And that's where the idea of simple modern as it is today was born, there was tons of competition. But even within that competition, there was room for differentiation and creating something of value.
From we're for good studios and simple modern Welcome to scaling for good with Mike Beckham unlimited podcast series, giving you the playbook to start, build, scale and give generously. In today's episode, we're diving into innovation and differentiation. The secret to success is finding the whitespace do what's already working, just do it differently and better hear how Mike and his co founders landed on drinkware as their product to sell.
Welcome back, everyone. This episode we're going to be talking about how do you create something of value? I teach entrepreneurship at the University of Oklahoma been a part of founding and starting several startups. And I've learned a lot along the way. And we want to talk about practically, what does that look like? What are some of the traps and pitfalls today? In 2015, two guys that I had worked with for several years approached me and said, we've loved working with you, would you be open to starting a company with us. And we did something that seemed insane to most of our friends and family, we decided to start a drinkware company. So this is, like I said, 2015 2016, there were already a lot of very popular drinkware companies, it felt like maybe the most saturated category in the entire world. There were companies that had literally been around for more than 100 years, for like Stanley and thermos, there were new companies that were great brands like Hydroflask, and Yeti was just blowing up. And yet, we got really excited about creating a drinkware company. And one of the things that I do is a part of being the entrepreneur in residence at who you is, I will guest lecturer in some classes, and I was guest lecturing in a class. And they would have an exercise they would do before the lecture where students would break down a prospective like investment like a company, and then they would kind of talk about it, you know, what are the pros, what are the cons and make a recommendation of would this be a good thing to invest in? So the professor and I thought it would be funny to give them simple modern without telling them my affiliation with simple modern, and the first 10 minutes of class, we're basically the students just ripping the idea to shreds. And I did my best to like not react, and I got up and I taught the entire class. And then at the very end, I mentioned that it was my company and some things that they might not have known. And they were like, wait, wait, we want to we want to change our mind, we think we might want to invest. But it was really indicative of just the tone that we got from a lot of people because it did seem crazy, especially when you take the kind of traditional view towards starting something creating something that has value, which is you come up with a totally unique idea that nobody's ever thought of before. And that that's kind of your advantage is that you're the first mover and you're going to you're going to create something in a new space. Well, today, our company does more than 100 million in annual revenue. And want to talk about why that is and the myth that people believe about creating things that have value. So here's the trap. The trap is thinking that the way that you create something of value is you do something that no one else has ever done before. One of the things that I tell students is that if you really truly start a business that no one else has done before, or nonprofit, or anything else that no one else has done before, then one of two things has to be true either. Number one, you have stumbled across an idea that no one else has had the intuition and wherewithal to start across all countries and people in the world. The second possibility is that many other people have had this idea and there is some kind of a fatal flaw that you don't know about, which is the reason why you don't see a bunch of these types of companies or organizations in the world. And so the trap is thinking that all great ideas are totally unique and haven't been tried before. The reality is almost 99% of new things that are created that have value are really derivative of something that already existed, they are taking something that really clearly there's already a need. And there's already solutions and they're creating a better solution, or a better way to address that need. And that was the approach that we were taking towards creating simple modern, we are constantly surrounded by different things vying for our attention vying for our money, and you're not going to be able to create an organization or a product that's immune to that. The sooner you embrace that, actually, the quicker you can start the process of really creating something valuable because you stop asking the question of Is This totally unique or can I avoid competition? But more is this something that people want? And what it turns out the most important question you can ask And answer is, can I create something that's better or differentiated from the solutions that already exist. And if you think about all of the most successful products that we use today, the iPhone, Apple was not the first person to invent a cell phone, right. But they made it better. The introduced things like the App Store, and their introduction of cameras. So there was this innovation that made an existing need better. Netflix didn't invent movies, or stories, but they invented a better way for people to access it through streaming, even the most innovative companies in the world aren't coming up with totally new products, totally new solutions. But they're coming up with differentiated and better solutions that address different people and different markets than existed before. And that's really what we tried to do when we created simple modern, what we realized was, in this see this, like red ocean of competitiveness, that there was still these pockets of places where we could do better. One example that really stood out to us was none of the companies that existed, were really focusing on E commerce and the potential to sell on Amazon, one of the most interesting things you can do is you can look at companies that exist in a particular space. And you can say, well, what are all their strengths? And what are their strategies. And when you focus on that, it can be intimidating, for sure. Because you're you're thinking about what are all the things that make this company great. But if you turn that on its head and you look at it from the opposite angle, what you'll start to see is all the things that they aren't good at, and that they don't want to do because of their strategy. And that that's where the whitespace lives. So if you look at like the insulated, drinkware market, for example, you had all these companies that did exceptionally well selling into specialty retail places like REI, and they had grown and experienced great profits as a result. But because of that they weren't focused on selling on the Amazon marketplace and growing that business as much as they were focused on their physical retail business. Another example that we noticed, Yeti was doing exceptionally well selling stainless steel, 30 ounce and 20 ounce tumblers, they hadn't even introduced any colors. And so really, they were focused on having this great product and insulated drinkware is a great product, when people see it for the first time. They're like this is magic, like it still has is like a day later. But they hadn't focused on an aspect of that product that people would ultimately want. And it's one that we realized is that we're not really just selling something functional. We're also selling an accessory that has like this kind of fashion or ornamentation perspective, kind of like a watch or like shoes or like a purse, that yeah, there's this functional piece. But there's also like the how it looks piece. And so the combination of seeing, hey, there's white space when it comes to this channel, Amazon, and just really digital in general. And then there's this whitespace around making them distinctive through their ornamentations. And that's where the idea of simple modern as it is today was born, there was tons of competition. But even within that competition, there was room for differentiation and creating something of value. I wrote about this once on Twitter. And one of the comments was, I'm skeptical that if these are really the answers that you just be sharing them in public. And my response was pretty straightforward. That the point is that there's always room in any industry for another well run company that no industry is ever to fool to take another really well run company and that that's the trick, if there is one, that there's always an opportunity to differentiate yourself and to serve customers that are underserved right now. So how can we apply this? Well, there's three simple things that you can look for when trying to start something new. The first is, have you identified something where there's obvious robust demand, you see people buying it today? You see people asking for it, and there's people selling it, there's competition? Second, what are the strategies that the current companies or firms or organizations are employing? What are they good at? What are they not good at? What are the things that their strategies and their success make them unwilling or unable to do? Third, what are the skills that you bring to the table? This can be the experiences this could have have to do with the fact that sometimes the skill is being smaller and more agile than your competitors. But what are the the internal capabilities and skills that you have in creating a new organization that maps well to the things that competitors can't or won't do? Those are the places those are the white spaces where you're going to see the best opportunity. Another example is differentiation through business model and or like revenue model. Great example, this from the nonprofit world that we'll hear from today is an organization called water for that's addressing the clean water crisis in Africa. And they have a very unique approach where they build water wells, and they build stores and they actually sell water clean drinking water. Africa for very, very low prices. But that selling of the water creates a revenue stream that actually ensures that the water continues to be available that the pump is maintained and that the people take ownership of the pump. And in a world where there's tons and tons of clean drinking water organizations, water for has been able to establish a real voice of leadership, and really make a difference through a different approach. I think anybody who looked at that space 10 years ago would have said, it's very saturated, we don't need another clean drinking water company. But the reality was, the world didn't need another clean drinking water company. It just needed one that thought about things differently and took a different approach. So let's take this and turn it into an application three simple questions you can ask yourself to put this into action first. Do I have an idea where there's proven robust demand? What are the opportunities? I'm looking at that it's clear that people want and the customer is already there a second? Do I have a clearer understanding of the strong competitors? What makes them good at what they do? Do I understand their strengths to understand their weaknesses? Do I understand the things that they want to do and the things that they don't want to do? Third, do I have a clearer understanding of my abilities and the unique things that my organization brings to the table, take stock of the things that you do well, that unique abilities, unique assets that you have? Now compare those to your previous list? Do those map well to the industry that you're trying to get into the organization you're trying to start? Are you able to really effectively address the whitespace with the unique skills and giftings that you have?
Hey, Fred's taking a quick break to share a glimpse of generosity on the frontlines at some of simple moderns, and amazing nonprofit partners. Simple modern is on a mission to give generously. They partner with nonprofit organizations all over the world to help make a positive impact in five core areas, water supply, human trafficking, education, marginalized communities and homelessness. Today, we'd like to introduce you to one of their nonprofit partners, water for
I am Matt and I'm water for CEO and waterfall we're out to in the global water crisis by creating local water businesses that take care of communities needs every day. And they do it through a business and a business that actually generates profit for good. And that's why we love our partnership with simple modern, another company that's modeling that profit can create good for employees and good for the world. We'd love for you to join us in this fight at waterfall by joining our monthly giving campaign called the core where your money doesn't just make a one time impact, it makes an everyday impact both for the people that benefit from the water and for the people that benefit from the jobs you're creating. If you want to learn more, go to water for.org. And know that $27 can provide water to a person for life and it's providing a job to a person providing that water for life. Please join us.
I'm Becky and Deckard here with John McCoy with We Are For Good. And we've had such a robust conversation around innovation and differentiation and mindsets has become a really big hallmark of how you can innovate and differentiate. And so Mike, I'd like to just get your take on the advice you give to an entrepreneur, maybe a leader who's listening, who's experiencing sort of that self doubt, or intimidation by competition, what are some ways that you can help them break through that?
Yeah, absolutely. Well, anytime you're trying to start something, it's intimidating. It's intimidating to look at what other people have built. And to think like, How in the world can I can I compete with that. And so I actually think that's where anything other than a cursory focus on competition can can be unhelpful, because a lot of what dictates your success is actually not what your competition does. It's, it's what you choose to do. And that's probably a misconception is, you know that my success has a large bearing of what my competition does and how they execute. Usually, it's a lot more about what you do and how you execute. So I would say you have to focus on the things you can control. And you have to kind of let go of the things you can't you can't control what your competition is going to do. But what you can do is you can focus on learning as much as you can about your industry, really understanding your customer and what they want. One of the things that we got really good at is understanding in the different channels that we wanted to sell in what our customers are, we have direct to consumer customers that buy directly from us. But we also have these huge customers like Amazon and Walmart and Target. You have to understand them and what they want. And as we really committed ourselves to learning about our customers and to just becoming excellent at making drinkware instead of focusing on our competition, that's actually I think, how we kind of found our path and also you know, where you find your security from, ultimately, if there's any security you can have from starting something. It's that you've created something that's valuable enough. That's X solid enough that the world needs it to exist, right. And that's what you have to pour all the passion, all the focus into is really creating something worthwhile and not focusing on can I be a little bit better than so and so but instead, what's the best thing that I can build? When you do that there's always demand. You know, that's kind of the point of the whole episode. The point is that there's always going to be customers that are underserved, there's always going to be a better way to make products. There's very few products that we use today that are exactly the same as they were 50 years ago, or 100 years ago, like products are constantly getting better. And that's a result of People with a growth mindset that are wanting to learn that are wanting to be innovative and find ways to improve them. So I think when you're wrestling with self doubt, the easiest way to counteract that is to just instead of kind of fixating on on that, and the nervousness and the uncertainty that comes with that you focus on things you can't control, and what you can control is your own learning, you can control experimenting, and you just redirect it.
Yeah. Well, I mean, I love entrepreneurship, I love looking at a blank sheet of paper and imagining what could be. And I think you said something earlier today, that really struck me in jest, that you shouldn't run from competition, like, that's just a good sign that there's traction there, that there's people that are interested, but moving into a space that, you know, a competitor wouldn't because of strategy, or maybe the skills that they have, or maybe their perspective. And so to me, that just opens up the world, you know, what kind of decisions have you made strategically, as you've looked at competitors? And kind of walk us through that? How that plays out?
Yeah, absolutely. Well, I think some of it is, we always do better when we're pushed, right? There's this thing about in sports playing up or down to your level of competition, it's just natural, it's psychological, that when we are pushed in when we're competing with others, that it brings out the best in us. And so I think that's just a reality. Like, yeah, it's, it's scary, because you might, you might not come out on top. But it's also like, if you want to unlock your best, whatever that is, you're going to have to kind of compete with other people. But the reality is, especially whether we're talking the for profit world, the nonprofit world, being successful does require focus, it requires having a particular strategy and sticking to that and saying no to a bunch of things in order to say yes to the right things. And if you can get a really solid grasp on your competitors, and their strategy and what they are saying yes to, then you also can make a pretty good list of what they're saying no to. And then you can look at that list and say, Okay, well, these are things that are underserved under focused on by others. So sometimes even, there's whitespace, that's being opened up as you just based on the movement of culture or preferences. And the incumbents very rarely are situated to take advantage of that, because they have a playbook that's built around the way that the market has been. So usually, you either get a disruption in technology or preference. And this tends to favor new entrants into the category, or you get just an underserved community, because they're not as big as the majority and the kind of incumbents are focusing on the majority.
I love that so much. And it really just starts to make you think differently about how you attack problems and issues. And I and I think about creating just a culture of innovation, which I think you all have done beautifully. At simple modern, and you're iterating all the time, you're you're serving, you're asking questions, your product testing, I wonder specifically even for the nonprofit, is there a time you're ever you should ever not be experimenting?
Yeah, I think I think that the amount that you're experimenting, is the amount that you're learning. And I think that when you stop learning, it's really just kind of a countdown timer until you're gonna get disrupted, even if you're successful. And so creating a culture and an environment where learning is really valued. And thus, experimenting is really valued, is critical. And it's I think it's more difficult when you are successful to do that. So I think that what you can develop the muscle of as you develop the muscle of how to experiment inexpensively. What is the way that I can learn and I can kind of test things without expending a ton of time without expending a ton of money. And if you develop that skill, it just accelerates how much you can learn and regardless of your context is possible.
You know, we have a real technical term for that. We call it trying stuff you love trying to set Yeah, I think it's revolutionary. But you know, I was talking today to some of the civil modern team and I've seen that y'all really embody this idea of community wrapping around your product just to figure out where do we go next? What do people resonate with? How has that helped inform your decision of how to differentiate which products to chase?
Well, I think you constantly want to be talking to your cause. customers. I mean, I don't know if I've mentioned this in this series before, but like the worst decisions we've made as a company, were when we became more disconnected with what the customer actually wanted. And we developed our own internal ideas of what was best, without really verifying that with the people that we're here to serve him functionally, whether you're a nonprofit, or you're a for profit company, you exist to serve people, and to help answer problems in their life. It's easy to get confused on that, you know, Steve Jobs was a phenomenal businessman. But one of the concepts that he came up with, which I think was mostly profoundly unhelpful to entrepreneurs is this idea that people don't know what they want, you just got to show it to them. And what I think the way that most aspiring entrepreneurs or leaders hear that is, I need to not talk to people, I need to have the vision, and then they're just going to kind of confirm it. And that's the opposite of the mindset that you need to have. The reality is sometimes people don't know exactly what they what the solution is that they want, but they know what the problems that they face are. And they have ideas about what they think the solution could look like. And if you're not talking to your people, then you become very vulnerable to creating stuff that they don't want or creating solutions that don't really meet their needs. And if you view the point of the company is the company exists, the nonprofit exists to serve these people. And we cannot do that without learning about them and staying kind of connected with their feedback, then you're setting yourself up for success.
And I also think that that feedback is I'm hitching my wagon to your comments, specifically a nonprofit, it can't just be one dimensional with your donor, you've got to be asking those questions to your beneficiaries, you need to be asking your volunteers, you need to be asking your staff and it's in it's almost like an ongoing social experiment that will inform. And I will tell you, I worked in public relations for a long time. And every time I thought I knew what the customer wanted, it was 99% a humbling experience, because I never knew what the customer actually wanted. Until we asked so
always room to grow. And, and you know, I think you're making a great point, Becky, when I worked in the nonprofit world, I raised my salary. And what I found was the most effective way to communicate with potential donors was actually not for me to do much talking at all, I would just share stories written by the beneficiaries of their giving, like students that were involved in this ministry. And I found that that was by far the most effective way to talk to donors was for me to kind of get out of the way and let people who were benefiting from their giving to do the talking. And, you know, I think that's a consistent theme. For sure. Now, as I sit more on the giving side of things that the more that I understand that it's clearly creating benefit in people's lives, that's much more motivating to give becomes a lot less motivating to give when I feel like I'm giving to an organization that I'm you know, then when I'm giving to actual, like impact in people's lives.
Well, I think we've had just an outstanding conversation here. I know that it's changed the way that we're even thinking about our business. I hope it's been helpful for all of you listening, but we've got to distill this all down to a mic drop moment.
If I had to summarize today I would say that in any industry, there is room for a really well run executed company. If you're wanting to start anything you find robust demand, you don't fear competition, and you focus on what do customers want, where customers underserved. Where's the whitespace and you focus on learning and building something excellent. If you do that, there's always room for more.
Thanks for tuning in to scaling for good, brought to you by simple modern and We Are For Good studios. If you like what you've heard, leave a review, share with your colleagues or tweet Mike at Mike Beckham SM, we're your host Becky Endicott and John McCloy in this series was edited and produced by Julie confer and a special thanks to Chris Boyle and Erica Randall from the simple modern team who helped bring the series to life.
