Beyond GDP

Society as such has reached a point of transition. The Gross Domestic Product (GDP) was a useful metric last century but now it causes more harm than good. GDP is harming our society and planet because as a metric it is unable to capture the different shades of the contemporary society. Like it or not, we belong to a society, and therefore it is our responsibility to push politicians to upgrade the metrics they use.

The shortcomings of GDP (Gross Domestic Product) are known and documented. The GDP only computed the costs of the market activities leaving out less tangible elements such as the environment. Moreover, GDP it is not a reflexion of an individual person, but it is instead the aggregated value; thus preventing the assessment of individual’s welfare. The Gross Domestic Product is not able to capture the non-economical transactions (e.g. volunteering or substance agriculture) and in the non-market related activities there are the resources extracted from the nature. For example, there is no measure of the social and environmental impact of an open-pit mine including the depletion of natural resources and biodiversity loss.

There are some initiatives from the european union to take into account non-monetary metrics: Better Life Index, Regional Well-Being Index and Social Progress Index. To overcome this problems in 1972 the term Gross National Happiness (GNH) was coined. And during 2008, Bhutan set the GNH as a institutional goal in their constitution; thus leading the movement to move beyond the old-fashioned GDP.

The Gross National Happiness metric is composed by 9 domains: psychological wellbeing, Health, education, time use, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards (Fig 1). All the domains are weighted the same. However, there are 33 variables which have different relevance on the final outcome. As a general rule subjective indicators have been assigned lower weights than the objective (factual) ones.

The nine domains of GNH
The nine domains of GNH, Source: Provisional findings of 2015 GNH Survey, p. 11

Each of the domines consist on several questions to asses the interviewee on the specific domain. For example, regarding the education the interviewers ask about literacy, schooling, and knowledge about different areas. The living standards are measured through the indicators household income, assets, and housing. Whereas the psychological well-being is measured based on the life satisfaction, positive emotions, negative emotions, and spirituality.

All of these sounds tremendously appealing but Bhutan may be hardly comparable to the “west”. There the literacy is low and the GDP per capita is far beyond any European country. So, in conclusion, this is a metric that needs to be studied. It is also unsure whether happiness will make the world work but what it’s clear is that some more empathy and happiness in our society is not going to do any harm.

Easy install of OpenVPN in Ubuntu

Sometimes it is useful to tunnel your connections through a server. Because it is located in a different country or simply to add an extra layer of security. What it is not always easy is to create the infrastructure. But that is solved now.

So to create the credentials we simply need to run this line
wget https://git.io/fj3wZ --no-check-certificate -O openvpn-install.sh; chmod +x openvpn-install.sh; sudo ./openvpn-install.sh

The previous line downloads a bash script and then executes it to create the necessary files.

Happy tunneling! 🙂

Defining the ideal customer for our startup

 

Any company bases their success on their customers; therefore, it is highly important to define the customers right. There is never too much emphasis in defining the customers correctly. The foundation of any Company, and specially startups, is about identifying and meeting the consumer needs. The better we do this the greater the satisfaction we are going to produce to our customers and the higher chances of future success we are going to have. During this exercise you should picture a very specific person in your head and not a range of people. You want to say my customer is a 43 years old woman living in a house and owning 2 cats.

Defining well our customer will simplify our future decisions. When we know whom are we selling to, choosing the right path is easy. We will know how our customers feel about any decision we make. We will know how to do advertisement. Does she watch TV? Does she go to certain places or have specific hobbies? A good definition will improve the word of mouth for our company. If they like what they bought they will share it with other friends whom will have higher chances of buying it. In the worst-case scenario, when the buyers reach for the customer service you will know how to approach the problems and solve them in the best effective way. Having seen the importance of a good customer definition let’s start!

1- Where do they hang out?

That is a valid question that not only refers to the physical world but also in the cyberspace. The more specific the better. You can’t say they are on Facebook because, let’s face it, everyone is. What you should consider is which pages do they like; which groups do they frequent? So, following the example, she is in the Vienna wine lovers Facebook group. Also, she goes to the wine bar at the Gutenberg street where they have a selection of swiss wines. This will help you to know where to advertise: certain Facebook groups, forums, but physical locations such as stores but other public places.

2- Where do they get the information from?

Every time she has a question where does she go to get the information? If you were Coca-Cola you could flood any possible channel but since you’re not you should be strategic about it. Maybe she gets a monthly magazine? She asks her friends? Googles it? Asks in Twitter? Goes through Quora? And How does she do it? On the cellphone? in person? computer? laptop? Which cellphone does she use? So, in our case she searches in Wikipedia using her iPhone.

3- What are their challenges and frustrations?

Everything can be summed up to empathy. Your aim is to be walking in your customer’s shoes to understand their challenges and frustrations. If you do it properly you will be able to identify the different pain pints and problems customers are facing. In the illustrative example she, let’s name her Sara, wants to try different exotic but good wines but it’s hard because Europe is full of delicious wines. Also, summer is approaching so she wishes she had 3kg less to be on perfect shape for the beach. The challenges and frustrations should impact several key points.

  • The service you offer should provide enough value so that the customer is willing to pay for it instead of doing it by themselves. The same for products, they must solve a challenge or a frustration good enough so it is worth buying.
  • Challenges and frustrations have strong emotions attached to it. Empathizing with your client and appealing to the feelings, connecting through the emotions, instead of using the rational will create a stronger connection.
  • When potential customers see existing customers that solved the same proved they have using your product, potential new customers will be more likely to buy your product.

4- What are their goals and priorities right now?

The place where your client goals and your product overlap is the area you want to maximize. It is known as product/market fit. It is defined as the degree which the product satisfies a market. However, now the concept has evolved and it is tested through the minimum viable product.

5- What brands do they like?

Each brand has their own personality, produce different emotions, and attract different types of people. Make a list of the brands your ideal customer likes, in general but also within your niche. This will help you to clarify the shape of your brand and find inspiration on how to better connect with your potential audience but also spark ideas of collaborations. For example, which partnerships make sense to pursue.

6- What is their preferred form of communication?

Finding the way your audience and specially your customers communicate is vital. Do they tweet? Text? Call? Send emails? Different people have distinct communication styles. If you want to address yourself to a teenage audience maybe snapchat would be your best choice because young people are using Facebook less and less frequently. However, if your age target is much older maybe calls would work best.

7- What phrases and exact languages do they use?

Have you ever read something from a brand and thought that they were fake? This is the problem when you don’t use the specific jargon from your audience. Listen your clients’ problems, needs, and desires and write it down. When researching you are going to hear certain words and sentences repeated over and over. These words or sentences are the jargon from your niche. You should use them because they will tell your customer weather you’re an insider or an outsider. If you don’t speak “the same language” you will be building barriers around yourself, people won’t see you on the same level and will be reticent. Whereas, if you speak their jargon things will be much easier. You’ll get their sense of humor and point of view easily. It will provide a feeling of belonging and connection that will increase the loyalty towards your brand.

8- What is their budget?

Pricing is always tricky. Money is a complicated issue that even in day to day situations is a taboo. If you sell a product to cheap or too expensive no one will buy it. Think about it, would you buy a house that costs 100 euros? It is surely a scam, because it makes no sense. Would you buy a 100 euros cup of coffee? What have they thought that money grows on trees? The economists say that the product should cost the maximum amount possible that your customer is willing and able to pay. But the whole pricing strategy is topic for another post.

9- What does a day in their life look like?

Imagining your customers’ regular day adds a personal touch to your communication. Everything is about empathy, if you can visualize what an ideal day of their lives is, then you can act on it in different ways. It is practical because you know when to send an email for example. When are they more likely to respond to your messages? When are they most attentive?

10- What makes them happy?

That is one of the most important questions every person should know the answer to in life. Business is more than a simple transaction. People interact with people because they become happy, so the same with brands. People would prefer brands that makes them happy without any second thoughts. People like pleasant surprises, provide unexpected and make the customers smile. Real personalization is very valuable to the customers. A handwritten note, a personalized birthday congratulations, etc. Laughter will create a deeper bond which will in turn create a long-term loyal fans. It is about improving the “gut-feeling” when people hear about your product/company.

After completing all of these questions, you should know who is your ideal customer. Now that you know it is good to summarize it. For example, look at the following paragraph using our example.

“Sara loves spending time learning about Vienna wine lovers Facebook group. It’s a passion of hers. Her biggest frustration is that she cannot find exotic interesting wines easily. When she’s in research mode, the first place she goes to her wineloversforum.com on her iPad. Her long-term dream is to start a cellar with lovely unconventional wines where she would spend time with wine lovers during weekends”

But that was not all! The ones who have an existing audience have a treasure. You can use different sources. On your website you should already have google analytics. That is a tool that compiles different types of information about the users, and their behaviors while surfing your website. Apart from that it offers you some basic demographics. It’s up to you how much information you want to mine from there. If you have been using social media your business can also benefit from that. You can mine the different channels you’ve been using to extract information. But always keep in mind that each medium may be biased towards specific types of population, each social network has a target group of people. If you don’t have any users… check your competitors 😉

What is NOT a competitive advantage

On my last post I wrote about the real competitive advantages that your company may have. There are, however, other ideas that sound like competitive advantages but they are not. Sometimes we get obsessed into being different but being different does not make us special. We can take steps forward into the right direction but those steps may not provide a real competitive advantage but a temporal one. Implementing a new feature is a temporal advantage. It’s cool. You worked for it. No one else has it. But it is a matter of time that the other players in the market copy it and then, bluff, your advantage is gone. Users only care about the moment, if you were the first cool, but now there are another 20 more companies offering the same feature. Also, by having one thousand more features than the competition may not add any sort of advantage. Most users stick to the basic 80% of functionality; therefore, those extra features make zero difference to them. They don’t add value, and if something subtracts desirability. It makes the tool more complicated to navigate and use. To avoid your feature to be copied you can go through the legal side and patent it. Patents are tough business that big corporations use to stab each other. Except for few cases, patents can be circumvolved.

The company can claim that they are different. They have “soft skills” that gives them an edge. Better SEO and social media. This is like when it comes to driving. Every driver thinks that he or she is above average in driving skills, that is however statistically untrue. Not everyone can excel at the same and still be a differentiator. Also, from another perspective, who tells you that Google is not going to change the algorithm and put you out of business. Or that Facebook will stop showing your page in people’s feeds?

You can claim that the team is the company’s asset. That you’re passionate about what you’re doing. Well that like saying that your children will be rich because you loved them so much. That’s nice but that’s not the point. If by passionate you mean hard worker, that isn’t helping either. 37signals are working 30h per week. So highly productive teams with a clear goal will outcompete you. You should work smart not hard. And don’t compromise your health for money. And please don’t tell me about your PhD or MBA degree because what it matters are your skills not the amount of paper hanging on the walls. A degree per se is not telling much about the person.

In conclusion, you need to prove yourself in the arena. Show the skills you have, be productive and work on the right milestones. Don’t get distracted by side quests that add little to no value to your business. That’s the path to success.

 

How to make a business that it is uncopyable

Every time when we get a business idea or we start a company we cannot avoid but think that someone is going to steal our idea and f*ck us over. I think that is a very natural thought. We feel jealous of our idea, we had it, we think it is very cool. But sooner or later that is going to happen, someone is going to copy us. There is free market and if the idea is actually good someone is going to try to replicate it. Some other company can copy your idea. Maybe someone is going to create an open source version product. Your first employee will decide that the idea is cool enough that he deserves a try by himself. But no worries, don’t freak out. It is likely that you’re not the first one that had that idea, you are not going to find an empty niche waiting for you. The world is full of smart driven people willing to build things. So, in the end everything that can be copied, will be copied. The only things that differentiate you from the rest are those things that cannot be bought nor replicated.

For example, insider information. Insider information is the knowledge of non-public information. It can also be considered insider trading, but as a startup, this may not be that easy to achieve. However, if you are a leading expert -knowing all the ins and outs, including the pain points- you can take advantage of it. It is not enough to know the problems at a surface level; you should know them in detail and have the skills to address them. In this case it will be hard for the competitors to find a similar skillset as you have (everything in one person) or even to find a team that can see the big picture as you can. Probably when they assemble the team you would have upgraded yourself to the second version. Sometimes it is necessary to team up with other people. Not everyone knows about everything nor have the same character. Awesome teams have varied skillset but a common vision. In any case they have the insider knowledge and expertise to increase the chances of success.

Single-minded, single-focus. Or as the proverb puts it: Jack of all trades, master of none. It is very difficult to fight with the same intensity on various open fronts. With multiple goals and paths one is forced to allocate resources dividing the attention into multiple directions. Sometimes you’re obliged to choose among tradeoffs trying to keep things balanced but with a single focus you already know which path is the optimal. You only need to be good at one thing. Apple for example put the design on top of everything, and Google their search engine. Those are the features that differentiate them among everything else, those are the things that got the eyeballs on them. Your single focus should not be easy to achieve either, if it is trivial it is not worth the time.

Something that is not easy to achieve but highly rewarding is authority. Authority is not something that you can buy, it is something that you build over time with constancy and lots of effort. You don’t sit one afternoon and build it. It requires a constant effort to let others know you and consistently show your expertise in the field. This can come in form of celebrity endorsement as well. Other well-known celebrities in your field may acknowledge that you’re doing a great job. If they do, your score is going to increase substantially.

There is, however, one asset tough to replicate. Existing customers. It is troublesome to gain new customers. People don’t like change. They stick to what they have, seen, and experienced. They like routine. Changes cost us in different ways. There is the learning curve on how to use the product, on how to interact with the new provider, on learning about the new representatives and their characters, etc. No one likes change. So, in most cases companies don’t get killed by competition but die by suicide. Current customers can help you to take the leap and jump to the next level. Don’t leave them aside. Customers are your momentum, don’t ditch them.

 

ROC curves vs Precision and recall curves

ROC curves are widely used but not always descriptive. The ROC curve is a plot of the true positive rate (TPR) against the false positive rate (FPR). It defines how many true positives are vs how many false positives. The higher the area below the curve the better it is, this area can be defined as a number. Then with the The precision-recall curve we get the tradeoff between precision and recall. Again, the bigger the area below the curve the better.

Due to the properties of the ROC curve and the precision-recall curve we can get few conclusions.Precision depends on how rare is the positive class. So the ROC curve is less informative than the precision–recall curve for unbalanced data sets.

We might have a fancy watch, but that doesn’t mean we’re good at telling time.

Everyone is so obsessed with tools that we forget to reflect. Cutting edge tools won’t make you better at your craft. If you’re already good at it will improve but tools by themselves won’t make you a professional. A professional photographer carries around many different lenses and gadgets to carry on with their work. However, if you don’t know about photography buying the same set of items as the professionals won’t make you a professional by chance.

You need to develop the skill and keep upgrading your tools so they match your skill level. You can’t screw a nail into the wall. Skill will tell you to hammer it. It is easy to start a new hobby or work project and desire to use the cutting-edge high-performance tool but maybe it would be better to start small and keep upgrading your tools along with your skills.

A degree is not telling anything about a person

A degree is used for HR departments to asses if a person is qualified for a position or not.
A degree is a showcase for a reputation that no one knows about.
A degree tells that you were able to survive X amount of years in the university.

A degree does not say if you actually learned anything.
A degree does not say if you’re an assh*le or a nice person.
A degree does not say if you will aim for perfection at work.

Maybe we go to school because we’ve been doing that for many years and the easy choice is keep doing the same.
Maybe the whole point of pursuing a degree is being with like minded people.

Yet we like spending tremendous amounts of time at the university.

Improve your strategic thinking

Don’t be reactive, be strategic about your life. But like everything in life you’re not born natural, you need work to develop the skill. Stop chasing leaves, you may work hard and be busy, it may be your passion but it does not mean that you’re productive. Ultimately you would have failed at the game of life. Without strategic mind any breeze may take remove you out of your course. You don’t have to read every single book about warfare but The art of war By Sun Tzu may be a good start.

Avoid tactical hell. Avoid being reactive to other people impulses, demands, and needs that originated from emotion rather than logic. Otherwise you will find yourself in an endless succession of battles. With objectivity you gain detachment from the battlefield and gain global vision, you get to see the bigger picture.

Plan all the way to the end. Envision the end result and reverse engineer the way to the desired finish line. You need to fully visualize the objective before you start with the action.

Think long term. People and companies are myopic about the future. They are forced to give results quarterly hurting in many cases the long term perspectives.

Think what can go wrong. That comes from stoicism. Visualize failure in advanced so you can avoid and/or prepare for it before it happens. You can mitigate the problems before they occur.

Don’t get caught off guard. Related to the previous point, anyone worthy to be named strategist shall think about all possible paths and possible perturbations of the master plan. Be ready for whatever comes your way.

Have cooling periodes for ideas. When you have an idea let it cool down. Sometimes we get caught up with the excitement of the moment and we cannot see all the reasons why it is a bad idea. If you reflect over an idea over a period of time you will gain perspective and see things differently.

Take the indirect way. Don’t go through the most obvious path because everyone is taking it (or in case of war it will offer the most resistance). Instead find a way to surprise, find a back door. Usually back doors offer the least resistance and the maximum reward. The smart move is to find the weakest flank and go through there. You will have higher chances of success and less casualties.

Everything adds up. The good and the bad become bigger piles if grouped accordingly. Skipping one gym day may not seem a big deal (and it is not) the problem starts when it becomes a recurrent event. But penny to penny you can also build a fortune. Be wise about it.

“Dress me slowly, I’m in a hurry”  Napoleon said. Sometimes it is better to make it right the first time, than attempt it multiple times without much success. Doing work deliberately avoids future course corrections and fixing along the way.

Avoid competition. Peter Thiel is all in for creating monopolies. As he states it competition is for losers.

Search for feedback. Other people’s complains will help you to fix the mistakes and keep improving. Leave your ego home and get better every day.

Start systems do not set goals. System creates the steps necessary to get you where you want to be. These structures will prevent you from drifting. Thus moving you to your long term goal.

Choose your strategy and stick to it. Don’t copy a competitor’s one. You’re not on their shoes, things are different and everyone has to play their own cards. Each of us gets and exam but everyone has different questions, so copying your neighbour’s will cause more harm than good.

Be ready to loose. As Nassim Taleb states it, you should be ready to loose money for long term in order to win in that one only unforeseen black swan event. Don’t get distracted by the short term.

Long term is “what” not “how”. Once you have defined the long term strategy you can define the process and put the systems in place to achieve it. Otherwise you will be pursuing the wrong goal.

Deal with the problems as soon as possible. Problems when not addressed accordingly grow overtime. By themselves of by collateral damage. Don’t create a monster if you can put off the fire early on.

Use their energy against them. The first lesson in the martial arts is use your enemy’s energy against them.

Prioritise. First important-urgent, then urgent, then important, and the not urgent not important delete it.

Time puts everyone in their place. Sometimes makes more sense to wait for things to fall in their place. If an army does not have supplies it makes no sense to fight it directly but to wait it to fade away.

Morale is a multiplier. If people are happy, well rested and optimistic about things their productivity sky rockets. High moral is a force multiplier for the common goal.

 

Play games you cannot loose

I never loose, I either win or learn
– Nelson Mandela

If you reframe life in a way that never leads to failure you will win the game of life. You can choose one single goal, i.e. running a marathon. However, wouldn’t it be better to create a system? For example, run 1h every two days? You can run a marathon and be happy about it. But this implies that you have one shot. If everything is life or death you will die many times. Why do you care so much for such a one-time event? Do you do it for the others or for yourself?

To increase your odds to success in life you can create systems instead of goals. We can always make mistakes and unforeseen events can happen but you cannot fail a system. Systems are not black or white they understand the different colors in life. Systems allow something very important, they move you towards the end goal without failing. Networking is not a goal is a system. You connect with people and it increases your chances for different opportunities. You going to an event once in a life time is not considered networking, networking is something that you do with certain frequency.

Systems are good for other reasons as well. A system involves practicing an activity regularly. Deliberate practice improves your skill. For example, writing a blog may seem like a wearisome experience. But there are several benefits attached to it. For example, I get to improve my writing skills. At every post I try to give my best craft. They may not all be outstanding – some of them will some of them won’t – but it’s part of the system. Try different things and see what works and what doesn’t. Blogging may increase my career prospectives – that is the goal I had in mind when I started – but now it does not make that big of an impact. This website helps me to remember ideas, books, recipes, and many different things I once knew. Writing summaries of books help me to grasp the basics of each book, improves my idea retention but also allows me to retrieve it later in life in a way that I spare time to myself because I won’t need to read the entire book again. Sometimes I use a post as an excuse to research certain topic. If I want to write about something I need to first understand it and then summarize it. So, by doing that I am able to deepen into different topics.

Another important key factor about systems is that it permits you to pursue different opportunities without blinding you. Goals require focus and therefore may blind you from other chances that happen along the path while systems are not limiting. With systems opportunities will arise and you would have improved your skillset so you could take advantage of that.

In conclusion, aim to continuously improve by using systems and not willpower. Will power is limited so it is better to find a way to take the smart choice without much mental effort.