning that hot water knob while impatiently waiting for the right water temperature. For me, that outcome is almost always a good reminder to be patient.

In other scenarios, it is not as apparent as burning skin. So, I have built a framework for myself. Not necessarily a solution, just an over analytically derived step-by-step guide to stay patient.

Realization and Acceptance

The framework starts with a reminder to myself and acceptance of who I am. I, like most in my circle, am a builder and a technician – a DIM (do-it-myself) entrepreneur. Doing something, even if it’s chaotically and frantically pedaling, is an innate trait.

Expect latency and account for it

Next, acknowledge that The wait is where it’s at – the delay between action and response. Making quick decisions solely for the sake of moving fast is only fruitful if I am patient enough to wait for enough data (or the right data) to reveal itself, allowing me to base the next decision off of it. There are essentially three types of latencies I account for:

• Time bound latency: Setting a specific time-based event to delay making the next decision.

• Data bound latency: Setting a specific data threshold to delay further analysis.

• Accountability bound latency: Entrusting someone else to be accountable for further changes, follow-up decisions, or even making the decision to pull me back in.

Puzzle vs Mystery

Call it manifesting or wishful thinking. A question I started asking myself is “What does ‘done’ look like?” Answering this requires understanding if we’re solving a puzzle or deciphering a mystery.

Solve a Puzzle -> Actionable Insights -> Next Steps

Decipher a Mystery -> Identified Patterns -> Further Analysis

As I’ve grown more and more accustomed to thinking in puzzles and mysteries. I generally jump to asking “Will decoding this (Puzzle or Mystery) lead to actionable insights for me to make changes or will it simply lead me to identifying more of the unknown?” Setting clear expectations with myself helps avoid future heartache and unnecessary dwelling over what I cannot control. And, because of that cognition, patience becomes a mere necessity and not an unachievable virtue.

Mind mapping Outcomes

If this, then that. This is a cheat of sorts. I only do this if it is a Mystery with multiple predictable outcomes. A tool like Coggle or FigJam to mind-map predictable outcomes. In most cases, the real outcome does land tangentially close to one of the predictions to get a head start on the next set of decisions and actions.

Conclusion

There’s only so much planning you can do before you eventually take the leap and test against your assumptions. As an entrepreneur and business owner, it is a harsh realization that my engineering mindset is actually a curse. A challenging innate persona of who I need to be most of the time – a patient observer, and the framework above helps me to be one.

Let’s start with Passion and a brief exercise to show why passion alone is not enough.

Grab a piece of paper (No, a Notion doc is not okay for this, get a real piece of paper). Create a list: 1, 2, and 3. Now follow the instructions below:

1. Write what you’re passionate about? I understand that for some, the words ‘get rich’ or ‘die trying’ might come up, but try to avoid it. Seriously, what are you passionate about? Write down a phrase. This is your What.

2. Now, write Why you are passionate about it.

3. Write out the plan of your pursuit in achieving that What.

Finally, write the plan for pursuing your passion — the how.

As an entrepreneur and a math nerd, I believe our successes, failures and plateaus can be plotted through simple exponential and logarithmic functions. In successes, as the value of x gets larger, the function value of f(x) increases more and more dramatically. In failures, as the value of x gets larger, the function value of f(x) drops more and more drastically. A little impact to x, can increase or decrease the outcome radically. And, then there are logarithmic functions that might come into play from time to time. Where beyond a certain point, the value of x increasing doesn’t lead to a radical shift in the outcome. It’s when you’re not winning, or losing — you’re just surviving.

Passion is necessary for exponential growth, but the same passion can also lead to satisfaction in survival for just long enough before the exponential demise. Passion alone isn’t enough. The answer then lies in the plan. And, realistically, even then it might not be enough, you might scale or you might burn out, but the plan gets you to the moment of realization sooner rather than later.

In my line of work, I often meet people with passion who need help devising a plan and executing it. But, I also meet individuals with a solid plan who lack the passion for their project in general. In the latter situation, I can’t help, but the former is why I rise and stay awake. The words following are for the insanely passionate.

I was wrong

It used to be tough saying these words. Initially in my career, my ego wouldn’t let me. I am finding that the older, wiser me is saying it more often now, and it’s not because of some newly discovered humility; it comes from acceptance. I accept that I will not get it right the first time, maybe even the second or the third, but eventually I will. Similarly, a successful blueprint isn’t based on immediate perfection but on the elimination of iterations not leading to success — accepting when you’re wrong, and moving on, over and over again until you’re right.

Perfection is unnecessary

Looking back, I regret almost every time I tried to achieve the perfect solution, including the times when I did achieve it. The trade-off of additional time, money and resources was almost never worth the outcome. The satisfaction factor and outcome margin between excellence and perfection is narrow, too narrow to justify insane passion associated with perfection.

Quick and cheap can be good enough

It’s ironic that I believe this because my job relies on convincing people that it isn’t true. This opinion, however, has an expiration date and there comes a time where quick and cheap will not make the needle move, at least not forward. But, I do believe that we now live in a Deploy or Die world for passionate ideas. Initially, your plan needs to quickly and cheaply validate your idea in market adaptation and financial feasibility before it’s too late and your passion becomes unrealistic infatuation. A key part of your plan should be to verify if it’s worth the sacrifices you’re going to make going forward. If the answer is yes, then and only then, you stride forward.

Being unique is overrated

Uber and Lyft are similarly competing with virtually the same features for riders and drivers, down to vehicle options, rates and tips. They shamelessly steal from each other. Their drivers are often the same…. even their goals are the same.

Being the first of your kind may have it’s benefits, but it has little to do with success. Legality isn’t a concern unless you’re blatantly stealing, and tenacious passion and will can justify the ethics of it. Where it matters most is defining and delivering on your own key differentiators (what we call the X-factor). Your launch plan needs to shout that differentiator from the rooftops.

I can’t do this alone

An idea’s conception may be a solo act but it is impractical for one person to continuously scale. Even the most introverted among us will need others to grow. Sharing your passion will attract the support you need to stay on the path of exponential growth, and expanding your support group at key intervals will help you skip pitfalls you might otherwise be too close to see. Plan to bring in trusted advisers during each stage so that you’re not going too far into alone. They will not only bring new perspectives but also dedicated expertise in areas you may lack.

Now that you have your passion written down, write down your assumed constraints, write your needs to overcome those constraints, then define what success looks like and finally, get started on the first draft of your plan.

Bonus: Look back

The future may always be a mystery, but the past is written. Go back to the beginning from time to time to look at the paper you inked your passion on, it’s going to ground you back to the wistful love affair that started you on your journey. That optimistic innocence can sometimes be lost in the practical pessimism that comes along with executing plans in the real world.

One of my next posts will go deeper into coming up with an iterative blueprint plan for your passionate idea. Stay tuned...