End to end to...end?
Irregulars #1 // Full-Stack strategy in low NPS environments, Chain-link systems
Space startups are đ„ right now. But what stuck out for from a recent podcast that Erik Torenberg did with Delian (Founders Fund, Varda) and Chris (Hadrian) was much more down to earth.
âFor me it goes back to root cause solutions. Slapping a marketplace onto a market where all the actors are bad or its super low NPS doesnât actually solve any of the underlying problems that cause pain for customers.
So you actually have to go down and vertically integrate everything to provide that full stack solution thats going to solve their problems. And a low NPS environment is a very easy way to identify that that is the right strategy as opposed to doing a marketplace or a platform â - Chris Power (ca. minute 17:00)
Full Stack vs. Focus
End-to-end strategies always seemed like lazy thinking to me. If you donât know how to win, you just say âwe do it all and if we achieve this, then we get imaginary advantage x, y and zâ. If⊠Focus seems so much harder to achieve and that much more desirable.
Just look at military strategy. Itâs about shifting centres of gravity, blitz manoeuvres that focus on the weakest part of the enemyâs formation. Same thing in business. Put âmore wood behind fewer arrowsâ as Snowflake CEO Frank Slootman puts it. And especially for startups the advice is always to go narrow, narrow, narrow.
Chrisâs argument was prompted by the Keith Rabois framework for finding fragmented industries with low NPS and building full stack solutions for them (i.e. Opendoor). And it really resonated with me. It goes down to solve the issue by first principles, from the ground up, instead of layering on top. And it also reminds me of that quote from Napoleon, that âquantity has a quality of its ownâ.
This framework gives us a a trigger, a green flag, for when to think about using a full-stack strategy. And even if one decides against a such an approach, it should force us to have a good answer as to how we deal with the lows NPS / bad actor problem.
Chain-link Strategies
What Richard Rumelt1 in âGood Strategy, Bad Strategyâ calls Chain-link Strategies seems to be related to this:
A system has chain-link logic when its performance is limited by its weakest subunit, or âlinkâ. When there is a weak link, a chain is not made stronger by strengthening the other links.
Food for thought:
Where do you start? If you do follow an end-to-end, full-stack, chain-link strategy, what do you focus on?
Systems thinking really comes into play here. I like Alex Dancoâs short section in âWorld Buildingâ on this:
If you want to change how a system works, and move the system into a new steady state thatâs closer to your goal, sequential effort wonât do much. What you need is parallel effort: you need several different things to happen, all at the same time, for the system to actually move in the direction that you want and stay there.Â
How does this interplay with the API model of companies as lego bricks, ready to be combined and remixed?
Thanks for reading this first edition of The Irregulars!
One of the most impactful frameworks Iâve read this year