What To Do When Your Product Gets Copied, How Nvidia Exaggerated Its Marketing To Crush Its Competitors, Nvidia's 'Ship The Cow' Strategy

0:00All right, here's what you should do when your product gets copied. So I thought this would be a fun conversation because literally over the weekend one of our customers who is with a subsidiary called a Large Indian subsidiary company They said hey, isn't this your product and we looked at it. I'm like, oh Son of a bee so India company copied you or some India company told you about it No, India company told me about it. It's some American that works for an Indian company They saw it. They were like working on the weekend and then so I was sitting on my couch It's like 7 34 p.m. I'm sitting on my couch watching anime right on Saturday and the CTO messages me.

0:34He's like, oh, this is our first copycat. And the moment I looked at that, my blood started boiling, right? And I looked at it and the video, it's so well done. And the funny thing is the UI looks exactly like ours, right? They have a lot more features. They're a lot more feature complete, I would say than we are. But basically five minutes after I got pissed, I was like, this is nice because we can go into it, but it's not like we're gonna copy the product roadmap. It's like more so it galvanizes us and it galvanizes my team and motivates us to push even harder. And at first, you're pissed. I'm assuming you felt some sort of flattery after a while being like, all right, like you said, you guys are on the right path.

1:16And eventually, if you're doing the right thing, you will get copycats. But did you hear the Travis Kalanick speech about Uber and all the copycats out of Asia? yeah that he well i know that he respects them what ended up happening was you see a lot of competitors that just start copying you and as you add more features they start copying you and they keep adding more features and what he broke down with uber and what he saw was after a while they've copied everything that you've released and then they start innovating and adding features that you don't have and i'm not saying that's china yeah and i'm not saying that's what's gonna happen to you but if you do something well in theory people will copy and eventually it'll go from them copying if they keep executing at a very fast pace they'll go from innovating yep yeah and by the way i respect them for copying i don't think there's i think a lot of people copy each other all the time you look at zuck with stories i mean yeah he's copied a lot right and it's worked out.

2:22What matters more is distribution and data at the end of the day. And I think what matters more than anything right now is speed and execution, which is one of your topics in here, which we'll come to in a moment, maybe right after. But in NetNet, I think this is a good thing because to your point, it does validate what we're doing. And it's interesting because they started copying immediately after they saw my LinkedIn post go well in November, that LinkedIn post where I shared one of our features and it got 1400 comments on it and everyone wanted access. And I said, you know, nobody's doing this.

2:51And I got like 700 likes or so. So they started working on that immediately. And I remember them commenting on the post as well. And so I think they certainly have advantages, which I'm happy to list. And I also think we have advantages too. But I think what matters at the end of the day is you're focusing on your game, and you're not worried about them, because whatever they're going to do, they're going to do at the end of the day. So I'm happy to talk about the advantages, the disadvantages that on both sides and where we go from here. And then we can move into your speed topic. Yeah. I just remember the Jeff Bezos quote, don't obsess about your competitors, obsess about your customers.

3:29And I remember Patrick Campbell had a good post. I don't know when it was maybe a year or two ago that was saying Jeff Bezos is wrong. You need to obsess about your competitors as well. And I agree with Patrick. I can't speak for Patrick, but I myself I'm not rich like Jeff Bezos. But I believe if you ignore your competitors, you're going to be screwed in the long run. It's like if Zuck never added stories, he would have really been screwed. I think the paraphrasing around Bezos was that pay attention to them, but don't obsess over them is what he said. So I think you obsess over your business more than you do over your competitors.

4:08You are right. I do obsess about my business way more than the competitors, but I keep track of my competitors on a weekly basis. You should always keep an eye on them, but they shouldn't be the main thing. Correct. Yeah. So we're on that page. Now, look, here's what I'll say. If someone copies you, I mean, they say imitation is the most sincere form of flattery. So that's what you're quoting. But on our end, we look at the competitor, one, their first-time founders. Not to say we're going to underestimate them, but their first-time founders. They have raised the money. They've raised a couple million bucks.

4:39And they do have about 30 people dedicated and focused on this, right? Are they in India? They're in Europe. And that could be an advantage or a disadvantage, the way you see it, because people make fun of Europe the way they do business, because there are regulations all day, right? They're a little slower. But I do think they have those advantages, and I do think they're more feature complete than we are. And they started about 2023 or so. Now, where I think we have an advantage is my CTO is not a first-time founder. I'm not a first-time founder. I do think that when it comes to the, you know, having some distribution in a space like being known, I think we have the advantage there.

5:21And then I think the third thing, too, is the agency actually serves, in my opinion, as an advantage, too. Because when it comes to actually when we talk to a lot of our customers, they need a lot of customer success. They need people to understand marketing. And our team actually does that. So there are advantages and disadvantages. manages. Um, but again, like I, there's always going to be trade-offs for everything. And, um, I think more than anything, you know, galvanize again, I keep using the word galvanizing, getting with my team. I was like, guys, you know, it's amazing. I was like, we have someone that copied us and you know what, we're going to have to kill them.

5:55And it's, it's funny because the moment my CTO texted me that I'm like, you know, I'll be honest. Like I would copy us. Why, why not? Yeah. I was like, unfortunately, you know, Sean, Sean, I was like, Sean, we're going to have to kill them if we have no other choice we have to kill them and no not saying we have to kill them as people but we have to we have to do what we can to destroy them it's unfortunate but we have to yeah i also think the market's big enough where you could exist and they can but you know i'm saying this right because and i'm reading the the nvidia way right now and back in the day when they used to partner with intel nvidia partnered with intel at a certain point intel started to copy them and they started coming up with gaming chips too and then jensen was like oh kill intel so the model was kill intel for a couple years or so and then um people that worked at nvidia for a while they're like yeah it really motivated them and but they would go to bed thinking kill intel they like work until 11 or 12 a.m right 11 p.m or 12 a.m and they wake up the next go to sleep thinking kill intel they wake up thinking kill intel and what happened they they they did they didn't kill intel they did hurt them pretty badly well intel's had a few ups and downs and people forget about this nvidia isn't the booming for the majority of its life has not been the booming company that we're seeing i've almost died many times and nvidia did well from gaming i believe that was their core business am i inaccurate on that one it started with gaming but i have there's way more that builds on that i can i'll tell you the story if you want later so they started getting into some other areas it sounds like i don't know too much about nvidia's background let me give you a little bit yeah go for it okay so they started in gaming and this is why i know them so well and they back in the day they would compete with like companies like 3dfx and these people were well more capitalized voodoo and all those voodoo you remember that yeah yeah um ati and all these companies right um so what ended up happening was people started scientists started using their video cards um and other people did because they were way cheaper than these other supercomputers out there what ended up happening they saw was that because if you wanted to you know do all these complicated complicated uh calculations for like proteins or like other stuff around science you would have to make use of the GPUs on the video cards.

8:02And the GPUs would actually take on the calculations instead of the CPU. So it would free up the CPU and then you would actually end up being able to do a lot more. So NVIDIA saw this and they're like, oh, we actually need to make this a lot more programmable for the general public instead of just gaming. And that's how they started expanding into other areas. So they actually stumbled into this based on market feedback and that's how they became who they are today. and they almost died many times. And then OpenAI started using their chips. Was their chips originally built for AI? No. When OpenAI bought them or Microsoft or whoever?

8:38I think 10 years ago, he already made the AI bet. He started seeing deep learning and all that and they're like, oh, we need to, because we see this working for science and everything, we should bring this over to AI and they continued to make this CUDA architecture was what they call it. They continued to make it more programmable for people to modify their chips for whatever it is that they're trying to do and that's how they got to where they are now. How many years? Like 10 years before opening? 10 plus years. And the board would, because their stock was going out, they would drop like 80 % or whatever.

9:01And their board was like, dude, we don't think you're making the right bet. And Jensen's like, nope, this is what it is. This is what it is. This is what it is. And he stuck through it for 10 years. And he could have been fired by the board, but he stuck with it and it paid off. That's awesome. It's just a lot of those long-term bets. This is also why I hate the concept of being publicly traded, because you've got to deal with people and shareholders who are all about what's going to be your quarterly earnings. And so, by the way, that's why I say it's an advantage for us to not have funding because they need to report.

9:30If you're a first time founder, you're going to listen to everyone around you. And they have so many people that are influencing them, whereas we're just focused on our vision. And look, it took them two years to find something. All of a sudden they copy us for four months. They were a little a bit reactive. So I'm like, oh, if that's your personality. And then if you're going to react to everything around you, that's going to make it tough to focus. So we'll see what happens, though. Back in the day when I had the startup Kissmetrics, which you remember, there was a company called Mixpanel that came out and they copied some of the designs early on.

9:59Because you guys were one of the leaders before Mixpanel. Mixpanel ended up beating us. I don't know how well they're doing now, but they beat Kissmetrics. They generated more revenue. We had way more traffic. We had more brand presence, but they had the most important thing. They had more revenue and lower churn. Going after different markets, we focused mainly on marketers. I believe they focused more on product people and engineers. but one thing that i learned from that because heath and i my co-founder of kissmetrics at the time we were serial entrepreneurs the thing that mix panel did well that we didn't that caused them to win they bet on mobile before mobile was big and we did not we did end up betting on mobile but we bet on mobile when everyone already knew that it was going to take off we were late interesting he and i remember him back in this is like 10 plus years ago um when mobile was taking off I think there's a video or something of him going like, this is the future, this is everything, right?

10:55So I don't know if that coincided with, if that was before or after, but it seemed like he already knew that mobile was the future. He may have knew mobile is the future. He's really good at spotting trends. We just didn't make our app focus on mobile experience. I'm not talking about people loading up our app, but actually tracking all the mobile apps. And at that time, people even had quote unquote mobile sites instead of responsive. And we were just missing that segment. but it caused Mixpanel to grow out of hockey stick and not us. Plus we had the litigation slash lawsuit over data privacy.

11:32We passed the FTC investigation. We settled the class action lawsuit because if I did what it cost more in legal fees than just pay 50 grand out of our pocket because we're also paying the legal fees every single month. And our insurance policy was like, you want 500 settlement? if you give 50 grand we'll get 450 we're like uh and then we looked at the math on how much we're spending everyone's like wait this is cheaper than trying to say we won the case here's a 50 grand and i learned that business lesson from my investors like you gotta be logical and not emotional in a lot of business decisions when i first started my business the overwhelm was real i didn't have the tools to help me scale if only i had shopify from the start to handle all the behind the scenes work.

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14:31The circumstance was a little bit different because back then I didn't have as much cash. If you're telling me if I'm starting a business today, would I take investor money or not? Today, I would not. Ethan has taken investor money. His latest company sold to Dropbox. He's my other co-founder. And we did most of our startups together. um you know when we when when i look at um when i look at starting things up unless you have something that you know is gaining tons of traction you need money to grow faster that's when i'm okay to take money but before i would take money because i needed it to get something off the ground keep in mind things are way cheaper to do now because of cloud and all that kind of stuff but i would focus on raising money to scale not raising money to um get it off the ground correct yeah so it's just like you're care is a great example you raise no money you have cash flow from your agency plus you have good savings and you have investments and stuff that you can tap into if you wanted to if you knew that a customer would stick with you for seven years oh but it would cost two years to get the customer then i would say go get 10 20 million dollars and spend exactly it makes sense at that point because you need it to scale faster while as an individual i'm not saying you can't float it but there's a point where it's going to get super expensive and if you really want to beat the competition that's when you're just like wait we got a winning formula you spend as much to make that winning formula scale i think people try to raise too quickly because they think it's the the right thing to do but i think the right the right time to do it is when you have a formula that's already worked it's a mathematical formula right yes and you want to bet on it do you do you believe in the founders do you believe in the formula if you do then you bet um and so let me give you one more thing before we move into speed so did you know that nvidia exaggerated its marketing to crush its competitors no what do you mean by this so basically when they come came up with the term gpu this is for the geforce 2 or geforce 3 okay so this is their third uh geforce card.

16:44And they basically said, look, this is going to have its first GPU, the first graphical processing unit, but in fact was not an actual GPU. They knew it would come in the future, but basically they embellished the marking in the very beginning. And now GPU is, everyone knows what a GPU is, right? Because you can just, again, you can run the complicated computations on the GPU, the graphical process unit, and then let the CPU do the rest. But that's how they made that term so big it was basically embellished marketing and that's why they became one of the most valuable companies in the world so they pretty much did false advertising yeah yeah and then they also have a ship the cow strategy let me give you another bonus here so nvidia has this ship the cow strategy which basically means ship the cow yeah ship the cow like a cow like oh the animal okay ship the cow let's ship the cow okay so ship the cow is when you are eating the cow you're eating everything right you're not just eating the fillet like the nice parts of the cow i know you don't eat beef, but like, you know, the nice parts of the beef, right?

17:45You're eating everything like, you know, Chinese people, we eat everything, right? Like it's, it's not me, but Chinese people do in general. And, um, but point is, and guys, I'm Chinese by the way, so just not racist. So, so basically ship the cow means that they were shipping these, um, higher end video cards that cost a lot of money. Right. But the innovators dilemma means that, you know, that book book from Clayton Christensen, it means that oftentimes the higher end people, the people that are charging higher end products or services, they aren't taking into account the upstarts. The upstarts will usually come in and undercut them with the lower costing.

18:19So what NVIDIA did was it took its lower price things or they would test a lot of video cards. The ones that didn't perform as well, they would just charge lower for those. And so they occupied the entire market and that's their ship to Cal strategy. They wanted to make sure that no upstart could come in and eat their lunch. i'm big on the marketing and just pushing hard if you can get your brand out there everywhere even if it's premature and some people call it the fake it till you make it strategy and i'm not saying it's right or wrong i'm a fan of it i'm actually somewhat of a fan of it i think some areas that can hurt you like if you have a limited customer base and you fake it and you know they're gonna have a terrible experience well yeah i think if you're like uh what is it the the people that sold that company jp morgan where they faked all the customers you know i do Dude, that was so terrible.

19:05That's a lawsuit that's going to happen. And they'll make an example out of them. It's not even about the cost so they don't have to deal with it ever again. And people don't do this kind of stuff. But yeah, I'm a big believer that you got to get your brand out there. And if you look at most large enterprises, they've grown large because good product and good service. And they've just been doing it for a very long time. But most of them, at least in the B2B category, don't spend that much time and resources pushing hard on the marketing. in. I think that's what you and I have excelled at for many years.

19:37Our weaknesses, I would say, are more product related and fulfillment related than marketing as individuals. I would say more fulfillment related for both of us because I'll speak for myself. I think on the product side, I was thinking about this over the weekend. I was like, when it comes to you building your own thing without the help of others or me building my own thing, it usually turns out to be pretty good. So I'll give you an example. I think my events are pretty good. And so like that's where I have full control of things. I'm not relying too much. I think when we outsource fulfillment too much to other people, it doesn't perform as well.

20:12But when it comes to product, when I think about Crazy Egg, for example, when I think about even Kiss Insights, when you had that back in the day, I think you guys had good product sense. But I think, again, there's a difference between creating a product and a service where you have multiple people because people, it starts to become distorted in terms of the quality. Yeah, and you and I have both solved the fulfillment problem by hiring really amazing people who just specialize in fulfillment so that way we don't have to worry about it. But as individual contributors, I would say you're my strong sister on more on the marketing end than anything else.

20:43Anyway, that's it, guys. Please don't forget to rate, view, subscribe. It helps us grow. And we will see you later.