The Law Of Comparative Advantage Of Entrepreneurial Firms: Do What You Are Best At

I think I can type faster than my assistant (she may disagree and challenge me).

But if the assistant is to attend the board meeting for me, while I am typing in the office, I think my entrepreneurs may be very unhappy.

Therefore, although I may be faster than an assistant in absolute terms, my job is to be a venture capitalist and spend most of my time working with entrepreneurs, which is more important than what I am better at than her.

This simple example comes from an economic law discovered by David Ricardo, the so-called "economic law".

Unfortunately, I find that too many founders have ignored the derivation theory of this rule -- the law of comparative advantage of start-up companies.

I am not David Ricardo, but in my opinion, if

The founders are talented, versatile professionals.

Therefore, they will devote a lot of time to doing things that they may be better at than others in the organization, but in this way, they will be relatively inferior in other kinds of things that are especially suitable for them.

I worked with a highly talented founder / CEO.

I think he can actually perform their functions better than any of their direct subordinates.

But if he acts as a parent, he puts all his time into operational project management.

In a fast growing start-up company, the founders must be very cautious and strategic about how to use time.

The founders are always complaining about their lack of skills and the backlog of work on their hands, and have to work hard to figure out how to prioritize their energies.

I would like to draw the attention of entrepreneurs that there are two main areas in other things: founders should not fake others: products and employees.

Product related activities include developing close relationships with customers (studying "customer voice"), designing product characteristics, thinking about product strategies and setting priorities.

Employee related activities include staff recruitment, corporate culture, training and counselling.

If founders find themselves spending a lot of time in matters that are not related to products or employees, they violate the rule of comparative advantage.

They need to rethink whether they are authorized in the wrong areas, so that they can not (properly) devote themselves to the more appropriate areas.

I remember reading once that in the early days of Microsoft Corp (Microsoft), Bill Gates and Steve Ballmer would check their schedules each month and give advice on what fields they should invest in.

This idea has always been hard for me to forget, so my partners and I are also working hard to do this regularly.

Try this exercise: every weekend, review the time you spend on your startup, and list 6-8 of the most important areas (for example, products, employees, project management, operations, marketing, sales, investor relations, and others).

Like a lawyer, he reviews his time every weekend by giving bills to these categories one by one.

When you take a step back and analyze how much time you actually spend (relative to the time you think you spend), you may find that you can make the appropriate adjustments and better schedule your time.

Following the law of comparative advantage of entrepreneurial enterprises may not allow you to win the Nobel prize in economics, but it can help you use your time more effectively when you start your business.