10x beer glass — and why this is one of the most important things to understand early as a founder

There’s a lot of talk about building something that’s 10x better in order to create a successful startup. But in my experience of working with hundreds of early stage startups, there’s often a subtlety lost in pursuit of this and a tendency to get obsessed about the 10x better technical solution, which is not the 10x better business solution. Please don’t do that.

The 10x beer glass

I was talking to a founder recently who was explaining to me that the quality, resolution and coverage of their imaging technology was 100x better than the standard used by current clients in their existing process. When I asked them how this 100x improvement in imaging would affect their clients business, did it allow them to do more things or uncover new truths, or offer more services? — they didn’t seem to have any idea. The fact that the 100x was 100x was taken as self-evidently valuable.

This got me thinking about the 10x beer glass. You may have invented something that is 10x better, or 100x better or 1000x better — on a particular axis — but if it doesn’t translate to an equivalent business outcome, no one cares. Let me explain.

Imagine a founder producing the 10x beer glass. This thing is awesome. Made out of some bioengineered transparent recyclable toxin free glass substitute (using crispr). Wired with IOT sensors to measure beer volume so orders can be automated when beer is low. And consumption habits, sales patterns and transaction data are automatically sent and stored on a new beer based blockchain. Amazing! And it’s the same price as boring old ‘glass’.

The business model of a bar is fundamentally determined by three things. Volume of customers coming in, average spend per customer and cost of fulfilling the service (including all overheads and inputs).

Does the 10x better beer glass lead to a 10x better business outcome for the bar owner? Probably not.

Will the 10x beer glass bring in more customers? Hmm, maybe. If it’s a serious novelty that customers enjoy, possibly it would have some minor impact. 10% maybe. If every bar has it, maybe not. But let’s be generous and say this bar is an early adopter.

Will the 10x beer glass lead to more sales per customer? Hmm, maybe again. If it really did re-automate some additional beer sales, maybe customers would consume a bit more than before. Maybe another 10%.

Will the 10x beer glass allow the bar to fulfil the bar service more cheaply than before? Hmm, maybe, maybe not. Maybe more orders are automated, so could reduce staff costs a little, or book keeping due to the great blockchain addition (sigh). But then again, maybe the glasses take a bit more care, maybe more are stolen or broken because they are so cool. So let’s say cost neutral.

So I’m the bar owner, maybe I can get more customers, maybe more sales — but I do have to buy a new stock of 10x beer glasses, train everyone to use them, adjust my processes because of the new capabilities, and even then, it’s not 100% guaranteed that this will work — this is after all experimental next technology.

Does the 10x beer glass have a slam dunk 10x business impact? No.

It’s 10x on some cool technical capabilities which don’t translate to business impact and when considered as part of a business workflow or service is not that impressive.

This kind of thinking is often lost on early stage founders. Just because something is cool or difficult, doesn’t make it obviously valuable to business. And even if it is 10/20/30% better, that’s often not enough when you factor in the cost of existing businesses having to switch supplier, process and train staff on something new for which there is a real risk that it doesn’t even deliver the full benefits promised.

This is why when something has a potential 10x business impact, even if this turns out to be only 5x or 2x, and the cost of adopting it is 10/20% or so, it’s still really worth taking on for a customer. The potential benefit even post risk and adoption cost adjustment is still amazing.

So when you’re working on your new technology or product, make sure you understand how it fits into the business process that you’re seeking to change, and whether the things you can 10x are actually things the customer cares about at all.

If it turns out you’re just adding a high tech clock to a fridge. Or blockchain to a beer glass. Maybe time to think again.