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binhtd-blog-blog · 7 years ago

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Can Anyone Stop Amazon from Winning the Industrial Internet?

Vijay Govindarajan February 02, 2018 UPDATED February 03, 2018 feb18_2_53378992 Alfred Eisenstaedt/Hayon Thapaliya/Getty Images Just the announcement that Jeff Bezos, Warren Buffett, and Jaime Dimon will be entering the health care space has sent shock waves for industry incumbents such as CVS, Cigna, and UnitedHealth. It also puts a fundamental question back on the agendas of CEOs in other industries: Will software eat the world, as Marc Andreessen famously quipped? Is this a warning shot that signals that other legacy industrial companies, such as Ford, Deere, and Rolls Royce are also at increased risk of being disrupted?

To start to answer that question, let’s tally up the score. There are three types of products today. Digital natives (Amazon, Google, Facebook, Microsoft, IBM) have gained competitive advantage in the first two, and the jury is still out on the third:

Type 1: These are “pure” information goods, where digital natives rule. An example would be Google in search, or Facebook in social networking. Their business models benefit from internet connectivity and they enjoy tremendous network effects. Type 2: These are once-analog products that have now been converted into digital products, such as photography, books, and music. Here too, digital natives dominate. These products are typically sold as a service via digital distribution platforms (Audible.com for books, Spotify for music, Netflix for movies). Type 3: Then there are products where input-output efficiency and reliability of the physical components are still critical but digital is becoming an integral part of the product itself (in effect, computers are being put inside products). This is the world of the Internet of Things (IOT) and the Industrial Internet. Manufacturing-heavy companies such as Caterpillar, Ford, and Rolls Royce compete in this world. An aircraft engine is unlikely to become a purely digital product any time soon! Such products have three components: physical components, “smart” components (sensors, controls, microprocessors, software, and enhanced user interface), and connectivity (one machine connected to another machine; one machine connected to many machines; and many machines connected to each other in a system).

Digital natives have already disrupted industries such as media, publishing, travel, music, and photography. But who is likely to assume leadership in creating and capturing economic value in Type 3 products: Digital natives or industry incumbents? Ford or Tesla? Rolls Royce or IBM? Caterpillar or Microsoft? Amazon, Berkshire Hathaway and JPMorgan Chase combine or UnitedHealth?

The Challenges for Digital Natives

Value will no doubt be created in the era of smart, connected machines. We don’t expect Amazon or Microsoft or IBM to design, make, and market agricultural tractors, aircraft engines, or MR scanners. The question really is: Can digital natives develop software-enabled solutions that siphon off significant value from industrial hardware? The answer is “yes.” But it won’t be easy. It will require tremendous amounts of investments in building new capabilities for hardware companies like HP, Cisco, Dell, Samsung, and Lenovo; established software companies like Facebook, Google, Amazon, and Microsoft; and start-ups. In particular, there are three barriers they must overcome:

1. The physics of the hardware. Companies like Rolls Royce design and manufacture jet engines. These are very complicated machines. There is hard science behind these machines. That’s much different than digital natives like Airbnb where marketing is more important than technical expertise.

Industry incumbents have expertise in the material sciences, for instance. Further, scientific knowledge keeps improving over time. They have made heavy R&D investments—both basic and applied—to remain at the cutting-edge of the physics of the hardware. Much of this scientific knowledge is protected by patents.

Mastery of hard science is a pre-requisite to develop software-based solutions on the hardware. These companies’ superior product/domain knowledge provides them the comparative advantage to model the asset’s performance and write high-end/high value-added software applications. A “pure” digital company can write commodity software applications. But it must acquire enough capabilities on the physics to write sophisticated apps that improve assets’ performance.

2. Customer intimacy. Industrial giants have well-established brands, built strong customer relationships, and signed long-term service contracts. They’ve won the customer’s trust, which is why customers are willing to share data. Digital natives can work with industrial customers, but they have to first earn their trust; they must build capabilities to understand customer operations; they must match the industrials’ cumulative learning from customer interactions; they must learn to ask for the right data; and they have to hire experts in several verticals that can turn data into insights.

3. Difficulty in sharing risks. Industrial incumbents have product knowledge, customer relationships, and field engineers on customer sites. Companies like Rolls Royce can, therefore, offer outcome deals where they guarantee customer outcomes (examples: zero downtime, higher speed, more fuel efficiency, zero operator error, greater reliability) and share risks and rewards with customers. It would be very hard for Amazon or Google to guarantee customer outcomes and take risks with businesses whose operations they know little about.

The Challenges for Industrial Giants

Can the industrial giants lead in the Industrial Internet? The answer is “yes.” But it won’t be easy for them, either. They too have three significant barriers to overcome:

1. Software talent: The IT talent in industrial companies can execute projects oriented towards process efficiency and cost reduction. That talent is ill-suited to develop new, breakthrough software products that offer superior customer outcomes. For that end, they must be able to attract world-class innovators and software engineers. Is, say, Rolls Royce, in the same consideration set as Facebook and Google for young tech employees? Not, really. If so, how can the industrial giants compete to attract the best talent?

2. Digital culture: Industrial businesses and digital businesses operate with completely different principles. The characteristics of hardware businesses include long product development cycle, Six Sigma efficiency, and long sales cycle. Software businesses have different characteristics: short product development cycle, flexibility, and short sales cycle. The industrials must build a digital culture based on concepts like lean, agile, simplicity, responsiveness, and speed. That’s a tall order for an established enterprise.

3. The Incumbent’s Dilemma: Digital has the potential to disrupt industrial businesses. There are three ways digital strategy can cannibalize “core” industrial business. First, data and insights can help improve the productivity of machines; digital, therefore, has the potential to cannibalize future hardware sales. Second, data and insights increase the reliability of machines; digital therefore has the potential to cannibalize future service revenues. Third, software subscription and license might enable customers to do self-service. Current customers could terminate/renegotiate service contracts, and potential customers may not enter into service contracts at all. In short, it is very difficult for a company to disrupt itself.

The future of the Industrial Internet will involve partnerships across a variety of players including tech companies and industrial companies. The key issue: Who will assume the leadership position to extract maximum economic value in such an ecosystem? Will industrial companies take the lead? Or will the digital natives take the lead? Both have a chance.

If I were a betting man, I would place my bets on tech giants over industry incumbents. One factor that will favor digital companies in the industrial internet is technological/scientific breakthroughs that level the playing field for newcomers. For example, breakthroughs in battery technology made the electric cars possible. Electric cars are much simpler to design than cars with internal combustion engines, allowing Tesla and BYD to enter the market despite Ford’s decades of expertise. Since electrification and driverless cars go together, other tech companies such as Google, Baidu, Apple, and Lyft will also be able to enter the automotive market. Similar technological changes in jet engines and agricultural tractors can allow tech giants gain foothold in these industries as well.

More importantly, Amazon or Google have the resources to acquire the capabilities to master the physics and acquire customer relationships and compete with the industrial giants in the Industrial Internet. They have enough resources and some to buy them, if needed.

Among the tech giants, Amazon is a likely winner in the Industrial Internet. It has successfully fused physical with digital. Amazon understands the economic laws of analog products and is not afraid of massive up-front investments and slower growth. Its acquisition of Whole Foods and experiments with Amazon Go grocery stores are an example. Amazon is the one company everyone’s scared of, even industrial giants.

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binhtd-blog-blog · 8 years ago

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Student loan calculator

https://commonbond.co/mba-student-loan-calculator

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binhtd-blog-blog · 8 years ago

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Ben Horowitz’s Best Startup Advice

Ben Horowitz is undoubtedly one of the most well-respected and successful venture capitalists in Silicon Valley. He’s known for being both straightforward and kind — an uncommon cocktail of no-bullshit and no-asshole. Wherever he goes, entrepreneurs flock to him like fly to flypaper, hoping for a few minutes to pitch their companies or talk about how his NYT bestselling book, The Hard Thing About Hard Things, changed the way they think about startups.

Horowitz is the quintessential contrarian, often turning popular advice on its head. Most recently, he did this during his commencement speech at Columbia University, declaring, “Don’t follow your passion. What you take out of the world...is much less important than what you put into the world. Follow your contribution instead. Find the thing you’re great at, put that into the world, contribute to others, help the world be better.”

While his advice is often unconventional, it makes so much sense that it’s hard not to listen. Even more compelling than perhaps his sheer intelligence and sharp judgment, there’s this feeling you get when you listen to Horowitz: he truly cares about the success of entrepreneurs. He’s been there. He empathizes. He knows personally about the hard things all entrepreneurs inevitably go through.

Recently, Horowitz joined the Product Hunt for a LIVE Chat — by the way, you can find the full schedule of upcoming LIVE Chats here:

In his answers to the community’s questions, his sincerity is almost palpable. Read on for some of the highlights of the conversation.

What advice would you give to founders that most investors or founders would think initially disagree with you on or think is crazy? - Sydney Liu

Nobody who ever built a great company wasn’t ridiculed along the way. If you are driven by social signals, you shouldn’t be an entrepreneur. That’s not say that you shouldn’t ever listen to input, but you have to decide for yourself.

Who are your mentors for work and life? - Andrew Chen

At this point in my life, I would probably refer to them as friends rather than mentors. Bill Campbell and Andy Grove are probably the two that I have learned the most from. Andy’s whole life is a great lesson in how I should live mine. The way Bill listens to people is so advanced that I learn something every time I’m with him. There are other people in other fields. Like Nas. Nas has the ability to see the world in such a radically different perspective. We can listen to the same song and he’ll hear 30 things that I didn’t.

What are the 20% of techniques, mindsets, skills, etc. new/first-time entrepreneurs have that result in 80% (or a large part) of their success? -Troy Shu

The big thing is to focus all of your energy on is product/market fit. Get to a product that people are adopting very quickly, or that you can reliably sell repeatedly. To some extent, everything else — culture, management, etc — is secondary. Don’t take your eyes off the prize.

You released The Hard Thing About Hard Things last year. If you released it today, what lesson would be added (or changed) in the book? - Erik Torenberg

I probably would have put in more war stories. I didn’t know if people would like those, but they definitely did. The biggest surprise about the book’s reception is that I wrote it for a very narrow audience, but everyone from teachers to pastors seems to like it. That’s been shocking.

Some people say there’s a new bubble, especially in the Valley. What are your thoughts on that? Are we headed down a path similar to the one back in 2001? - Juan Antonio Karmy

Having been a CEO in 2001, I don’t think that we’re anywhere near where we were then. Valuations have gotten high in certain tech sectors in the private markets only, but they have actually corrected themselves pretty quickly. For example, enterprise software started to get overvalued privately, but after several companies went public at lower valuations than their last private rounds, the private markets corrected as well. I don’t see a massive crash on the horizon like 2001. In 2001, Nasdaq lost 80% of its value. I’ll bet any bubble believer everything I have that Nasdaq won’t drop 80% in the next 5 years.

The current state of public markets has scared a lot of people, and there is talk of some unicorn and “decacorn” startups being affected. How do you think this downturn will affect early stage companies — or will it? -Mitali Pattnaik

I think that early stage investing, if done right, is pretty disconnected from the public markets. The average venture capital exit is over eight years, so the public markets will change a lot by then. Having said that, a lot of hobbyist investors will stop if the markets crash, and that will make it more difficult to raise money for sure. In addition, if you are a VC and you pay a bubble price, even at an early stage, that can be hard to recover from (for both you and the company) if the climate changes radically.

Which of the unicorn startups do you feel is best positioned to weather the [potential tech bubble] storm and why? - Nicholas Spinazze

Airbnb, because they are a great company with a great culture and a massive network effect. Brian Chesky is amazing.

What do you believe is the best way to get into VC as a young professional? — Ben Center

Start a company or join a startup and learn what the process of building a company feels like. It’s almost impossible to learn any other way.

At what stage should CEOs step away from “product owner,” and broaden their focus to the rest of the business? - Blake McDowall

I wrote a post on that called Why Founders Fail. I don’t think that you step away from the product, but as soon as you get in market, you have to start paying a lot of attention to the rest of the company.

Projecting financials is a difficult thing to do when the numbers are purely hypothetical. Can you offer any input on the best methodology to creating investment friendly financial projections? - Zack Fisch

If you’re an enterprise company, then the best way to do it is probably Salesforce math. In other words, add up the quota of the productive people that you have. If you are a consumer company, financials are usually a derivative of some other metric. I’d just be explicit about how you get there.

If you had to start your career all over again, where would you start today? - Michael Joyce

I think that I would be a bio hacker. Computational biology is the most exciting thing that I’ve ever seen. I’d love to work in that field.

Do you think entrepreneurs are born or made? - Jacob Catalano

To be an entrepreneur, you have to be willing to be completely vulnerable and think entirely for yourself. I imagine those can be learned, but I am not sure.

Are you Startup L. Jackson disguised as Ben Horowitz? :) - William B.

I am not, but I am a big fan of his. As you might of noticed, I tend to say what’s on my mind regardless of whether it’s good for me, so I don’t need a pseudonym.

Top three favorite books? Any books that inspired your own [book]? -Stella Tran

The book that most inspired my book was Andy Grove’s High Output Management. It’s hard for me to list my top three favorites. Some that I like in various categories: The Black Jacobins by C.L.R. James, Fooled By Randomnessby Nassim Taleb, and Tuff by Paul Beatty.

Outside of work and writing, how do you like to relax? Do you have any hobbies? - Emily Hodgins

My hobbies are hip hop, BBQ, and macroeconomics. @pmarca is better than me at macroeconomics, but I can destroy him in BBQ and hip hop.

Tupac or Biggie? - Josh Voydik

They are both great, but Biggie is a little closer to my personal taste.

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binhtd-blog-blog · 10 years ago

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Lí do trở về Việt Nam của mình

1. Không tìm được công việc mong muốn ở Mỹ

Sau khi tốt nghiệp Vanderbilt với tấm bằng cơ khí, mình cảm thấy không phù hợp với công việc kĩ thuật nói chung và những thứ liên quan tới mechanical/electrical nói riêng. Hơn nữa ở Mỹ, tìm được việc trong ngành này là rất khó vì các công ty tuyển nhiều sinh viên ở trường mình là các công ty trong lĩnh vực quân sự (defense). Họ chỉ tuyển công dân Mỹ hoặc có thẻ xanh. Ít nhất là mình chưa từng gặp bạn sinh viên quốc tế nào ở trường mình kiếm được việc trong khối ngành mechanical này. Các công việc như banking hay software ít tuyển người không có kinh nghiệm mảng này.

2. The MBA offer from HBS and Stanford

Việc được nhận vào 2 ngôi trường nói trên trước 2-4 năm khiến cho quyết định trở về Việt Nam dễ dàng hơn rất nhiều. Mình không phải quá lo về mặt tài chính. Việc ở lại Mỹ làm một công việc mình không ưa thích chỉ vì tiền hoàn toàn không make sense financial wise vì HBS và Stanford cho fellowship dựa trên need-based. Điều này đồng nghĩa với việc, mình càng kiếm được nhiều tiền, mình sẽ phải đóng học phí cao hơn.

3. Để hiểu hơn về business ở Việt Nam

Nếu ở lại Mỹ, việc tìm hiểu về business ở Việt Nam sẽ khó khăn hơn. Việc xây dựng contacts ở Việt Nam không chỉ giúp mình quen biết các doanh nhân sẽ giúp mình build teams để làm startup sau này (hi vọng vậy.) Hơn nữa nếu ở lại và sau khi học MBA mình muốn về Việt Nam, quyết định quay trở lại sẽ khó khăn hơn rất nhiều.

4. Cơ hội được thử nhiều công việc và nhiều ngành nghề

Việc về Việt Nam sẽ giúp mình được tiếp cận với nhiều industry và công việc khác nhau. Chắc chắn mình sẽ học được nhiều hơn là làm 1 công việc duy nhất ở Mỹ. Mình có thể nhảy việc dễ dàng hơn nếu không thấy công việc phù hợp

5. To live a cool life

Girls + Sports + Fun stuff

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binhtd-blog-blog · 10 years ago

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My not-so-secrets to success

1) keep everything in perspective. Family first- everything else is secondary.. 2) don't get discouraged. There are going to be naysayers along your path. Use them as motivation. Set yourself a goal to prove them wrong. You CAN make it out of ops into banking. You CAN make it into banking from a shitty college. Nothing is impossible. 3) stay focused on your next step. Don't set goals that are too far out... Maybe you'll make parter by the time you're 40, maybe not. Main thing you need to focus on now is making associate. That's all that matters right now- the next step. 4) be diplomatic. Don't shit on people when they piss you off. Don't fire off and send nasty emails - to anyone. Especially not clients. 5) Respect the admins. Appreciate what they do, and show it. Wish them happy birthday- merry Christmas. It's the little things that count, and they can (and will) fuck your career up if you treat them like shit. 6) be genuine, don't be a dick - to anyone. If you do start to succeed and move up the ladder, don't you fucking dare step on anyone to take that next step. Even if you win out at someone else's expense, it'll make you look like shit. 7) never forget where you started, where you came from. Keep your feet firmly planted on the ground. Nobody likes a cocky asshole. 8) be ethical in your business dealings. Enough said. We get a bad enough rap from the media. Don't be the asshole that fucks up bankers public image any more than it already is. 9) have an unquenchable thirst for success. Focus on greatness. Good is not enough. It never will be. 10) think and act like an owner, and one day- you will be. 11) find a mentor that believes in you. Make them want to take a gamble on the kid from the shitty school. Prove it was one of the best personnel decisions they ever made. 12) take personal pride in your work. If you have difficulty doing that, you are probably in the wrong line of work. 13) be ethical - have I said that already? Worth repeating. Be ethical. This is a business that can tempt you do do some stupid shit for short term gain- don't do it. If you do, you may very well ruin your career forever. I have seen it happen before. Get blacklisted on the street, and you're done. 14) be coachable- extremely coachable. 15) keep your chin up (see #2). This is a difficult industry... There may be days, weeks, months, even years that absolutely suck. Stick it out, it'll get better. Your career is in your hands. 16) go where the firm needs you. Even if it's equities in dallas. See #10. 17) when your star starts to rise, you may find yourself with less friends. Fuck em. They were never your friends to begin with - they are your colleagues. 18) commit to your firm. Even if you can make 50% more elsewhere, stick it out if things are moving along title-wise. Firms reward commitment. 19) don't complain. To anyone. Whiners get left in the dust. 20) have a go-getter attitude. Go above and beyond. Don't be shy. No upside to being shy. also no upside to brown nosing, so hit a good balance.

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binhtd-blog-blog · 10 years ago

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Stanford Interview Report

I am applying for the MBA Program at Stanford and Harvard Business School. After months of preparation with GMAT, essays, letters of recommendation, I got invited by both schools for an interview. That is 75% chance that I will get accepted to either of them. Let's take a step back and think about the 25% chance that I get rejected :-). Most of the time, I am the-glass-is-half-full kind of guy but this time it is better to think a bit negatively to not feel disappointed later on. Trying to manage my emotions as I get too excited sometimes.

Last Friday, again, the interview with Stanford went amazingly well. I honestly thought I did my best. There is nothing to regret about. Thanksgiving is coming; it is cold outside in Nashville; I am in the mood. So it might be a great time to write about the whole Stanford interview experience, even though I should be preparing for the Harvard interview coming this Friday. Excited!

As I keep the blog secret, all of this is just for my personal enjoyment.

Thursday, Nov 13, I arrived on campus. A Vietnamese student, anh Huy Doan (you can google "Doan Quoc Huy", who I just met yesterday, took me to a faculty's house for a party with 30 GSB students. It was the most beautiful house I have ever seen with lights on, beautiful paintings around and of course a pool outside. Or may be I was just in love with those beautiful blonde kids asking my name. Anyway, GSB students are organizing a Global Studies Trip to Vietnam this winter. It was a great experience. The class is extraordinarily diverse. I did not see any 2 people who had the same background. Then I stayed over anh Huy's house and observed how a successful businessman doing business as he was talking to his employee about his Elite Spa business.

In the interview, I was able to talk about the experience the day before. I sounded spontaneous and lively. They even ran out of questions because I hit all the points they wanted to ask. LOL. I was a bit scared because now they could ask odd ball questions that I had not prepared. But then it was great and conversational.

Here are the list of questions:1. Why MBA? Why Stanford? 2. Tell me the time when you (TMTTWY) worked with difficult people3. TMTTWY exceeded expectations4. TMTTWY face challenges in a project5. Tell me something you are proud of. 6. I don't remember. They asked some similar questions but still the same thing. 7. One thing u want us to remember about you8. Do you have any questions for us?

I asked them

1. How flexible can I take classes at d.school and public policy dept?

2. Something about their Arbuckle leadership program

Then I said most of my questions were answered by last night experience.

This is the part I try to be personal.

3. What is the most challenging part do you face as an ad com to create such diverse class?

4. Where to see Golden Gate Bridge at its best angle?I managed to smile a lot and be personal for the whole interview.At the end of the day, it does not mean anything as I guess everyone is doing well. The chance of getting in is still 50%. keep my finger crossed. After the interview, Anh Huy took me to visit Stanford main quad for about 5 minutes so that I could take some pictures. #tourist. And also, I may not come visit here ever again. I totally get why Americans love Stanford, even more so than Harvard. It is the most beautiful campus I have ever seen.

Quick write! I am an international engineer. So please ignore all the grammar mistakes that I may make.

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