Jeff Bezos probably doesn’t think selling trinkets and random products on Amazon is the coolest business idea in the world, but it’s certainly what the public wants now.
Amazon fulfills the current demand in the market, with an eye towards the future and lots of experimentation going on behind the scenes.
One mistake I’ve made in my SEO consulting services is trying to overplan for the future, trying to devise complicated, genius spreadsheets that would help make decisions with all the data available, and remove the reliance on me making a mental analysis every month. While this is useful to a degree, there’s a level of overplanning and overoptimization that actually doesn’t help me in the present moment.
If I try to plan for something 6-12 months down the road when I have 5x the current amount of clients, but this month my profit margin is only 10% with my current handful of clients, clearly I’m overoptimizing. Instead, I should be adding a new handful of clients, solving those problems in real time as they come up, and gradually planning for 3 months down the line, not 12 months down the line.
In addition, I may want to be offering InnovativeServiceXYZ, but if that service is not what the current market demands, then there’s a big gap there. Large agencies and consulting companies that have 100-1,000 clients and an oversubscribed pipeline are in a better position to offer a super innovative service to the 1% of their clientbase that needs it, because they can take a loss for months or a year and write it down as R&D if it doesn’t work out.
I, on the other hand, running a small consulting outfit with just a few people don’t have that luxury.
On the flipside, some may argue that if you’re solo or a small consultancy, you should fill the gaps and edge cases, offering a truly innovative service that the big boys won’t touch.
This can be true as well, they both can be true, depending on how well I can find the right buyers for that innovative service, and if I can do so within the next 90 days or not.
Interesting problems, but at the end of the day, the meta takeaway here is that even some of the most successful companies have to fulfill the current demand in the market, and continue to innovate on new ideas, but shouldn’t bet the whole farm.
A new concept that I heard of recently, made famous in Antifragile is the the Barbell Strategy. In investing, it means having 90% of money invested in safe bonds and treasury bills, while 10% is extremely speculative on Bitcoing, VC, startups, etc.
This same theory can apply to your current products and services. As long as it’s profitable, you should fulfill the current demand to generate revenue, while reserving the other 10-20% on the more innovative ideas.
Google is famous for having it’s moonshot projects, where it’s experimenting with the next big thing such with Wing, Loon, and Tidal.
But none of those are paying the bills. Instead, their 20+ year old idea – Google Search – brings in the vast majority of revenue. While the algorithms behind it are amazing, the product itself is now so commonplace that it’s just a boring part of life.
SpaceX makes a good amount of money doing the “boring” thing of taking satellites into orbit for other companies. Although this is super cool compared to most businesses, the concept of satellites has been around for decades, and they’re essentially just being a space bus for taking these into orbit, and getting paid the transportation fee. What this has enabled for them, however, is the corporate experience and muscle to launch their own Starlink internet satellites.
Boring pays the bills, and innovation today may be the new boring revenue-generating machine in the future.