Lenny Rachitsky: evaluation

Transcript context

…e else to prosper, rather than smash on top of us. And so, if you have completely different capabilities and management systems, it'll encourage people to choose a different where to play, how to win. If your capabilities and management systems are very similar to your competitors, and you're succeeding with your chosen where to play, how to win, what are they going to do? They're going to drive straight to your where to play and try to win exactly the same place and wreck your market for both of you. That's what you don't want. And the more complicated, in some sense... I shouldn't use complicated. The more nuanced and multifaceted your capabilities and management systems are, the more likely they're going to say life's too short. That's what everybody says about Southwest. So, if you're the only airline in the United States that's earning its cost of capital for 50 years, wouldn't you say, gee, I'd love to be like that? But what does it mean? Well, it means selling off most of your aircraft, so that you can have only one kind of aircraft, 737. Tearing up your entire root structure, your entire hub and spoke structure, and make it point to point. Changing your complete labor relations strategy, from fighting the unions to paying them a lot, as long as they're highly flexible. People think Southwest is non-union, it's not unionized [inaudible 01:01:55], but they do different... You have to essentially fire all your travel agents, and convince your customers to book online, by themselves, to save more money. Life's too short, it's just too short. So, they try things like Continental Light, or Ted, that do half the things that Southwest does, and then you're what? A crappy Southwest. So, to me, that's the ultimate. The ultimate is, it's like the ultimate weapon is the one you never use. The ultimate way to compete to win is to never actually be forced to compete. Wow, that's a great quote. This story about Southwest makes me think about Hamilton Helmer's counter-positioning, I don't know if you've heard that term, but basically, you position yourself in a way where the competitor can't do the thing that you're doing because of the way their business is already structured. Ah, that's sounds right. The can't.…

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