Choose to compete against those who are less competent

If you're looking to start a business then don't volunteer to compete against the smartest/best people in the world. Compete against the 'sleepy ones'.

I was having this chat with a friend a couple of weeks back and it stuck in my head. He was interested in starting something and asked me if I had any ideas.

Now the knee jerk reaction would have been to say that he should start some AI thing because that is all the craze and tons of value will be created there in the coming decade. But I know my friend and he’s just not an AI sort of person.

He is simpler, but efficient and a very good manager.

But not the guy that I could foresee coming up with some cutting edge AI-based business model and beating the thousands of other highly smart people that are tryiing to do the same.

Don’t compete against the smartest people

So essentially what I was telling my friend is that there is no sense in choosing to compete against the smartest people if you don’t have to.

For example… if you see that your idea is being done by a current or past YC company…. probably better not to do it.

Next, I told my friend a short story from my college days that has always stuck in my head. It was my senior year of Cornell University and I needed to take a required managerial accounting class that was impossible to fit into my schedule.

I had spent my entire third year in college studying abroad and so it kind of screwed up my schedule because I had a lot of required classes left to graduate for my major. And getting them to fit into my schedule was next to impossible.

So I was speaking with a counselor and they mentioned that I could also take the class at Ithaca College.

Ithaca College was the other major campus in Ithaca and it required taking a 20-minute bus ride to and from. But I had no choice so I did it.

When I started my class at Ithaca it felt like being back in my public high school.

I made almost no effort, got at A+, and was the teacher’s favorite student. It was a far cry from the curve-based classes at Cornell where you needed to fight tooth and nail against other extremely smart people.

People like the famous Josh Wolfe, the now famous Lux Capital VC with $billions under management, who I used to have in many of my Cornell classes.

They were highly intelligent and motivated natural born hustlers. If you were gonna beat them it was gonna be a dogfight and you were gonna come out wounded.

But I fought and got Dean’s list (top 25%) every semester at Cornell… which was hard as hell and took a lot of work.

I’d learned that while possible…. competing against people like Josh is hard. Very hard.

Whereas competing against the folks at Ithaca College… not so hard. No offense.

So I told my friend “think about the most successful, but least capable people you know”

And I clarified what I meant by “capable” as I do not define this as pure intelligence. There are a lot of intelligent people out there who are either lazy or have poor communication skills.

And there are some lazy people who are very strategic and successful. So what I meant was this combination of intelligence, drive, communication, organization, etc. that made a person highly ‘capable’.

In a way you can view being very capable as being a good ‘hustler’.

At this point he started naming off names… some of the folks I knew but most of them I didn’t.

Some were in big companies and a few had their own businesses. Both are relevant in my view as you can also effectively disrupt traditional businesses with a new approach.

A good example would be how MrBeast is starting to create shockwaves in the sleepy old chocolate business with his “Feastables” brand. And giving nightmares to the $62bn Mars Confectionery conglomerate.

My friend narrowed his list to about 8 people and we were on to the next step.

Create a business that either improves upon or disrupts ‘sleepy’ businesses

By this I mean businesses that have been around for awhile and maintain their profitability despite not having much innovation and having relatively weak employees.

If you look around there are actually tons of them. But they are not sexy.

One way to think about this is to look around in your home and office at every single object and ask yourself… “How did this get here?” Because the answer to that question is often some non-sexy business.

This is also how one Twitter influencer I follow, Nick Huber, thinks about which businesses to get in. He steers completely clear of the sexy ‘tech’ stuff and rather goes for the things like storage companies, etc.

And teaches others how to do the same.

A lot of the non-sexy businesses were built by “Ithaca College” type people

When you dig into small businesses you start to run into lots of normal people.

They didn’t go to fancy colleges. Rather they just work hard and perhaps inherited a family business. Or got lucky and started in a niche that they knew really well.

Most of them don’t really try to innovate very deeply or achieve some grand vision. And this is where I think the opportunity is.

For the past year or so I watch a lot of Youtubers like Alex Hormozi, Gary Vaynerchuk, Dan Koe, Shaan Puri, Sam Parr, and Nick Huber. They are all running businesses that are worth north of $10m and in some cases north of $100m.

When you look at their portfolio its chock full of the non-sexy type of businesses. And has very few of the Silicon Valley-type sexy startups.

However interestingly enough… when you look at their backgrounds it is often of the “Cornell” variety rather then the “Ithaca College” variety.

For example Nick Huber also graduated from Cornell. Shaan Puri is from Duke. Alex Hormozi from Vanderbuilt and was a management consultant out of college.

Which tells you something important. While most of their peers were drawn into the ‘sexy’ world of investment banking, management consulting, and Silicon Valley startups… they pretty quickly made their way into the non-sexy world.

They’d found their “Ithaca College”.

You need to compete against those “Ithaca College” kids on your terms

This is how we ended the discussion with my friend and I think it evolved his thinking quite a bit.

Do you want to go head-to-head against the Josh Wolfe’s of the world? Probably not a good idea.

Rather you want to find the Ithaca College kids that went on to run daddy’s business, a business that is still pumping out profits.

And then you want to find an angle in that business that gives you a competitive advantage, which is hard for the incumbents to follow.

Plus you ideally want to be passionable about the niche so that you can create content and develop an audience. Which also gives you feedback and test customers.

Once you filter for all of these things… you’re actually looking at a pretty narrow array of ideas. And that, my friend, is where I believe you should start.

Now I just need to work on taking my own advice. Hahahahaha