Superliquid Strategy

The telephone needed 75 years to reach 100 million users. The car took 25 years. The internet took 7 years. Facebook was 4.5 years. ChatGPT took 2 months and Threads was 5 days.

The world today moves faster than it ever has, and switching costs are incredibly low in many areas that have historically been expensive.

As a result, the world is now superliquid.

This means that bits, atoms, information, technology, money, people, ideas, forms & substances of all kinds can now move through the world at a speed unimaginable even just a few years ago.

Want to sell some stock? Done in seconds from your Robinhood account.

Want to travel to the other side of the world? $1,000 and you can leave tomorrow, and land at your destination 24 hours later.

Want to talk to a billionaire? They're on Twitter responding to comments.

And this is everything from the macro to the micro.

Want to switch from Netflix to Hulu? A few clicks and it's done, pro-rated to the end of the month.

SDR not hitting numbers? There's thousands of replacement candidates ready to fill that seat, one email away.

Leadership crisis at one of the most important companies in the world? The CEO gets fired, moves the entire company to a division of Microsoft, the board hires a new CEO, then resigns, and the CEO is re-hired again... over the weekend.

Now, this introduces both threats and opportunities to the business world

If you nail your product and go to market strategy, you can grow incredibly fast.

At the same time, you're under constant threat from competitors who might innovate & operate faster than you.

So strong advantages create more value with maximum leverage applied as quickly as possible. Growth capital. Operating leverage. Rockstar talent.

And weak moats erode quickly, emphasizing a greater need for defensible strategy & reinvention as the world shifts and changes around you. Entering new markets. Launching new products. Speeding up the cadence of business.

So, controlling the flow of superliquid motion is the key to profits

If you want to control your destiny, you basically have two options:

1. Set the pace of change by moving faster than everyone else in your pocket of the market
2. Slow the pace of change with defensible strategies, stickiness, moats, narrative, and other mechanisms of superliquid control in your pocket of the market

Moving faster is pretty straightforward. It's the grow-at-all-costs-hustle-culture-hypergrowth-startup-grind approach.

But how do you slow down everyone else in your pocket of the market?

It all comes down to your business strategy, and how you implement it. With emphasis on the core business model.

A few examples: stickiness, long term commitments, implementation complexity, on/off ramp gating, building moats, securing unfair advantages & protections, and becoming a de facto option.

For example.

Month-to-month cancel-any-time subscriptions are easy to sell. But there's no protection against superliquid threats.

Paying Google & Meta for digital lead gen is easy to spin up. But any competitor can steal your ad strategy and bid against you.

Hiring in a radius around your office location is a safe & easy management move. But you overpay in the global talent market and employees switch jobs every few years anyway.

So a superliquid control strategy places great importance on building a protected business that resists the eroding effects of superliquid currents in the market.

Ideally, businesses should strive for as close to a monopoly as legally possible to maximize profits. And secure exclusivity &/or unfair advantages in key operating pillars of business from distribution to talent to systems excellence to financing to legal protections to supply chains.

'Build a good product' and 'Quality service' in today's superliquid world is not enough to build & grow a strong business. Those are simply the table stakes to play.

On an implementation basis, it should be very difficult for customers to leave and switch to other competitors. I.e it's painful to rip out a CRM. But relatively easy to swap Slack for Teams.

This can also be reflected in your pricing strategy. Long term contracts. Proper value gating. Etc. Etc. After all, MRR is only as good as your ability to retain customers.

You want to become sticky & hard to kill

The value of a business is classically considered to be the present value of future cashflows.

But another way to think about the value of a business is its longevity multiplied by its ability to produce value like cashflow.

Fast growing businesses command a premium.

And slow-to-die businesses also command a premium.

Superliquidity is an advantage to companies on the cutting edge. But it's impossible to stay there forever.

Think about it this way.

Will your product be a commodity feature in the next 5 years?

Will your industry enter a race-to-the-bottom price war in the next 5 years?

Will a new technology replace you in the next 5 years?

Will global shifts in the zeitgeist reduce psychological desire for your services in the next 5 years?

Can your customers leave you tomorrow if they have a change of heart? In one year? 5 years?

Maybe you're rich and powerful today, but in a superliquid world, $42 billion in stable assets can vanish in a single day.

We live in a world today of unbelievable abundance and opportunity.

Just make sure you're protecting the downside of your business besides shooting for the moon.