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20VC: 7 Powers: The Foundations of Business Strategy: Deconstructing Economies of Scale, How To Assess True Market Size, Assessing Risk vs Uncertainty, What "Brand As Power" Really Means with Hamilton Helmer, Managing Partner and Chief Investment Offi

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May 18, 2020

Hamilton Helmer, Managing Partner at Strategy Capital and author of '7 Powers: The Foundations of Business Strategy', shares his journey from advising tech giants like Adobe and HP to his current investment strategies. He discusses the importance of strategic mental models and adaptability for founders. Helmer explores how innovation drives competitive advantage and examines the dynamics of copycats versus original creators. He also emphasizes why being 10x better doesn't guarantee success and the critical role of branding in business strategy.

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INSIGHT

First Mover vs. Inventor

First-mover advantage doesn't equate to invention; copycats can still invent.
Facebook innovated despite MySpace preceding it.

ADVICE

Compelling Value over 10x

Don't aim for 10x better; focus on offering compelling value.
Customers should feel they need your product, not just that it's nice.

INSIGHT

Market Size Estimation

Precise market sizing is often impossible in early stages; focus on larger trends.
If you can confidently estimate your market size, you might be too late.

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Hamilton Helmer is the Managing Partner & Chief Investment Officer @ Strategy Capital a long-only public equity fund that selects securities for investment based on Power Dynamics, a proprietary model of fundamental value, developed by Hamilton over decades of strategy consulting with clients such as Hewlett-Packard, Adobe and more. Hamilton is also the author of one of my favourite books, 7 Powers. If that was not enough, Hamilton is also an Instructor in the Economics Department @ Stanford University.

In Today's Episode You Will Learn:

1.) How Hamilton made his way into the world of investing from advising some of the largest tech titans on the planet with Adobe and HP?

2.) What is a strategy mental model? What makes the most effective strategic models? What characteristics do they have? How should founders balance between sticking to models and being willing to change them? What are Hamilton's biggest takeaways from working with Netflix?

3.) "All strategy begins with invention", what did Hamilton mean by this? How does Hamilton explain the success of copycats in markets? How does Hamilton separate between first mover and creator? How does Hamilton analyse the transition from startup to pricer with scale economics?

4.) How does Hamilton advise founders to view and approach competition? Why does Hamilton totally disagree with the requirement of being 10x better than your competition? Is product innovation alone enough without brand or business model innovation?

5.) How does Hamilton define "brand"? Is brand an attainable strategy alone or is it the byproduct of something else? How transferable is brand in one category to alternative categories? How does a brand truly know when they have sustainable leverage and power?

Items Mentioned In Today's Show:

Hamilton's Fave Book: The Road to Reality: A Complete Guide to the Laws of the Universe, Stardust

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