“Business is like a multidimensional probabilistic chessboard. The rules aren't set, and the same moves don't always make you win. A lot of people can be really good in a set-piece battle; my biggest differentiating skill is I can invent new pieces.”

- Elon Musk

The Kobayashi Maru is a test in the Star Trek Command school dealing with un-winnable scenarios. Fortunately Captain Kirk famously doesn’t “believe in no-win situations” and was able to hack the system designed to make him fail, instead he created success. There are a lot of lessons we can all learn from Captain Kirk.

I think about the Kobayashi Maru all the time. It’s like this whisper in the back of my mind when talking strategy with startup founders, if you listed off the insurmountable odds a fresh startup has to overcome in order to compete with their largest potential competitor, most people wouldn’t start… which is why founders are a combination of brave, brilliant and stupid all in one carbon based life form. Stupid in a good way, in case that wasn’t clear.

In so many ways, building a startup is an un-winnable scenario. You have no resources, you have two people, to the majority you sounds crazy, and there is no “right answer” to any of the questions presented to you, only your best answer on hand. Yet still every ten years the top 10 companies by market cap change out, almost completely. So society continues to evolve and technology continues to dictate how to make the largest impact. Over the last 70 years we have evolved from Automobile to Oil to Banking to Tech to Data. This industry evolution shows what sectors were important from a US centric world as it adapted into a full blown globally connected world. And through globalization, the movement of communication, information and goods seemed to have created the richest data set that grew the largest companies: Apple, Amazon, Google, Facebook + more. Only 3 of the current top 10 companies in the world even existed 70 years ago.

Which means that this “un-winnable” scenario is actually clearly winnable… hard… but possible. But this would assume that a startup starting today is competing directly with Facebook or Google, which it is not. When startups think they are competing with Facebook, they aren’t competing with Facebook. When startups think they are competing with Google, they aren’t competing with Google. Actually in a weird way, they are ALL competing with Google and Facebook, but individually none of them are. Its similar how in the ocean a whale and a school of tuna compete for similar ocean space, but individually neither of them are going after the same food. Rather than putting your startup on a pedestal with Google and Facebook, or any other $Trillion dollar startup, it would be helpful to think of Google like a fully grown whale, and your startup like a baby tuna. At least this way you understand that you are a different species and at a different stage.

This does beg the question… how could you compete with Google, and how could you put Google in the Kobayashi Maru, rather than your startup.

New technology breeds new winners. Going head to head with Google and trying to beat them at their own Ad based search game wont work, you have to change the rules. So either the rule is “We are best at X” in order to slowly develop trust in that market, or you add something they don’t understand like incentivized user based search. (These are random examples, but distinct possibilities)

The key is beating them at your game. It’s not about playing in theirs. If you are playing in theirs you will never be one of the most defining companies of our life time. It’s about creating new rules and pieces in the game that only you can see.

I think that in the next 10 years there will be 2 crypto currency companies and 2 gaming companies in the top 10 companies in the world. I believe that those companies started in the last 10 years.

The secret of the Kobayashi Maru is that the enterprise was testing for how they felt a captain should perform under pressure. Captain Kirk didn’t understand those rules, so he didn’t play their game. Same thing happened with Google when Yahoo ruled search and Facebook when Myspace ruled the network. They switched the game rules, and society liked their games better.

Good luck in your Kobayashi Maru.

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