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The Art of Profitability

codingvc.com

146 pointslpolovets18 comments

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Don't knock it 'til you actually read it. The succinct snippets given on CodingVC's blog don't do it justice.

It's one of the most interesting business books I've ever read - one of the only that's worth reading multiple times.

You can see my more detailed notes from it, here:

http://sivers.org/book/ArtOfProfitability

Or if you're the video type, I did a conference presentation about it, here:

http://vimeo.com/15088740

(I'm the author of the CodingVC blog.)

Thanks for linking to your notes, Derek! I had forgotten about them, but reading your notes ~5-6 years ago was actually how I discovered the AoP book in the first place. Small world =)

Hi Derek, That presentation is awesome! Are the slides available somewhere? (the video doesn't capture them) Thanks

Hi rrtwo -

Please email me for the slides. I'm happy to share them.

- Derek

Profitability is like weight loss. Extremely straightforward, in principle. Charge money and keep more of it than you spend. What could be so hard about that?

> What could be so hard about that?

Fantastic analogy. It also covers the difficulties: it's fun indulging in ivory tower engineering exercises, or decadent offices, or letting delusions of grandeur grow your staff too quickly, if you don't have the self-restraint needed to make sensible decisions every. single. day.

And it's especially fun to tell other people how they're doing it wrong.

> Charge money and keep more of it than you spend. What could be so hard about that?

I may not be a fancypants entrepreneur, but this principle has guided me well in my freelancing career. I have a system set up that sends me a graph of my financial state every couple of days.

If graph is going up, good. If graph is going down, bad. Act accordingly.

Works surprisingly well and has really changed my behaviour ever since I started using the system.

Same principle for weight loss/gain (I do both depending on mood). Use a tracker, myFitnessPal works great, weigh self every once in a while. If graph is going the right way, keep doing what you're doing, if not, adjust parameters.

This is why I hate business writing. Endless platitudes without any substance. Sure, each of those are models, but they are neither novel ideas nor are they prescriptive enough to leave a path toward building something that takes advantage of one of them. Nor, for that matter, is it possible to prescribe a path to successful entrepreneurship beyond the basic principles because as soon as one path to success is known, it stops being a reliable path.

Less hand-wavey:

a) Read some Peter Drucker. b) Read a bunch of case studies in your industry. c) Start a bunch of businesses with someone else's money.

(I'm the author of the post.)

I went from software engineering to VC about two years ago, and I used to have the same opinion as you: a lot of business books/articles/blog posts are just platitudes, and anyone with common sense should already know this stuff or be able to figure it out easily.

Moving to the VC side was eye-opening. From what I've seen, people are very good at taking something they've learned in a blog post and seeing how it would apply to other people's businesses. They're not very good at realizing how those same lessons apply to their own businesses. For example, I've met many founders who talk about building MVPs but don't notice that their own pre-launch products are heading way past "minimum viable". I'm not immune to this, either. Like many engineers, I have a bunch of side project ideas that I hope to one day turn into successful companies. Literally days after becoming a VC, I realized that most of the pitfalls I saw in other people's business ideas were very present in my own ideas. It was humbling.

This is a roundabout way of saying that I agree with you that AoP's advice is not particularly deep (although it's much better than most books), and that the challenge is in applying it. What I loved about this book is that makes it makes profit model advice so easy to apply to your own business. You can literally go through each of the 23 profit models in the book and ask, "What would my product look like if I applied this model to it?" If you spend 2 minutes on each model, I bet that you'd have some excellent ideas in just 45 minutes. I haven't found many other business books that are as practical.

> You can literally go through each of the 23 profit models in the book and ask, "What would my product look like if I applied this model to it?" If you spend 2 minutes on each model, I bet that you'd have some excellent ideas in just 45 minutes.

Completely off-topic, but since you phrased it this way, I want to capture it and make a point.

This is a very good practical advice to follow literally. That is, take a clock and think about a particular business model for those two minutes.

It reminds me of a following quote:

"(...) another good question to ask yourself straight out: Did I spend five minutes with my eyes closed, brainstorming wild and creative options, trying to think of a better alternative? It has to be five minutes by the clock, because otherwise you blink—close your eyes and open them again—and say, "Why, yes, I searched for alternatives, but there weren't any." Blinking makes a good black hole down which to dump your duties. An actual, physical clock is recommended."

( http://lesswrong.com/lw/hu/the_third_alternative/ )

If you think about it (let's say, for 15 seconds ;)), it's surprising how rarely humans sit and actually think about something even for real five minutes. I try to use this technique whenever I face a hard question/problem. It doesn't take much time, and it's actually surprising how much you can come up with in those 5 minutes.

Well, I ordered the book. I've given the first couple chapters a read and (while the writing is somewhat agony-inducing) it's far better than I gave it credit for. I retract my earlier statements :)

Great advice! However when I tried it, it took me 46 minutes instead of 45 (I tried it twice just to make sure)

You didn't have any excellent ideas until the last minute of the last model?

i think the point parent is trying yo make is. Even if you follow that advice there its not going to give you a bigger advantage. If there is evidence of that i would love to see it, otherwise I think we are in confirmation bias land :)

The book shows up as "usually ships within 2-3 weeks" on amazon, even though it's a prime item. I guess this is what happens when amazon gets flooded with orders on an item without a large stock? I wonder if it's the publisher that didn't give amazon a large stock, or if it was driven by its own algorithms.

No it's due to a power struggle between the book's publisher and Amazon. Amazon is intentionally delaying shipping the book.

http://www.theguardian.com/technology/2014/aug/25/amazon-hac...

Sounds good to me. Just ordered a copy, along with Gabriel Weinberg's Traction book, and Profit Patterns[1].

[1]: http://www.amazon.com/Profit-Patterns-Anticipate-Strategic-R...

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