“It’s not enough to be open. You have to be open and good.”
Image: Juan Pablo Bravo. Source: Noun Project
Paul Graham penned this line over 16 years ago. Graham is a hacker/programmer/philosopher and built one of the first internet-based applications back in 1996. He founded Y-Combinator, a startup accelerator that has helped launch thousands of startups, including Airbnb, DoorDash, Reddit, and Coinbase. Graham was talking about the Mac – how, after years in the wilderness, the Mac had become the platform of choice among hackers, who tend to write software for whatever platform they use – software which, at the time, sold hardware. Now, we would say, software that sells services. Services like Airbnb, DoorDash, and Coinbase.
The combination of openness and goodness is powerful. Airbnb achieved it with open reviews, honest listings, and fair prices. The company serves as a conduit between renters and hosts, and encourages open and honest communication. DoorDash achieved a dominant position during Covid by allowing customers to track where their food is after ordering. They’re open about how quickly they’ll get your food to you, and their AI software allows customers to see the most popular menu items before we order.
Photo: Karrie Zhu. Source: Pixabay.
The internet, mobile technology, and AI software have revolutionized most businesses, moving them from a scarcity mindset to abundance-thinking. Think about the news business. Newspapers and network TV used to be profitable because they enjoyed local monopolies. Now, anyone can get all the news they want from any source in any medium. Publications succeed by attracting audiences – any audience – from among the world’s 4.7 billion active internet users. That kind of scale is literally mind-and-server blowing.
Photo: Gerd Altman. Source: Pixabay.
But it’s not enough to be open to innovation. You have to be good.
It’s not enough, in investing, to generate market-beating returns. You need to provide them in a way that clients can trust – where they trust both the process and the provider. It’s not enough, in healthcare, to provide a medical solution – like a vaccine. You need to provide it in a way that patients don’t feel like they’re just a cog in a healthcare machine. When I talk to a therapist or a pastor, I need to be confident in their knowledge. But their character is even more crucial. After all, they’ve got access to some of my deepest secrets.
The best companies don’t succeed by attacking the competition. They succeed by transcending. Apple didn’t become the dominant smartphone company by criticizing Nokia. They redefined what a phone is. Tesla didn’t become a top-selling EV by criticizing gas-based cars. And Facebook didn’t become a dominant social media platform by trashing other websites. The concept is simple – after someone else thinks of it. If you’re in a race, the way to win is to run faster, not to turn around and fight.
In an age of scarcity, the way to succeed was to control critical resources, like sea lanes or oil. But in an age of digital abundance, resources are plentiful. Now success comes from having new ideas and building new things. To attract business, these new things need to be open, so everyone can join. But they also need to be good.