How to Succeed in Business When Everyone has the Same Idea

Andrena provides high-speed Internet at a fraction of the cost. They're able to do this because instead of relying upon telephone poles and underground cables to bring consumers the internet, they employ the latest wireless internet technologies.

With a fiber backbone, they deploy a series of antennas to spread the internet across geography. Using previously deployed infrastructure or their proprietary in-home router, they allow residential and commercial customers to tap into their network wirelessly.

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How To Succeed In Business When Everyone Has The Same Idea | James Smits

This is a common mistake for founders where they go right at the jugular. Your large competitors are going to be protecting that territory. They've got that locked down. Finding your niche is important. In your case, how would you describe the industry? Elon Musk is going after the rural areas, the whole Starling stuff.

The traditional ISP is going up to the densely populated heavy urban areas in tier-one places. You're going off to the alto areas like the secondary markets. That’s important because what will happen is large competitors all ignore that part of the market. It won't even rise to the level of executive awareness. When they're talking about charm, they're looking at their core markets. They always believe.

With the 20% of those accounts that generate 80% of the revenue, that's where a lot of the focus is for the large players, building out the mass after that. They get the mass because they have the head. Your chances to go after the areas where no one is taken care of. All those customers are likely to have problems. They're not going to have the best service. They can't get through to the big anonymous monster company. Frankly, no one cares if that account is lost, whereas, for you, that account is your start.

The idea is you capture that segment and wow that segment with a clear offering. It has to be ten times better. You can graduate upwards. Too many founders go straight for the jugular. You might think of mass-market products. Let's say Instagram. Instagram didn't start as a mass product. It started as a platform for people that love photography and wanted to capture that essence. Every great company needs to stop with a focus on the niche.

It's interesting. Whether or not we're in Manhattan years from now, I don't know. I could see a world in which we work with a partner and they're large enough that we get an opportunity to go into their portfolio. From a sales perspective, we are not talking to anyone in Manhattan. Far Rockaway is much more interesting than anything in Manhattan.

If I go to Far Rockaway, I'm either the 2nd or 3rd provider in a building. In my apartment building loan where I'm sitting, I wish I could be an Andrena customer but alas. I have the option of Verizon, Spectrum, Optimum and RCN. If I was in a luxury building or another building in Manhattan, I might also see Starry and Honest. Upwards of six providers in a building, no, thank you. I'm never going to be able to get this 40%, 50% penetration that we see in other markets.

You talked about how much infrastructure the large players have sunk into things and how they're married to their infrastructure. The sunk cost fallacy is true. What is a breakthrough technology that Andrena is building on? In relation to that, share any wisdom you have about competing with companies who are still focused on legacy and sunk cost and how focusing on breakthroughs allows you to do things they can't do.

The vast majority of hardware we use is still off-the-shelf hardware but we focus on purchasing hardware that was developed not with the urban market in mind. Wireless hardware got its advent for the rural markets, where it's too expensive to run coax cable 50 miles to a farm. We know that we can send a high-density internet beam, for lack of a better term, through the airwaves. There's a receiver on the other side that can then provide someone with local connectivity. That hardware has been going nuts. It's incredible stuff. There are a bunch of different major providers in that space. We pick and choose who we buy hardware from but by using someone else's hardware, we don't have to reinvent the wheel. When you're trying to do an infrastructure play, you're already reinventing the wheel as is.

Building a startup is a series of local minimums and local maximums. As long as the local maximums are greater than the local minimums, you are going up into the right.

That gives us the advantage where someone spent decades developing this technology but where we're at and why this is the most interesting time for it is I know that I can move with 1 radio link, 10 gigs of internet 5 miles through the air, without any issue like rain fade or clouds getting in the way. That opens up a world of possibilities where I don't need to be relying upon this legacy infrastructure where you have to wait for permits. When you're getting pulled permits, they generally take about 6 months because it's 3 months of permitting with the local government and then there are 3 months of permitting because Verizon generally is the one who controls the telco space on the pole.

They have to let you on if you do things right but they have up to three months to let you on. Day 90 is when you hear from them that you're able to go on that pole. Being able to circumvent that process gives you that speed to market. That's something as I look at what we've done with Andrena. I'm sure it's quite complex but as I think about any startup, the number one advantage they have is speed. You're a small team. You can iterate. You can easily tell when things are broken or aren't working. You don't necessarily know what the solution is 100% of the time but perhaps you've gained some data that can continue to steer you in the right direction.

Not every startup goes through a major pivot but every startup goes through little pivots and developing what you're doing. That’s the nature of the business. You have to have that flexibility to succeed at all stages of your business, even as you begin to lose that flexibility and that's the nature of the beast, unfortunately. Bureaucracy finds its way everywhere, especially as headcount rises but how can you try to avoid that for as long as possible is important to maintain.

The nature of competing against Goliath or a massive company isn't to go head-on. It's to appreciate that we are different. Why should we try to compete with them on the same terms? You will lose. Don't go after the same customer base or infrastructure and technology. Instead, do things your way and do them deliberately differently.

If you think something is broken, doing it the same way that it's broken is not a fix. Us starting Andrena, if we hate Comcast or whomever it is, if we don't appreciate how they do business, why would we then replicate that model? If you have this opportunity to start from scratch, you're going to want to start with some different parts than what they're currently using that don’t seem to be working.

There could be a lot of reasons why they have a low NPS. A lot of it's going to come down to how they treat their customers but the issue that is then boiled down there is pervasive in every part of the business. If how they treat their customers isn't perhaps the best as it could be, they're going to have that same ideology elsewhere in the business. It's going to be reflected.

On the opposite side, if you value something like customer service like an Amazon, it will pay me through every part of the company and product and everything you do as well. Profits tend to be the key focus and profits are the focus. You slowly start to chip away at things that are needed long-term, like great customer service. In PropTech specifically, many companies don't fulfill their maintenance obligations. It’s sad how people are taking advantage.

In that perspective, our number one acquisition channel is the property manager, the person who is giving the new resident their leasing packet in their keys. As soon as you lose sight of the importance of maintaining that relationship, why are we doing this? That is our number one path to building this company more rapidly. We need to maintain that relationship. You can take that same lens, project it everywhere in the business and see the same thing happening.

Here’s something counter-intuitive and I learned this after. I won't say who but I was speaking to the CEO of a large financial/bank many years ago. They said to me, “We have a lot of regulators in our office. For everything we want to do, some regulators look through everything. We have to be careful.” He said something I didn't expect that caught me out of sight. “We love it. The more regulation there is, the more difficult it is for other companies to enter.”

The people that want more bureaucracy, fines and more costs levied are the largest players because they realize their ability to deal with bureaucracy is a competitive advantage versus a new company coming in. How is the new company going to go, get a full permit, wait six months and try to work with Verizon? These large companies have an incentive to make things even more complicated. You don't realize they're the ones who are pushing the regulators to you. You should make sure that there are more processes to get through it. It helps their business because they're the ones that can get through that process fast.

This is why tax lawyers are the highest-paid lawyers of them all. It’s because they've taken the time to learn the code. It's a game for them.

Do not engage the enemy on the same battlefield with the same weapons. You have got to play differently. Don't bring a knife to a gunfight. You've got to appreciate that if you’re a startup, you've got a different playbook and follow that. Eventually, you will find a way. Also, the niche doesn't have to be sexy.

It depends on who you say it to. To some people, the internet is fascinating. Other people view it as an essential good, where it has to work 99.99% of the time. It has to work properly and hit those base-level consumer assumptions. I can do that in many different ways. I don't need to be doing it in the same capacity as the Verizons of the world.

What other advice do you have for founders reading this? You bring a unique perspective here.

It's so much more fun on this side of the table but do I have way more sleepless nights? When I worked in a venture, I don't think I had a single sleepless night. There may be a couple where I lost a deal, where you wanted to squeeze it on a cap table and it didn't happen for whatever reason but probably my fault most of the time. It is never more exciting and interesting to be a founder but there are sleepless nights involved. That’s the nature of the beast.

Are you finding this more ups than downs or more downs than ups or is it fairly balanced?

I think of it this way. Building a startup is a series of local minimums and local maximums. As long as the local maximums are greater than the local minimums, you are going up into the right. It's not always necessarily a hockey stick but if you are going up into the right, you're doing something right. It means that you're further, not only just developing product-market fit but you've put your gas on the accelerator and you're doing something right. From day one, it's always been a series of local minimums and local maximums. Those happen daily. It's the nature of the beast. As long as I can, at the end of the week, take a step back and realize that our local maximums have been greater than our local minimums, I can be happy with that.

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About Zain Jaffer:
Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780M.

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as “Forbes 30 Under 30,” “Inc. Magazine’s 35 Under 35” and the “SF Business Times Tech & Innovation Award”. He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.