Whirling Thoughts

Chewing, swishing, and spitting thoughts out. Personal blog of Nicholas Chan.

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Execution vs Strategy

In business school, we are taught a lot about strategy. We glamorize it. We talk a lot less about execution.

We’re taught that if you know the “4 P’s” or how to build a financial model or how to setup a marketing strategy, then you will be able to succeed at business.

Something I’ve come to appreciate since joining Clearbanc is that reality is a lot messier than this. You can dream up something in boardroom, but you really need to know how to make stuff happen. Otherwise ideas just stay ideas.

Good execution is identifying all the actions required to support the strategy / goal, then making sure those get done. People who know how to get stuff done, get paid. They’re rare.

Strategy is useless without good execution and good execution is a bit messier than I expected. Here are some boring, practical, unsexy things that I’ve learned to make execution work.

Getting the Incentives Right

One area that I realized you have to account for is politics. Politics boils down to the simple fact that people in organization just have different interests. The product team is optimizing for different metrics than marketing. Marketing is optimizing for different metrics than finance. And legal is just trying to make sure no one is going to get sued.

What happens here is that in trying to optimize for their metrics, marketing might take actions that actively undermine the product team’s goal. As a tangible example, the marketing team might be optimizing for getting leads, without a focus on the quality of those leads. Meanwhile, the product team might be optimizing for conversions. By funnelling more leads of lower quantity, marketing is meeting their goals while product is frustrated and underperforming.

The mixing of incentives is a sticking point in good execution. A practical learning from all of this is that to execute properly, a really important point is to make sure that everyone is tracking the right metrics, understands what other people are tracking, and that you take the time to think about any second order effects. AKA. ask yourself the question, if this is how we are going to track success, are there going be some unwanted side effects of this?

In the above example, marketing and product should both be measured by conversion rate. This way marketing doesn’t actively undermine product. A second order effect of this change might be that marketing begins to drastically increase advertising costs or CAC in response. This is something else that would have to be monitored.

Time Lag

Executing a strategy rarely results in instantaneous results. It often takes months if not years for your actions to bear fruit. This means that it is important to be patient. Don’t kill a good thing before it has some time to age and mature.

A new sales process and organization in Clearbanc took more than two hard months before it started to show results.

A Linkedin content strategy I’ve been playing around got some initial traction, but I had to wait until week 3 for my first “conversion”. It’s still too early to judge if the program is a complete success, so I simply have to keep executing and posting.

The practical takeaway? Things take time. Be patient.

Nitty Gritty, Hands Dirty, Detail Devil Execution

Setting a good strategy is only the beginning to getting good results. The reality is that the boring day-day details are what gets you results. Surprise!

To use sales as an example. You can talk about a completely revamped and sexy sales strategy to get more revenue. Blue ocean and all that shit. But have you checked to make sure that your existing reps are doing their job?

Are they sending the right length emails? With the right headers? Are they following up with people? How often are they following up? *yawn it’s so obvious and boring, but I’ve seen 6-figure deals pop out of nowhere because someone decided to…send an email and followup.

To use marketing as an example. We at Clearbanc were trying to get more companies to become repeat customers. There were a lot of ideas tossed around, but ultimately what made a big difference was just sending them emails to remind them how they can use our money. No AI involved. No extreme data processing or segmentation.

I think that business students are overly obsessed with the glossy, sexy solution. I know I was. It’s a mentality that’s supported by case competitions and projects that reward ideas that are creative and clever. Ideas you rarely have to go out and execute.

There’s certainly value in creating those strategies, but something that I’ve grown to appreciate these past few months is that sometimes you have to take the time to sit down and just get (the boring) stuff done.

Data as a Crystal Ball

Wouldn’t it be amazing to always have the most up to date information? What if you could monitor and predict what was going to happen before it actually happened?

I’ve realized recently that it is possible to build a business that gives you a magical crystal ball into the future.

Wouldn’t we all like to know when businesses, particulary SMB’s, begin to recover from the current Covid crisis? As a result of how their businesses are structured, both Clearbanc and Shopify have extremely high amounts of data, that lets them monitor trends in small businesses that normally only banks would be able to realize.

This information gives these two companies an edge that lets them move quickly and make better decisions than competitors who don’t have that information.

How did they get to this point?

Both companies built data collection and aggregation into their core product offerings. In return for access to data, they provide their customers with value they would not be able to derive independently. At Shopify, this takes the form of tracking website traffic, sales, and customer information on behalf of the merchant.

It is critical that the data being collected on customers is providing them value, otherwise these customers will stop providing it or using the platform.

What Happens When You Misuse Data

Today’s most relevant example of the misuse of customer data is Amazon. Shopify was able to carve out a significant chunk of the e-commerce space because Amazon did not let their merchants view and control their own data.

Amazon sellers did not know how often customers were repeat customers, who was buying their products, and could not monetize them with retargeting campaigns or email lists. These sellers lost control of their brand.

Adding insult to injury, it has been discovered in recent years that Amazon has started to launch their own private label brands. Think Amazon Basics.

They would find the best selling products by their sellers, then do the production and manufacturing themselves, promoting their products over their sellers.

It’s easy to see why sellers would like to avoid Amazon and control their own destiny when their own data is being used against them.

Both employ data science divisions who can make sense of all that information.

Data as a Competitive Moat

When it’s easier than ever to code something and copy other people’s code, how do you maintain a competitive advantage?

Just look at Facebook ripping off Snapchat’s stories and adding it into Instagram. It was incredibly successful.

Features can be copied. Data can build a moat

IMO there are two key pillars to this “moat”.

The first is time. If you have been operating for a year, it takes an incredibly long time for your competitor to amass the same amount of data. Meanwhile, you continue to race ahead, gathering increasing amounts of data. It will take them years to catch up, unless they figure out a way to collect useful data 2x faster than you can.

The second pillar is scale. The more data you have the more useful it is to you. Think about it like this. What is more useful? Your personal information or the personal information of 10 people? How about a million people?

With the latter, I can identify trends, demographic data, and start to train machine learning models that optimize my product and drive more revenue. By gathering more data, you can build a competitive moat by improving the processes that drive revenue, making them a magnitude better than your competitors.

Food for thought as you brainstorm your next billion dollar business idea ūüôā

Dirt Cheap Dirty Canadian Oil, Time for a Change?

Yesterday, I found out that the price of a barrel of Western Canadian Select has plunged below $5. That means a barrel of Canadian oil costs less than a 6 pack of toilet paper.

Why is this the case?

Saudis have started a pricing war

The first is that recently, the Saudi Arabians and Russia have gotten into a bit of a price war. They were unable to agree on prices, after China’s drop in production severely crippled demand. Now Saudi has “turned on the taps” and flooded the market with more supply

Lack of Pipelines and Distribution

Due to political barriers and Aboriginal opposition, pipelines needed to increase capacity to transport bitumen from the oil sands south to USA and west to ports in BC have been cancelled or put on hold indefinitely. This has forced companies to instead have to pay a premium to ship their oil via rail or other methods. This has further decreased demand.

Abundant and Cheaper Alternatives

In recent year, shale oil production in USA has exploded, propelling America to be the 4th largest exporter of oil. This significant increase in supply has made Canadian crude look even worse in comparison. Shale is cheaper to manufacture than oil sands, which takes around $45 USD per barrel to breakeven.

Compounding the problem is that shale oil can slow and start production very easily. When prices are above an operation’s breakeven point, they will simply turn on the taps again, setting a cap on how high the prices of oil can go.

Where next?

This is a purely qualitative analysis, so take it with a grain of salt. To me, it appears as if the Albertan oil industry will remain unviable for many years ahead. The industry is beset with poor unit economics, political headwinds, and superior competitors.

Countries have already started to invest significantly into renewable energy. Norway is the prime case study for how to take oil wealth and transition it into creating a more sustainable a circular economy. Texas (of all places) has become a renewable energy giant, with wind outpacing coal as a power source in Texas for the first time ever.

Alberta is still far behind the curve when it comes to renewable energy, but progress is starting to be made with propositions such as the Rattlesnake Ridge Wind wind farm project. This is a promising sign of things to come.

However, there is still more that can be done. The afore-mentioned project had a price tag of $200 million CAD. Meanwhile, the government is proposing an investment of $4.5 billion CAD into purchasing the TransMountain oil pipeline. What is the point of this? If we are aiming to transition into a green economy, why are we investing capital into infrastructure that will be outdated by the time it is actually built? $4.5 billion CAD would be enough for 22 wind generation projects.

The world is not moving back towards oil and gas. It is time to look to the future.

Things Take Time To Build

Coming into the QICSI program this summer, I’ve had a lot of time to reflect on startups and particularly the type of company that I would like to build.

Something that I found myself assuming was that it would not take very long to build a business. I naively assumed that you could get something profitable up and running in a year.

How wrong I was.

Companies which have graduated from the program have come back to discuss their experiences. What has struck me has been their lengthy timelines. One company, while having signed government contracts and won several international pitch competitions, is still working on their commercial product two years out from when they started working full time on their venture.

Another found details how she watched her friends signing full-time lucrative jobs when she graduated from the program, while she was sitting in Kingston, on a fold-out table, applying for funding grants. Only recently, three years out from starting work full time, has she started to gain significant traction. She has just been able to afford to open an office in Toronto.

Reflecting on companies like Shopify. who were founded in 2004, it took them 10 years to reach IPO. They only recently passed $1bn in sales.

For me, this is a sobering reminder of the lengthy timelines required to build a scale business. Something to keep in mind as the program moves forward.

Good Intentions Are Not Enough

A recent debate started by an article has caused me to begin questioning the worth of good intentions. Specifically, is a good, well-meaning intention enough to justify poor execution?

For light context, this was an article that sparked debate about the lack of initiatives within the Queen’s Commerce Program supporting among other things, diversity in income, hiring, admissions, and support for marginalized groups. It examined the notion of privilege within the program, and the lack of help for those without said privilege. However, in it’s writing, it was an article that was, in my opinion, one that failed to perform the adequate research ahead of time or provide meaningful solutions.

To backtrack, I whole-heartedly agree that there should be some more supportive diversity initiatives within this program and school. I love this school, and it has provided me with opportunities to meet executives, hone my skills, and meet like-minded people. There are more opportunities, amazing people, and challenging ideas here than I have experienced anywhere else.

Racism continues to exist, with racist graffiti being sprayed on the walls of my school and students being assaulted for their race in this city. Privilege exists. I have sat through meetings where my peers complain about how once their father had spend $1500 to cover their cellular data overuse penalties, the $50+ Uber expenses sent to parents because they didn’t want to walk a few meters, what a pain it is to have to fly often to international destinations, and the heirloom LV bag waiting for them once they got a job. People skip class or loaf through this program because they have a job lined up or enough money that it does not matter, when there are those struggling to complete the program or choose to not attend for financial reasons. These are some real issues, though they are not always top of mind

I say this to highlight that the intention of the article was amazing. That the cause certainly has merit. But the execution was terrible. I could not agree with this article.

In failing to adequately research the article, it resulted in a piece of writing that was indefensible. It was full of holes, came off as a rant, and misrepresented statistics. This had the consequence of diluting its very real message and infuriating a good portion of the program, minorities included. No one listens when they are angry. And it’s important that people listen, particularly those who fail to agree, because the purpose of starting a debate is to convince these people that there is a need for change and to listen. Otherwise, you aggravate an “us vs them” mentality that is not helpful when tackling multi-lateral issues.

In a way, this article undermined the author’s cause, which is a shame.

When stating or assuming that “good intentions are enough” it brings to mind the quote “the mean justifies the end.” It doesn’t matter how you act to achieve a goal, so long as the goal is achieved. In parallel, the assumption here is that as long as good intentions exist, it doesn’t matter how you achieve this goal.

Donald Trump is the perfect example of this. I’m sure in his mind, he has some good intentions. He wants help the blue collar workers, reduce illegal immigration, and create jobs. Admirable goals, good intentions. In reality, he started a trade war which has hurt farmers,separated families at the border, and caused an iconic manufacturer to leave the country. Poor execution.

So intention needs to be supported by effective, tactful action and execution. Failing do so puts you in the company of someone like Trump, no matter how good your intentions might be. Trump’s intentions are good too. Actionably, for any initiative, this means at a minimum, doing thorough research ahead of time, consulting with key stakeholders, and reflecting thoughtfully on how messages or initiatives will be perceived by these stakeholders.

Good intentions are not enough.

Difference Between Being “Successful” & Not- Use of Free Time

Reflecting this part month, I was thinking about what allows people to be “high-performers”. This is idea is not particularly ground-breaking, but thought it would be worth writing regardless.

The mentality is that “everyone only has 24 hours in a day”. Elon Musk has 24 hours in his day. Tim Cook has 24 hours. You and I have 24 hours. The only difference is essentially how we use that free time.

Digging deeper, what distinguishes students who excel in a program and those who do not? Everyone spends similar amounts of their time in class. They learn the same material, do the same assignments, read the same textbook. Yet why are there different outcomes at the end of the program? What remains variable? The only thing that changes is how people use their time outside of class.

There’s a certain set of things that you can end up using your time. You can choose to study, read, exercise, do extracurriculars, watch Netflix, party and who knows what else.

Some have direct effects on becoming a smarter person. Other have indirect effects. Sleeping is not a productive activity, but allows me to be more productive. Same with exercise. Even partying in moderation, lets me destress and meet more people. And of course, some activities have no value or negative value. For me, Netflix is a time sink that adds little to no value to my life.

Finding the right mix of the activities that works for you is key. There are certainly people who can do it all. For me, I definitely place high value on quality of sleep, exercise, reading, and extracurriculars.

School work is a low priority (not a true differentiator). Partying is an activity best done in moderation.

I encourage you to reflect on how you are spending your time ūüôā

How to Avoid Travel Burnout – Plan Less

Vacations should lead to a feeling of refreshment, a renewed sense of excitement and energy. Isn’t that supposed to be the point?

Yet sometimes, I find that going on vacation turns into an experience more exhausting than everyday life. There is always an urge to cram as many events, restaurants, and attractions into the fleeting few days you have in a city or country.

Isn’t it so strange that we complain about waking up for a 9-5 job, yet on vacation, we gladly pack our days from 8am to 8pm?

Recently, I took a trip to Quebec City without any planning whatsoever. Other than the flight tickets and accommodations, I simply left my schedule open and free for exploration.

Quebec City – No Plans Made

Without a set plan or schedule, I had the opportunity to explore things on my own pace and be spontaneous, pursuing opportunities and interactions that I likely would have avoided. These include:

  • Chatting to a 50-year old woman on the plane, before hitching a ride with her daughter into the city. I am grateful that they treated me to lunch and coffee, while sharing some of the best restaurants and experiences in the city
  • Sitting down for two hours in beautiful Petit Champlain, listening to a street musician strum his harp while journalling
  • Taking advantage of a beautiful day to rent a bike and ride a 25km trail along the St. Lawrence River upon the recommendation of the bike shop owner
  • Watching a hilarious Mexican street performer defy gravity, balancing, climbing, and dropping from a 20ft pole.
  • Savoring fresh, amazingly sweet raspberries and blueberries from local farms, while wandering through the farmer and artisan’s market
  • Absorbing beautiful Inuit and Quebecois art at the Musee de Beaux Arts for, simply because I was in the area

As I slowly ambled my way through the old city, I found that I actually ended up seeing all of the main tourist attractions such as the churches, plains, and the old port and city.

Trust Your Feet

In any case, I have found that I can trust my feet and a sense of adventure to find myself something interesting to do to fill up my time.

I am advocating for planning less during trips when possible and exploring at a more organic pace. There’s less stress, no need to rush, and you will still be able to find the major tourist attractions while stumbling upon more of the little interactions and moments which truly make travel so enjoyable.

Building A Stream Of Information – I’m Unsubscribing From The Economist

One of the most crucial components to maintaining an edge in business / life is access to relevant, high-quality information. This information shapes our perspectives, decisions, and acts as the basis for new ideas or strategies.

So in the pursuit of this information advantage, common advice that is given is to read the news. The intent behind this is well-meaning, but the reality is that reading the news turns into you swimming through oceans of irrelevant information, overreactions, and repeats of company press releases. Occasionally, you come across an article that will change perspectives or add significant value, but skimming through news sites to find these nuggets of gold is extremely time consuming.

To me, staying informed is a situation where quality matters exponentially more than quantity. What defines quality? My litmus test is whether it unlocks a new perspective and provides applicable information to my fields of interest.

Those criteria also mean that everyone should build out a stream of information that uniquely suits their needs rather than listening to general advice.

On The Economist

I recently subscribed to The Economist on the recommendation of several friends. It does a great job of analyzing geopolitical trends, politics, and providing a global perspective. The Economist has definitely made me smarter.

But recently, I’ve asked myself how useful this information is to my own interests¬† in technology, startups, and business strategy. My conclusion is that other than a few talking points, the information that I’m absorbing through The Economist has largely been redundant.

The pieces of information that would interest me, have already come in through other new sources in my stream of information.

My largest complaint of The Economist is that it is reactionary in its coverage and analysis. They provide few robust analyses on business strategy and trends in the future.

I get it, that’s not what The Economist does, their focus is on economics and geopolitics. My interests and the magazine’s interests don’t align, so it’s time to switch off.

The New Information Stream

My subscription of choice moving forward will likely be the Harvard Business Review. Their in-depth case studies, CEO interviews, and discussion of technological trends in business are more suited to my personal interests.

To keep myself up to date on significant news items, I am a fan of using newsletters which sort out irrelevant information. The Hustle¬†is my go-to for daily business and tech news; Seeking Alpha’s Wall Street Breakfast¬†is a short, digestible, daily breakdown of news from a financial lens;¬†Abnormal Returns¬†for curated article links on personal finance, investment strategies, and news from a financial lens;¬†The Tim Ferriss Show¬†is my podcast for learning about how high-performers think and operate through in-depth one on one interviews; National Geographic¬†is my favourite magazine and it provides a holistic view of politics, culture, and nature through their passionate photographs and storytelling.

Moving forward, I will continue adjusting these information sources as my needs and interests change. So far, I am happy with the quality of information these sources provide. They keep me from being caught flat-footed in conversations while providing me with information that helps me make better decisions.

 

Consistency – Showing Up Everyday

Something that I have struggled with over time has been consistency in my posting. I find my inspiration and desire to write constant, but my ability to create the time to write those posts very difficult.

It’s easy to get caught up in excuses and put off a post for another day or week, that then turns into another month. There’s always some excuse, an event, or project, or impeding exhaustion.

Taking the advice of venture capitalist Fred Wilson, who has managed to blog consistently for years on end, I installed WordPress onto my phone.

I connected my site to my phone, which gives me the ability to write short posts like these. I am a big fan of the idea, mostly because it revolves around setting up an environment that removes friction (annoying to login and open up blog on desktop) from my desired result (more writing.)

Writing is something that I truly enjoy as an avenue to express the random thoughts that come about every day.

This is why I named this blog whirling thoughts, it’s a safe place to plop down the random ideas and thoughts that pop up from time to time for an occasional audience.

The key barrier from making this a habit / successful routine is my lack of consistency. Really need to focus on writing more stuff down and creating consistency.

Not sure where the idea came from originally (buffett?) but knowledge and habits are like compound interest. Continuous small actions, such as writing everyday, ultimately creates significant improvement and growth or what people refer to as the process.

Moving forward, I aim to improve my consistency and focus.

HackTPS – A Reflection On Innovation & Learning

Coming off HackTPS, which is a hackathon sponsored by Toronto Police Services and Ryerson’s DMZ, I wanted to take a few lines to highlight some takeaways from the event and reflect.

Business Case First

To be successful, you need to build the business case first, then worry about building something.

This reflects a lot of the ideas about the design thinking methodology that has gained so much traction. Not only should you find a problem, but you also need to think about how sustainable your model is and your ability to monetize the idea.

It’s really easy to get bogged down in a “code-code-code” mentality, especially at a hackathon like HackTPS. While it’s important to have some product to show, few judges end up asking about the technical stack or how you implemented the solution. What they end up caring about is your thought process on the problem, your business model, and assumptions that you made.

Keep It Simple

Building on the previous idea, you really don’t need to make your¬†code the most complex and advanced as possible. What matters the most is that it works. No judge has ever asked “How many hours did you stay up to finish this? How many bugs did you solve?”

We put a lot of pride on “taking the hard way” and “making something for scratch.” But hey, those “easy ways out” exist and should be used if they fit in with your solution.

As an example, the runner-up for this hackathon made an AI chatbot that would allow TPS to handle and troubleshoot many of the unnecessary 911 calls that could occur to a service.

Did they hard code that themselves? Build the ML and AI algorithms from scratch? Nah, they used Google’s DialogFlow service which had all this information plugged in and ready to go.

The result? They got 2nd place at the hackathon, spent maybe 4 hours implementing their solution, and had something functional to show the judges.

Don’t work hard. Work smart.

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