Lessons - Learnings From Failed Companies | Sandeep Chennakeshu, President of Blackberry

Welcome to Lessons episodes of Success Story, part of the HubSpot podcast network. These lessons episodes will be shorter conversations with past guests, valued members of the success story community, and myself. They'll be focused on teaching you actionable, insightful takeaways that you can use to upscale your personal and professional life. I love the analogy. Let's go into some of these strategies so that people can at least take some really tangible things away. So there's so many different elements, and I always hate asking what's the most important because they're all obviously very important. That's the concept of the castle. It's none of them can exist without the other entities. And they're holistically they create this ecosystem that leads to a strong business. And I'll ask in a second maybe some of the more tactical strategies for pick an element or two. But before we do that, what are really glaring examples of companies that haven't done this properly and what is the pick a company that has failed? What is the thing that they missed the mark on to sort of highlight the importance? I'm sure you have some thoughts on different companies that have grown too fast, but like I'm not going to make you talk about the ones you don't want to talk about. But other companies for example, what are some of them? I'm going to be a little political and there's no problem because you know, the two most important things, because you brought up the one of the two most important concepts I talked about eight elements. But one of the two most important, I think that you must have, actually there are three very important things I'll mention the three most important, the three most important is when you build a strategy, you have to think it through very carefully. Okay, there are three elements of a strategy that if you get wrong, you're invariably going to fail. So the three elements of the strategy are how big is your opportunity or addressing? Don't go after little opportunities, go after big opportunities. You want to go and fish in lakes full of fish so that you can basically catch something recently. Okay, and especially I call it open space, it's going somewhere where no one else is fishing so you can catch something. The second is your product relevant to the market. How do you make sure it's relevant? Right, a lot of products have been launched which either customers did not like, there was no need and I make a lot, I talk a lot about these, I've given examples in the book or they come too late where others have already been entrenched. Okay. Now, your biggest opportunity there is the example I give is the iPhone, you know, they entered when they were, the leader had over 400 million phones, they were selling 400 million phones in the market. But the leader basically didn't missed out a major issue. They did not realize the value of an application store and the user interface, which the iPhone sold. That was a fundamental customer need and they toppled an entire industry and lost to the top. So product relevance knowing what your customers want and need is most important. Find out what your competitors are not doing or will not do and see if you can address it. All of that relates to relevance. Make sure you have sustainable differentiation. So that's the second element of the three in strategy, the third element is do you have the capability to execute on your differentiation and your relevance and capture the opportunity. If you don't, you're not going to succeed however brilliant your idea is. So that's about strategy. The second aspect is culture. You know, as I said earlier, strategy is what you want to get done. Culture is determines what you actually get done. How do you build the culture to execute and build and in my book I talk about two things I call it raising the right army and leading the right army. It's both a combination of leadership and instilling the set of beliefs that you need in your team in order to execute to the strategy. I won't go too much into this. It's a new book and the third part is you have to be able to generate cash. Nobody trusts a company that bleeds constantly and does not meet its promises. So it's devoted an entire chapter to basically managing cash and managing risk and figuring out how you generate more cash. And physical prudence is extremely important in doing this. So those are three elements that stick out as it's very fundamental to how I run my business. If I can't get these three things right, everything else doesn't matter. I'm curious about what your thoughts are on companies that have scaled without being profitable. But that's something that we saw in Silicon Valley with some companies that grew too quickly. And I feel like I just had a conversation with a friend the other day about how capital is more scarce than it has been before. There's a lot of dry powder on the sides for investing. But people are looking at profitable companies, companies that are cash flowing, companies that aren't bleeding money. Do you think that this is, I mean, I would actually rephrase, why do you think companies didn't adhere to this? Why do you think companies like, for example, Amazon, their investors waited 20 plus years for them to be profitable? But it seems like that's a very risky move. Yeah, it doesn't work for everyone. It may work for a few companies. I mean, Uber was not profitable for many years. I mean, Airbnb was not profitable for many years, and of course, now they make money. So there are some companies that are disruptive that can have a strategy like that. But by and large, most companies, especially if you're a venture capital funder, at some point, the venture capital has to cut their losses if they're not going to make money. So it's extremely important to focus on how to make money to fund your development, because take, for example, if you take a startup like mine, where I'm a chief operating officer, it's a brilliant startup. I mean, nobody has done digital radar at the size of your thumbnail, and is able to do what we can do. And we've been funded to get the products so far. But we are in the automotive world. In the automotive world, you need that product to be, have a lot of compliance. So it's not good enough to be technically brilliant. You have to have the right quality. You have to make sure it is, you pass all the safety certification. You have to make sure your software is compliant to certain processes that have extreme rigor, and that rigor is not found in consumer electronics. You need to have volume reduction with very, very stringent conditions. Again, not found in consumer electronics. And you have all these conditions that you have to engage, that you have to go through. Otherwise, you'll never be successful because nobody will buy it from you. And this is capital intensive. So you have to consistently demonstrate to your investors that you're on the right track. If you're not, nobody's going to fund you. So it's extremely important to have structure. Otherwise, you're going to just trade because you'll have a clever idea and you'll run out of money.