The 7 Powers with Hamilton Helmer & Jeff Lawson

**SPEAKER_1** (0:03)
Hi, this is James Currier, General Partner at NFX Capital, and you're listening to The NFX Podcast. Five years ago, I wrote an op-ed at TechCrunch titled, Defensibility Creates the Most Value for Founders. I was seeing founders make the mistake of focusing too much on their sugary sweet growth and not enough on their long-term durability. At NFX, we've now written about the four defensibilities available to founders in the modern digital age, brand, scale, embedding, and network effects. The last one, network effects, is incredibly strong. But not all network effects are created equal, and not all great companies need network effects to be durable. The key is to study the different defensibilities available and understand which are available to your company right now. Someone who sees this clearly in ways that others do not, is Hamilton Helmer, author of The 7 Powers. In it, Hamilton defines seven different powers that great companies can use to achieve defensibility. Iconic founders from Reed Hastings, Netflix, to Patrick Collison and Stripe, Twilio's Jeff Lawson, have said that The 7 Powers are one of their core insights behind their companies. Our friend Jeff Lawson, who is co-founder and CEO of Twilio, has built a business now valued at over $60 billion, is steadfast that Helmer's 7 Powers framework needs to be in the hands of every great entrepreneur out there, and we couldn't agree more. So in this special episode of The NFX Podcast, here are Jeff and Hamilton to talk through the 7 Powers.

**SPEAKER_2** (1:27)
So I first met Hamilton, actually, I didn't meet Hamilton. A package showed up at my door one day, and I opened it up and it was this book, and it was called 7 Powers, and it had a little sticky note on the cover, and the sticky note said, Jeff Epstein, a friend, thought you would enjoy 7 Powers. Strategy Capital is a Twilio shareholder. Scribble, scribble, scribble, scribble. And I was like, okay, and I put the book aside as one does, and just kind of forgot about it. Until a few months later, I was talking to Jeff Epstein, who happens to be on Twilio's board, and I remembered that, oh, apparently he had recommended a book to me basically, and I went and found it, and I read it and I'm like, oh, this is signed by the author, some guy, Hamilton. All right, well, let me read it. So I started reading the book and I said, this is really good. And I will tell you, I am a big skeptic of strategy, like the word strategy and the way business leaders often invoke it. Yet this book really spoke to me. And so I called up Hamilton and I wanted to talk to him. And that began the process of me really understanding the 7 Powers, getting to know Hamilton, recommending the 7 Powers book to my leadership team at Twilio, and even having several sessions, inviting Hamilton in to speak to the team at Twilio. So it's my great pleasure to introduce Hamilton Helmer to everybody listening today. Hamilton, welcome.

**SPEAKER_3** (2:50)
Thanks, Jeff. It's a delight to be here with you. I so admire what you've managed to accomplish with Twilio. My whole career has been around thinking about what makes businesses successful, and I'm very shumpeterian. I think that entrepreneurship and building companies is the lifeblood of the vitality of a society, and it's really hard, so I just admire what you've accomplished enormously. It's a delight to connect up again.

**SPEAKER_2** (3:17)
Well, thank you, Hamilton. I'm going to start by saying why I think strategy is... I usually say strategy is a dirty word, and then you can rebut that with the hypothesis of your book. How's that sound?

**SPEAKER_3** (3:27)
That sounds good.

**SPEAKER_2** (3:28)
So what I have often told Twilio employees through the years is that strategy is a dirty word, because it is this idea that the people at the top of the company have developed a strategy, and everyone in the company is supposed to blindly follow this strategy, whether or not your customers want you to follow that strategy. And therefore, I've always thought that strategy is basically just a way of telling your people to pay attention to the C-suite and the executives of the company as opposed to the customer. So one of the things I've often said at Twilio is there is only one true strategy. Build products and services for which your customers will pay you. That is the one true strategy, and anything that distracts from that is really preventing us from executing the one true strategy.
And my example has always been for some reason this always has stuck in my head, Google Plus. Because if you think back to like the early 2018s, whatever, Google clearly had a strategy. Our strategy is to go beat Facebook, and the strategy required integration of social across every part of Google's properties. And from people I've spoken with, every product manager, every engineer, everyone on the front lines of building all those products were like, why are we doing this? Our customers don't want this. It's making the products worse. But you pretty much had to do it, because that was the strategy of the company. And sure enough, customers hated it, nobody wanted it. And that was just a lot of lost energy in that. And it's not that like they shouldn't have tried something new. It was that this quote unquote strategy was driven by an executive idea of who their competition was, as opposed to what customers wanted. And that's what has always been my example of why I call strategy a dirty word. But then I read 7 Powers and I started to think a bit differently about it. So Hamilton, why don't I give you a chance to rebut my natural skepticism of strategery?