Hard work and grit aren’t enough to succeed. You have to find your own unfair advantage and play to your strengths. In The Unfair Advantage startup entrepreneurs, Ash Ali and Hasan Kubba share their insight about how behind every success story is an “unfair advantage”.
What is An Unfair Advantage?
Your unfair advantage is your personal economic moat. It is your competitive edge over others. It can’t easily be copied or bought and is unique to you. We all have our own set of unfair advantages, which we might not even be aware of.
Like habits which are stackable and compound over time, your unfair advantages build on top of each other creating a snowballing effect. When you leverage on your unfair advantages, it creates a positive feedback loop. The more of these advantages you accumulate, and the earlier you develop them, the stronger they will be.
Why do most Startups Fail?
“To get that momentum, growth and subsequent success in your startup, you need to have strong unfair advantages as your foundation. By knowing, developing and leveraging your unfair advantages, you will work on the right idea, partner with the right co-founders and develop a strong foundation.”
M.I.L.E.S Framework
There are 5 categories of unfair advantages, which makes up the MILES framework – Money, Intelligence & Insights, Location & Luck, Education & Expertise, Status.
Money
Understanding Runway time and Burn rates
Runway time = time you have until your startup runs out of money and is forced to shut down
Burn rate = how much money your startup is losing every money.
For instance, if your startup has $5,000 in the bank, and your burn rate is $1,000 per month, then you essentially have 5 months of runway time.
More money gives you a longer runway. The lower your burn rate, the more runaway time you will have. If you don’t have the unfair advantage of money to build a business with a high startup cost, getting paying customers first should be your first priority.
Depending on your type of startup, money plays different roles. Lifestyle startups do not need to burn much money and have a shorter turn around time. Comparatively, hyper-growth startups, or Silicon Valley-style startups which aim to be unicorns, burn a ton money for growth with less focus on profitability.
Intelligence & Insights
Intelligence has many dimensions, those with high IQ, book smarts, street smarts and creative intelligence.
An example of leveraging “book smart” intelligence as an unfair advantage – Patrick and John Collison, the two brothers who founded Stripe, a payments processing startup which helps companies accept online payments.
Patrick took computer science classes when he was just eight, developed a new programming language and entered MIT. John was accepted to Harvard even before taking his final exam. Of course, they have put in the hard work, but their intelligence is their unfair advantage.
Intelligence is useful, but for your idea to work you need to have some unique insight. Having insight is about seeing things below the surface, understanding parts of a situation others are unable to.
You might have insight into a specific market due to your background. Or you might have insight about an upcoming trend because you have been researching and you can see where the trend is going.
Finding a Gap in the Market
Having insight means finding a gap in the market. An inefficiency of an existing product, or a problem people face in their everyday lives.
The key here is to always find a problem first, before developing a solution. Instead of coming up with a solution, then force-fitting your solution into the problems you have brainstormed. This helps to ensure there is a good product-market fit.
Understand the problem and your persona inside and out is a powerful insight. As Paul Graham, founder of Y combinator said:
“What we look for in ideas is not the type of idea but the level of insight you have about it. It’s a common mistake to say the distinctive thing about your solution will be that it’s well-designed and easy to use. That is not an insight. You’re just claiming you’re going to execute well. Whoever wrote the current software was presumably also trying to. So you have to be more specific. Exactly what are you going to do that will make your software easier to use? And will that be enough?”
Paul Graham, Founder Y Combinator
Location & Luck
Location can give you access to ideas, talent, and capital.
For instance, Silicon Valley, also known as the Wild Wild West, is the innovation hub for ideas. Situated near research universities like Stanford and Berkeley, it attracts highly skilled talents who come up with innovative ideas. Also, investors and VC firms tend to cluster in startup hubs which makes gaining capital more accessible.
People often say that luck is about “being at the right place, at the right time.” That said, luck is not random. You can create your own luck by:
- Maximising your chance opportunities
- Trust your intuition and gut feeling, especially when you have had prior experience
- Expect to be lucky, it is self-fulfilling prophecy at work
- Turn even the bad luck into good luck
Above all these, you can increase your luck by taking action.
Luck is quite predictable. If you want more luck, take more chances. Be more active. Show up more often.
The Unfair Advantage
Education & Expertise
Education
The 3 main benefits of formal education and university degrees, “Knowledge, Network and Signalling”:
- Knowledge: Going to university and specialising in a course, gives you a more in-depth understanding of a particular field
- Network: Gain access to people and places
- Signalling: Increase credibility and helps in personal branding
Expertise
Having expertise is about being very good at something, in a specific domain. It is a self-taught process, which you learn mostly by doing.
“An expert is somebody who obtains results that are vastly superior to those obtained by the majority of the population’.”
Professor Fernand Gobet
Ask yourself:
- Do I have the skills to build my company?
- Do I know what I am an expert in?
- What would I like to be an expert in?
How do you build your expertise? Learn online, from books, or from mentors. Don’t be afraid to be multidisciplinary, a lot of creativity comes from interdisciplinary thinking and having a broad scope of knowledge.
Status
Having status could also be your unfair advantage. When we talk about status, we usually refer to social status, including your network and connections, family background and privileges.
But there is also an inner status you have to develop, your self-confidence and self-esteem. Develop your own inner status first, as it is a powerful way to boost your outer status. Your confidence and self-esteem will shine through.
“In fact, for Status, it’s most important to develop your inner status (your confidence and self-esteem) first, rather than your network or your Expertise. The latter two determine what role you will play in your startup ‒ networking is better for the commercial co-founder, and Expertise more important for the technical partner. But both partners need self-confidence to succeed. Then combined you will make a strong management team – what all investors are looking for.”
The Unfair Advantage
Focus on improving yourself and becoming 1% better every day. Get clear on your goals and let your habits compound exponentially. For actionable tips, read the review of Atomic Habits by James Clear.
Concluding thoughts
The MILES framework can be seen as different forms of capital, as theorised by Sociologist Pierre Bourdieu. We all have 3 forms of capital – economic capital, social capital, cultural capital, which influences our life chances, our chances of succeeding in life.
Whether it be in your personal life or your business, play to your unfair advantages. Let the odds be in your favour, and live your best life.
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