Howard Schultz argues being first is risky; better to enter an established market and improve on what exists. NP Digital did this in digital marketing, serving underserved clients without inventing new products. Private equity investors prefer this approach because massive existing markets reduce risk, even for copycat firms.
One of the interviews that I remember and it really stuck with me was a Howard Schultz interview. And Howard Schultz breaks down like innovation's really tough. It's a big hit or miss. You get really bloody being the first going through the door and it's hard. Like most people fail at it. And he goes on to saying like, I'm paraphrasing here, but he's like, I'd rather not be the innovator. I'd rather just go into a big massive space and just do something a little bit better. Now that could be kind of a form of innovation. It's probably not a true form of innovation. That's fair. Hey, we're gonna provide better customer service or put your name on a cup. All those little things do matter. And what I ended up learning through this company at NP Digital, because it was one of the first companies where we started. And I truly didn't innovate much when we started. I was entering a massive crowded marketplace where most of the things were determined. And what we felt in this space was clients were really underserviced. And what I learned from private equity going through the process when we were thinking about selling and we decided not to was private equity was just like, oh yeah, you don't have to create a new company. You just have to go after big spaces. We tend to just invest into companies that are in existing spaces that are just massive. And it's okay if they're just another Lookalike company. The space is big enough.
