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In my ‘last’ piece, I shared some thoughts on business fundamentals that generated significant pushback. Two points in particular seemed to touch a nerve:
1. My assertion that business is essentially a zero-sum game, and
2. My claim that what makes a business “good” is objective rather than subjective.

This strong reaction has prompted me to clarify my position and expand on these concepts in greater detail.

In this piece I shall outline what I believe constitutes a truly good business, explain why competition for resources makes business fundamentally zero-sum despite market growth, and break down the non-negotiable fundamentals that separate resilient, thriving enterprises from those destined to fail. Whether you are a founder, investor or business leader, understanding these principles will help you build something that lasts.

What Makes a Good Business: Resilience

A good business, like any meaningful long-term endeavour (Fitness / Marriage), must be resilient. In the business context, resilience means being sustainable in operations and capable of growing profitably over time, regardless of who is at the helm. It is about building something that can weather storms both expected and unforeseen.

To assess your business’s resilience, ask yourself what it can endure. Begin with everyday challenges and work your way up to truly catastrophic scenarios.

• Can you survive when suppliers miss deadlines or competitors slash their prices?

• Can you pivot quickly when regulatory changes hit or when a key co-founder departs?

• Are you prepared for constant technological shifts or for a competitor suddenly securing massive funding?

• What of more disruptive challenges – system outages, data breaches or reputation-damaging publicity?

• Can you withstand legal challenges, global pandemics or major market resets?

• What happens if investors pull out or major clients abandon your product?

• Can you navigate through hyperinflation or geopolitical instability?

• Would you survive a war?

• Ultimately, would your business survive a seismic shift in customer preferences that renders your core offering obsolete?

Companies such as Coca-Cola have, over the decades, developed responses for each of these challenges. The question remains: have you?

Why Business Is Fundamentally a Zero-Sum Game

Many business thinkers argue that business operates as a positive-sum game – markets grow, economies expand, and a rising tide lifts all boats. This perspective sounds appealing, yet it misses a fundamental truth about competition.

At its core, business is about competing for finite resources. Consider customer attention and wallet share; every client that your competitor wins is one that you do not secure. Even in growing markets, market share remains relative to the overall size. Exceptional talent is another finite resource – when your competitor hires the best engineer in your field, that talent is no longer available to you. Investment capital is similarly limited, particularly during economic contractions.

Even when creating entirely new markets, first-mover advantage is temporary. Look at OpenAI’s experience with ChatGPT – within months of proving that people would pay for advanced AI chatbots, competitors such as Claude and xAI emerged specifically to capture market share. If business were truly not zero-sum, OpenAI would have no reason to keep its technology proprietary. They could open-source everything without concern. They do not; without exclusivity, they would struggle to attract the investment needed for computational resources (Nvidia’s GPU’s ain’t cheap) or recruit top talent (MIT’s Grad’s ain’t cheap).

While markets can expand, creating more opportunities for all, at any given moment businesses are competing for a finite set of resources – customers, talent, attention and capital. This competition is fundamentally zero-sum, even as the overall pie grows.

What Makes a Good Business: The Objective Fundamentals

The factors that create a resilient, thriving business are not subjective preferences; they are objective requirements, as non-negotiable as the elements of a successful marriage or physical fitness. These fundamentals underpin a business that can endure, grow and remain profitable over time, even when leadership changes. Consider the following eight essentials:

1. Clear Value Proposition

A good business solves a real, significant problem. When you truly address a pain point, customers become evangelists for your product without further prompting. This is the ultimate test; if your fundraising pitch requires a substantial marketing budget to explain your value, then you are signalling that you are not actually solving a genuine problem. You read that right, when you ask me for money and you include ‘marketing’ in the list of uses, you have just told me that you are solving a real, significant problem.

Take Dropbox, for example. They did not need to over-explain their value – they built something that people desperately needed but had not articulated. Likewise, consider Airbnb. Its value proposition might sound trivial if reduced to ‘stay in someone’s home instead of a hotel’. The revolution lay not in the description but in the solution of genuine economic and experiential problems for both hosts and travellers. Truly revolutionary products often have straightforward value propositions when put into words; it is not clever positioning that drives success but the elimination of real pain.

2. Strong Leadership and Culture

Leadership is not solely about setting the vision – any competent executive can do that. The real challenge lies in forging a culture that makes your vision endure. Culture is not what you say; it is what you consistently do. If, as a leader, you respond late to emails, you are effectively establishing a culture where delayed communication is acceptable.

Your true values reveal themselves in the difficult decisions you make, not in glossy mission statements. That one occasion when you retained an aggressive, high-performing sales executive despite warnings of toxicity defined your culture more sharply than any carefully worded document ever could. Culture is not what you intend to create; it is what you tolerate. Great companies are not built on generic platitudes about “excellence” and “integrity”, but on distinctive, sometimes unconventional practices that align with their mission. The more deliberate and differentiated those practices, the stronger your culture becomes.

Effective culture is often counterintuitive – it involves embracing practices that might seem uncomfortable to outsiders because they serve a deeper purpose. The hard truth is that your company already has a culture; the question is whether it is the one you truly desire. If it is not, meaningful change must start with you – re-evaluate your standards and lead by example every single day.

3. Customer Obsession

True customer obsession involves a delicate balance between listening and leading. It operates in two distinct modes: iteration and innovation.

Iteration requires listening to customers who can articulate improvements based on their previous experiences. They can advise on how to enhance your checkout flow or streamline your inventory system. This approach works best when the problem space is well understood.

Innovation, however, entails solving problems that customers have not yet identified. For example, before ChatGPT emerged, OpenAI’s prospective users could not possibly have articulated what they wanted from a language model – they lacked the frame of reference. The breakthrough did not come from incremental feedback; it arose from a bold vision that redefined possibilities. Now that ChatGPT exists, customers can offer feedback and suggest refinements, but the true power lies in building what they will ultimately need – even if they have not yet conceived it.

The challenge for great founders is to balance these two approaches: use iteration to fine-tune what works today and embrace innovation to pioneer new frontiers. Genuine customer obsession means caring enough to occasionally disagree with what customers say they want, and instead building what they will eventually require. This necessitates leadership so competent that your team and investors have the confidence to follow your vision, even when it diverges from conventional customer feedback.

4. Execution Excellence

Ideas are abundant. Execution is rare. Your market research, pitch deck, network, and charisma matter far less than your ability to deliver consistently, especially when challenges arise. That is the real test of a founder’s worth.

This explains why NDAs often appear misguided – your business plan holds minimal value if you cannot execute it. Consider the so-called Winklevoss/Zuckerberg narrative. Harvard Connect was not “stolen”; it was a valuable but limited intranet concept, akin to a local coffee shop bulletin. Facebook, from its inception, was conceived with a global vision – much like Starbucks. Only those who understand execution grasp this subtle yet crucial distinction.

Truly valuable ideas are not easily replicated because they are exceptionally difficult to execute. If someone builds something better after learning of your concept, take pride in having provided the inspiration – then strive to create something even better. Every groundbreaking business began as a modest idea that evolved through relentless execution. The most outstanding founders combine curiosity to explore alternatives, proactivity to test assumptions, relentlessness to overcome obstacles, and resilience to endure inevitable setbacks.

Execution is not merely important – it is the fundamental difference between success and failure in the startup ecosystem.

5. Adaptability

Effective adaptability means maintaining an unwavering focus on the problem you are solving while treating every implementation as a provisional hypothesis. Your founding vision should concentrate on the problem space itself, rather than on your initial solution. This approach allows you to execute with conviction while rapidly adjusting your tactics based on feedback.

Navigate your market using first principles thinking. Do not simply follow competitor moves or accepted wisdom. Instead, regularly deconstruct your business thesis to its most basic assumptions. Question not only your product but also your target market, your go-to-market strategy, and even your initial definition of the problem. The objective is not to achieve incremental improvements but to unearth non-obvious opportunities that emerge when you rebuild your thinking from the ground up.

Successful adaptation requires what I call existential optimism – the ability to hold two seemingly contradictory mindsets simultaneously. You must be absolutely certain that your overall direction is correct, while retaining radical scepticism about your current approach. Develop robust systems to distinguish between visionary persistence and self-delusion. Establish clear, measurable hypotheses for every significant decision and set predetermined triggers to indicate when a course correction is necessary.

Equally vital is infrastructural flexibility. Design your early organisational structure, technology choices, and business processes with change as the norm rather than the exception. This may mean sacrificing some short-term efficiency for long-term adaptability – for example, choosing technology that offers greater flexibility over one that guarantees rapid initial development, or building a culture that values continuous learning rather than mere execution.

For pre-revenue startups, adaptability is not simply about responding to market feedback. It is about systematically discovering the market while building the capability to pivot rapidly once promising signals emerge. The winners are not those who adapt only after securing product-market fit; they are those whose agility enables them to find it in the first place.

6. Financial Discipline

The old adage “a fool and his money will soon part” applies doubly in business. Financial discipline is not just about cutting costs – it is about strategically allocating resources to maximise your runway while promoting growth.

Financial discipline means understanding your unit economics before you scale, maintaining constant clarity about your cash position, and setting burn rates that align with your growth metrics. It also involves preparing for funding delays or shortfalls with multiple contingency plans, prioritising investments that directly enhance your core value proposition, and meticulously measuring the return on every pound spent, whether on marketing, product development or talent. Cultivate a culture where financial prudence is held in as high regard as innovation.

The most successful businesses maintain this discipline during lean periods as well as times of abundance. They recognise that capital efficiency is not just about survival – it is a competitive advantage that affords greater independence and strategic flexibility. Remember, impressive growth numbers on a pitch deck mean nothing if your business model is not sustainable. True financial discipline is about building a business that will eventually thrive on its own economics, rather than merely on investor capital.

7. Competitive Differentiation

Sustainable differentiation is not achieved by merely tweaking features or adjusting prices. It is about fundamentally rethinking the problem you are solving. Do not enter crowded markets directly; instead, target issues that others overlook, addressing urgent needs for a specific group where your team’s unique insights create a natural competitive advantage.

When you select the right problems, you lay the groundwork for solutions that become increasingly difficult for competitors to replicate as you grow. Every new user and every data point makes your offering exponentially more challenging to duplicate. Beyond building an effective solution, you must move with a speed that distorts reality. Execute so rapidly that while competitors are still planning their response, you are already advancing to the next iteration of your product.

Underpinning this must be a clear, contrarian vision – a firm belief in a future that others have not yet recognised. You need the confidence to stand alone, bolstered by insights that expose opportunities where conventional thinking falls short. Rather than competing on standard dimensions such as features or price, reimagine the entire user experience, business model or delivery mechanism in ways only you can deliver.

True differentiation is not about incremental improvement – it is about carving out a niche so fundamentally different that it aligns with emerging customer needs and leverages new technological possibilities. Sustainable differentiation arises from a potent combination of choosing the right problem, building an increasingly inimitable solution, executing with unmatched speed, maintaining a clear contrarian vision, and delivering value that competitors simply cannot replicate.

8. The Right People

Surround yourself with, partner with, and hire only those who excel at execution. Do not hire based solely on personality; hire for the effectiveness required by the role.

The right people share your values while complementing your weaknesses. They bring perspectives that you lack, challenge your assumptions constructively, and remain committed to execution excellence above all. Building a great team means defining roles strictly based on business needs rather than personal affinities, setting crystal-clear performance expectations from the outset, and providing direct feedback that focuses on results rather than intentions. Create systems that allow exceptionally talented individuals to maximise their impact. Understand that culture fit does not equate to hiring people who are just like you. Be prepared to make difficult personnel decisions swiftly when necessary.

A mediocre business concept with an exceptional team will always outperform a brilliant concept run by a mediocre team. Your people are not merely resources – they are the essential determinants of your business’s success or failure.

When any of these fundamentals falter, the business starts to crumble.

It goes without saying: None of the above apply to cartels, rent seekers or monopolies. Which is exactly why countries should deregulate, reduce the size of government and put more state assets into the private sector.