Your value prop must align to how your team works

Be more like the Mongols...fast, flexible, and ready to change shape depending on your enemy.

I was talking to a founder that was trying to raise VC funding lately and he was telling me about his business.

It was an ecommerce business and they were competing in pretty competitive segments with their products. Meaning relatively tight margins.

When the margins are tight, my experience in ecom is that you better be running a pretty tight ship. Otherwise you’re going to lose a lot of money.

And running a tight ship in the early days means running a very flexible one.

For me it is like an obvious rule. You should not hire full-time people…. rather you should use something like my ‘Beast Method’ to keep your cost structure flexible if your margins are tight.

And yet this founder had it in his head that he needed all full-time people and that it was better to lose money and raise VC funding. Which didn’t make sense to me at all.

And today I’ll put some more thoughts to this.

Know your value proposition

By this I mean you need to know how strong your value prop is. Do you add a ton of value to customers and therefore can pull out a nice fat margin?

Or are there 10+ competitors just like you and you’re competing on price and other small nuances?

Your value proposition is like your fortress walls. If it is strong you can comfortably invest in building a strong, permanent city inside those walls.

If it is not strong and you have lots of competitors then you need to be prepared to be overrun and move around. Kind of like the Mongols… they never really built large fortresses because they preferred to move around like nomads. This made them a very hard target.

I think of my approach to business as being more like the Mongols. We are aggressive and fast and have no full-time employees.

If a big competitor were to come straight for us using the same biz model, we’d probably change form and fight a guerilla war in the niches. Not some head on price battle.

Putting a city inside a fort with shitty walls is unwise

If you build a city inside a fortress with weak walls then you are an easy target to attack because you are inflexible.

For example this guy’s business with all full-time employees. If he needs to cut costs then he just needs to start firing people.

And firing people means that entire functions do not get performed, which disrupts the business. Disrupts potential growth.

As a result he needs to make sure that they have funding until they are self-sufficient. So he probably spends almost half his time fundraising. Because running out of money is so disruptive.

And since they are somewhat desperate I am pretty sure that they have to raise some of that money not on the best terms. And from investors that perhaps are not the ideal partners.

These are all seeds that are likely to grow into larger problems later on.

When I told him to run things more like me, he laughed

I told him to consider running things more like me.

Use freelancers and move all the full-timers to part-timers.

Use Clickup with the ‘everything is a task’ system where literally anything done in the company is tracked with a status and updates. So that you can seamlessly work with part-time remote workers in an asychronous way.

And implement a culture of discipline where the team is clearing their notifications daily. Which leads to rapid communication and strong coordination without politics.

Be hands-on so that you know everything that is going on and can control these freelancers.

This seemed impossible to him. He kind of laughed at the thought as he just couldn’t see himself doing it.

He much preferred wasting half his time talking to investors so that his leaky ship could keep driving forward.

This new way of waging war like the Mongols will prevail

His way of thinking is the ‘prevailing’ way of approaching business. It’s more or less what is taught at business school. It is ‘textbook’.

It is like the old Roman Empire falling apart as they hide behind their fortress walls even as newly developed catapults are punching holes through them.

My ‘Beast Method’ approach is the Mongol horde. It is like Genghis Khan fighting without fortresses, but rather on the open plain on horseback. Allowing him to strike in many different places without warning.

But stop and think for a minute. Which way makes more sense for this current time?

It is a time when companies everywhere are laying people off because their moats are being eroded by fierce competition and AI.

A time where tons of quality talent is available as freelancers at very reasonable rates.

I think my system makes a ton more sense at a time like this.

With my system I create a business that is profitable a lot earlier, is not reliant on raising investment when we are desperate, and allows us to change things very rapidly.

We are the Mongols… ready to change shape no matter what enemy comes at us.

Closing thoughts

Doing business is to me a lot like waging war. I enjoy it.

It’s a measure of your strategy and ability to execute.

And when waging war… you need to know the landscape around you. How is it changing? How strong is your value proposition to your customers?

And the way you go to battle absolutely needs to reflect this value proposition in my view. Because if you hire a big full-time team when your value prop is weak… you are leaving yourself vulnerable to attack.

I much prefer to be like the Mongols… with no fortress to defend.

I can reinvent my company as the landscape changes without any city to worry about defending.

But it takes a bit more work and a lot more discipline & organization.

So it’s your choice. But just remember that one day… you may have an enemy like me storming your gates ;)