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I have been paying attention to some of the news and the interviews surrounding the upcoming Snap (Snapchat) IPO and found one with Jason Calacanis particularly interesting (click here to watch). He mentioned that the story of Snap is akin to the story of the artist and the thief placing Snap as the artist and Facebook as the thief. Snap creates and innovates great products and features while Facebook steals them and incorporates them into their own products and features. I was interested in the comment for other reasons. I think its important to know if your business is an artist or a thief because I believe it impacts the financial results and expectations for your company.
There was a popular book that went around the business community a few years back called Blue Ocean Strategy that I think covered the same idea with a different concept: blue oceans and red oceans (read the book to learn more). The general idea for me is that your business is either creating products and services that don’t exist or is making existing products and services better. While I don’t believe there are new ideas in the world I do believe there are new ways of doing old things. The real question is: which is your business doing?
What does this have to do with business and finances? I think there is an argument to be made that entrepreneurs and business owners who are artists or are creating new products and services have an profit margin advantage versus entrepreneurs and business owners who are trying to make existing products and services better. To clarify, I believe that products and services that don’t exist in the market can command a higher price and higher margins until such time as there is competition. The artist gets to determine the price because there is no real point of reference for comparison purposes in the market. Once competition comes in and begin copying an idea or iterating on it price now becomes a competitive attribute and will ultimately be driven down. This results in lower prices and by virtue of lower prices, lower margins.
For businesses looking to grow, solve a problem or chat a new course there could be some value in asking the question: “is our business an artist or a thief”. I realize that the word thief conjures up negative thoughts however in this context the word thief is being used to highlight a fact. To some extent I suppose all businesses are thieves as they borrow from other ideas and concepts however I do think the “artist” type businesses in the market have a competitive advantage which is what I am proposing here. If you can answer this question for your business you might be surprised to see what ideas come forward and how they can impact your business plan and goals.
My goal is to get up every day and contribute to the lives of business owners and entrepreneurs who need someone that understands what they are going through. Let’s chat if you (or someone you know) needs some help with their business.
