In Zero to One Peter Thiel theorizes that a new innovation must be at least ten times better than the currently existing solution in an important dimension. This is a high bar, but it often achieved by focusing on an ignored or under exploited niche.
The examples of Uber, and Amazon show how focusing relentlessly on customers can also achieve this goal, especially when incumbents are attached to an old way of doing things that is unpleasant for customers. Good customer service can be extremely disruptive.
When facing regulatory challenges, Uber’s CEO Travis Kalanick went against conventional wisdom of his lobbyists. Rather than seeking to compromise with regulators, he focused on delivering a better product. In The Upstarts the author discusses what is known as “Travis’ law:
“Our product is so superior to the status quo that if we give people the opportunity to see it or try it, in any place in the world where government has to be at least somewhat responsive to the people, they will demand it and defend its right to exist.”
Mobilizing customers is Uber’s public affairs strategy.
This extreme focus on customers was a key factor in Amazon’s rise as well. Here is Jeff Bezos in the early days of Amazon(quoted from The Everything Store):
“You should wake up worried, terrified every morning. But don’t be worried about our competitors because they’re never going to send us any money anyway. Lets worried about our customers and stay heads down, focused.”
Bezos reiterated this sentiment in the most recent annual letter:
There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.
Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.
I can’t help but wonder if financial services will end up facing a similar level of disruption from Robo Advisers. Most of the financial services industry is clearly conflicted and not focused on actually improving client outcomes. That leaves a massive space for new entrants.