Everything we learned in 29 minutes at Harvard Business School

This is everything we learned at Harvard Business School in 30 minutes. I'm Cherie, I'm Jean, and we're the Tiger sisters. Welcome to Season 4 of the Tiger

Sisters Podcast. Yeah, so if you're new to this channel, Gina's my older sister. She went to Harvard Business School. She's my role model best friend. We have this podcast together. And just a little bit more background of who she is. She's an absolute badass, badass and biatch. She started her career out at Goldman Sachs working in finance, and then she's pivoted to working in tech as a product manager at Zynga, the gaming company, and most recently at Snapchat as head of product for

augmented reality monetization. And she went to Harvard Business School. She graduated in 2017. She has over 50 patents in AI, and I'm able to talk about this because she won't brag about herself and I have to brag about her. So as you know, we're talking about Harvard Business School, everything she learned there. I went to Stanford's Business School and I just graduated a few months ago. So this is fresh on our minds, and we want to give you a crash course in the next 30 minutes.

We're going to race through all these concepts, so buckle up. We're going to go through 4 main concepts, strategy, marketing,

product development and finance. So. What we're going to do throughout this episode is we're actually going to bring in examples for each of these sections so that we can talk through the company and you can really understand how these frameworks apply, just like we would in Business School. I learned best through examples, so I'm really glad we're going to put this to the test. And by the end of this episode, you're going to have a mini Harvard MBA, basically saving you $250,000.

That's right. We both spent $500,000 collectively on our MBA S and you're going to get. This for free, not including not including the. Travel expenses, fun and extraneous travel expenses. So we're going to dive right in right after this break. Hey guys, quick break to let you know that we now have merch on sistersmatcha.com. We have sweatshirts and T-shirts that we designed ourselves. Go check it out and please rate US five stars on Spotify and Apple Podcasts.

These ratings are so important for the distribution and survival of Tiger Sisters Podcast. Thank you for your support. So let's get started with

strategy. So strategy is where Harvard Business School really, I think, differentiates themselves, or at least they strive to differentiate themselves. And where where they shine. Yeah, so at HBS, strategy is not just a buzzword, it's a road map for where to compete and how to win in a complex marketplace and. Without a clear strategy, even the best products or the best companies will not be able to succeed.

A. Classic HBS tool is Michael Porter's Five Forces, which analyzes the five components of strategy. Porter's five forces was actually invented at HBS, so we bring it up all the time. Porter's five forces are as follows. Threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and rivalry among existing competitors. So let's say we are going to use Starbucks as the example.

Everyone knows Starbucks, and that's actually kind of like a classic Business School company example. So let's start with Starbucks and threat of new entrants. So the way to think about the threat of new entrants is that from Starbucks perspective, one of the reasons why they're super successful is because it's really hard to start your own coffee company and go against big people like Starbucks.

Starbucks already is a pretty massive company, so they spent a lot of money on brand awareness, supply chain efficiency, and they have a lot of money to spend on having the best real estate so they can have the best stores in the best locations. You might be able to open up a small coffee shop, but going against Starbucks For these reasons can be pretty hard. So then I would say threat of new entrance for Starbucks is actually pretty low, yes. So the second is bargaining

power of suppliers. Yeah, I feel like this is a pretty easy one because the scale of Starbucks is so massive and obvious that they have incredible bargaining power with suppliers. They buy in a huge bulk volumes. So because of that, they can really control and push down the prices. Yeah, that's kind of similar to Walmart as a classic example that has incredible bargaining power and buyers. Also Costco. Those are some of the other ones that get brought up a lot. Yeah. The big names.

OK, Sheree, what about the bargaining power of buyers? So the way to think about this is from the customer perspective. The customer can go to other brands out there of coffee places, like you could go to a Dunkin' Donuts, you go to Phil's or Pete's. But honestly, like there is pretty high brand affinity for the customers. Starbucks has loyalty programs. They have like cool seasonal drinks.

Customers want to buy Starbucks. Starbucks has also invested a lot in this area through their technology investments. So creating the app where you deposit money into your Starbucks account ahead of time kind of locks in the customer and sort of decreases the buyer bargaining power in some ways because they literally have a Ledger. With you, Yeah. And I guess the last part about Starbucks is that it was one of the bigger names to create a third space. And now there's like so many

other third spaces. But Starbucks is really known for being like that place away from home where you can hang out. You bring a laptop and meet up with people. So in the customer's mind, like it's still like, let's meet up at Starbucks. Yeah, it's ingrained after having been in your sort of routine and your go to 3rd place for so many years, ever since for us, since high school or middle school, even middle. School. Not my caramel, My iced caramel macchiato. I guess it was the ultimate

tree. It was so the ultimate sweet treat. Yes, before we knew about calories. Before I cared about calories and and the effects of caffeine on stunting my height as a 13 year old in middle school. But I love that ice caramel macchiato. I felt like a queen. Drinking that, but we digress back. Back to the lesson. Back to the lesson. OK, so the. 4th force to talk about is the threat of substitutes. Yes. So if you think about coffee as a category, there are a lot of

substitutes. You can make coffee at home, you can get coffee in the office, etcetera. But I think what Starbucks has done a really good job of is expanding into adjacent categories so that they sort of diversify their holdings and then decrease the threat of substitutes. So Starbucks also makes those little pods, right? Coffee pods, they make coffee beans you can buy, they make ground coffee. So they're not just a retailer of coffee in their retail

locations only. They've done a really good job of sort of mitigating the the risk of substitute, the risk of substitutes. So I would say their risk of substitutes is moderate. Yeah. The last of Porters 5 forces is rivalry among competitors. So how does Starbucks line up here?

So I mean, there's a bunch of different competitors in the coffee space, but Starbucks stands out because they're consistently delivering on the customer experience in store and setting itself apart with its premium pricing. There was an HBR piece recently on how Starbucks has gone above

and beyond on customer service. And also, I know in the most recent years, there have been kind of some bad press that Starbucks has had recently, especially over the last like three years, but they've like completely jumped on top of that and tried to mitigate any of the bad press that they had recently. The press, the Starbucks like CEO slash president has gotten ahead of that. And so they're just really trying to put the customer

service at the forefront. A Starbucks employee called the police on these two men who were like these two black men sitting in Starbucks. And then they were arrested even though they didn't do anything wrong. But then Starbucks like, really put a forward an apology and we're just like, how do we make this right?

Yeah. So that is the framework of Porter's Five Forces. Anytime that you're thinking about a company, evaluating a company, you want to ask yourself these questions and go through this framework. And then that way you can understand their landscape and where they sit amongst all of their competitors.

Another key HPS principle is choosing basically how you'll compete. So competitive positioning, Porter's generic strategy is basically say that companies pursue one of two approaches, either cost leadership or differentiation. So cost leadership means being the low cost producer. So again, the leader in the space is Walmart. They are all about getting the lowest price possible for you and doing anything they can and then also scaling back on other amenities so that they can

always get you the lowest price. And that works for Walmart because that plays into like they're offering people go to Walmart for the cheapest. Like their logo is like everyday savings, right? That's their core value. Yeah, exactly. Versus differentiation means offering something that is valuable to the customer that might be at a premium. So thinking about cost leadership and differentiation, which one do you think Starbucks falls into answer in 321 Differentiation, differentiation

situation. So Starbucks offers more premium priced coffee and also because of the things that we just named before, like their focus on 3rd spaces, their focus on customer service, they try to differentiate by giving you a better experience than just, you know, the lowest, cheapest experience. Yeah, the example that comes to mind for me is the writing the names on the cups, right.

That is one extra step in there. Yeah, it's like an extra step in their operations that honestly is not really necessary for a generic experience, but it's caused so many it it means a lot to people, I think, to feel personalized. And also it causes some funny memes. Yeah, it's actually paid off in spades for them, I think. They've stopped like writing. I don't know if you've been to a Starbucks recently, but now they're like printing, printing

it out like the names. Yeah, sometimes they still write it. Maybe in my? Online orders, they just print it out. But then I think recently there's been a mandate. I saw this online. There's an article where like the employees of Starbucks were asked to like, write more personalized messages on the cups.

Exactly. I saw someone, someone I I know wrote like I love you so mucha someone or someone received a cup that said I love you so mucha and she actually posted it on her Instagram. She's like oh this totally made my day. Yeah. I mean, that's just one example of differentiation, a high, high

touch. So the one thing you can take away from this lesson is that you can't be the cheapest, the best and the highest quality all at the same time. Just like Starbucks, they chose to be higher quality and more expensive. And one example that comes to mind for us is Sisters Matcha, right? Sisters Matcha, which is our company is a ultra premium matcha brand and it's ultra premium product.

So even if we wanted to offer it for less, we just couldn't because of our supplier cost and the fact that the matcha that we provide is the cultivars called Akumadori, which only makes up 2% of all of the matcha produced in Japan. So by definition, it is very rare. It's very hard to cultivate. It has to be hand picked. Like all of these different reasons contribute to the fact that it's a premium product. So for us, we went the way of differentiation as opposed to cost.

Yeah. Which makes sense for like the stuff like who we are as well. Yeah, we enjoy nicer stuff. And we also like matcha, like when we're drinking ceremonial grade first harvest matcha. Like you want it to be the good stuff that you're putting into your body, like.

Exactly. So for us, it wouldn't make sense to start a brand that is oriented on cost leadership because that doesn't align with our own personal brand or our own values for something that you are basically consuming every day and putting into your body and that's meant to help you and improve your health. Very true. And also, it's just beautiful. And it tastes so freaking good. But yeah, so these are things that like this is just another

example for you guys to see. Like Starbucks is obviously a huge behemoth, but these are things that we've thought about when creating our own company, which is very, very small and is kind of a start. Yeah. And also just like breaking into the macho world, like we were asking these questions of ourselves to each other, of our brand and where do we want to sit and making these very intentional decisions so that, you know, we can be successful.

So that concludes our mini lesson on Porter's five forces.

Next, we're going to be talking about marketing. One of the first big concepts for marketing at HBS is STP, segmenting, targeting, and positioning. STP is all about identifying specific customer groups, choosing the right customer group for you, and then crafting a message for that customer group specifically and then making sure it sticks. So I think that all sounds pretty straightforward and simple, but it's the backbone of essentially any marketing campaign in any marketing go to

market force. OK. Love that. One of the examples that we're going to use in our discussion and our mini case study is Warby Parker, which is one of the most recent big, big successes in the

direct to consumer D to C world. Yeah, so Warby Parker actually is a really good example of a company that came in and disrupted a massive marketplace that was run by 1 behemoth, essentially Luxottica. So Luxottica was accounting for like 80 plus almost 90% of the eyewear market, the obstacle eyewear market glasses and they basically any brand you could think of was produced by Luxottica. So they were essentially a monopoly.

Which is crazy, by the way, if you guys don't know Luxottica, like look it up like they own like Ray Bans they own like all the big names. You're like, oh, I thought Ray Ban was itself. Nope, it's owned by this like one company. And if you guys remember buying glasses, optical glasses in the 90s or the 2000s, it was a really big deal. Like you would pick out a pair of glasses, you would get them made and it was always 300 plus dollars if you wanted anything that was remotely cute.

Yeah, it's a it's a really expensive and so Warby Parker came in, they like completely shook up the model, their deed to C and mostly like started online. So they started with their like try on phase. You can try on a bunch of glasses. They would mail it to you. It was also much cheaper than what you would get originally with the other model. OK, so good summary. So let's talk about how they used STP to break into this market.

So the first part is segmenting. So what they did was they looked at the market and they said, OK, there are actually multiple different types of buyers. First for glasses, right? There are people who are super high end and they want really, really fancy glasses. Maybe that's not really us because they just want brand names. They want Prada, Versace, I want Gucci, I want product anyway. And then there's another market which is cost conscious.

So people who just want to the lowest possible price, right? Kind of like what we talked about before. And then they identified 1/3 Market, which was essentially millennials, people who wanted something that was trendy and still looked good, but not necessarily didn't necessarily have to be the specific brand name. Right, so the T in STP is targeting. So after they identified these different segments, they decided which segment to actually target. You can't do all of them really well.

In fact, if you try that, you're probably going to do a pretty bad job. You should be very focused on which segment you target. And so then they ended up choosing the third segment, which is the cost conscious millennials who want something cute, but something not too expensive. And so then Warby Parker, after they chose their segment, they basically created their company around this target segment. And basically what does this target segment care about and how can they cater to their

needs? And so the first thing is that this target segment is online first. Like millennials are very comfortable buying things online, having things shipped to their house than like previous generations. The second thing we just mentioned is price and fashion. Warby Parker started around 95 to $100 and this is a very affordable price range that millennials are willing to opt into. And the last is like social impact. Millennials are more conscious about the impact that they're

leaving in this world. And Warby Parker like created a program knowing this where they like, you know, it's buy a pair of glasses, get a pair of glasses.

And so they were able to tap into these three sentiments that this segment really. Cares about great description. So the last part of STP is Pete, which is positioning, which is essentially Warby Parker asking the question and answering it. How do we want customers to see our brand. So the answer to this was one, they wanted people to see their brand as modern, chic, and accessible. 2, they wanted customers to see their brand as digital first.

So everything basically started with the website and then from the website you could pick which glasses you wanted to try and they would mail it to your house and then you can select your glasses from there. And then three, they also leaned very heavily on this sort of sustainability and helping other people in the world narrative, so that they really tied it that into pretty much all of their branding and all of their

marketing. Yeah, another company that I think about that fell into this category, although it's like not really popular anymore, but it's like cater towards millennials was Tom's. If you remember those shoes like 15 year, 1015 years ago, they were all the rage when they first started out. Everyone wanted a pair of Tom's, which is a pair of flats, a pair of canvas cloth flats.

But the biggest part of their campaign that seared into my mind is that you give a pair of, you buy a pair of shoes. They give a pair of shoes to a child in need in a developing country. And so it was like really interesting that like 10-15 years ago, I think that's also when Warby Parker also started to like, there was such a huge focus on these companies to have a sustainability bend. Yeah, and it was also a very novel concept that.

Doing good in the world? Sort of that your company would be have that as part of his company ethos. True. And so then that also, I think, elicited a lot of people who became brand loyalists for that reason, because they wanted to feel like, hey, this brand represents my morals, represents how I move in this world. Yeah, conscious consumerism, actually. That's so interesting. That was new at the time.

Yeah. I think also coming out of that where companies were like Rothys, another shoe company that, you know, is like Conscious Eco, they don't have like a give and get program, but like they try to do recycled water bottle shoes, sustainability, sustainability, Blue Land sustainability band. So it's really interesting. I'm sure there's another case study out there about like the trickle effects of these giant companies establishing themselves and how people follow that trend.

Yeah, maybe it's kind of more, it's almost like taken for granted now that that's sort of part of a lot of the DNA of a lot of companies, yeah. So now Warby Parker is valued at more than a billion dollars. They have so many cute little boutiques in like basically every major city, and they're doing super well. And the main conclusion from this discussion from STP is that you should choose a target segment and the hyper focused on the population in the community

that you want to serve. Because if you're trying to serve everyone, you're really serving no one and you're not going to be doing a good job. You really need to be focused on your target segment. So if you're launching your own brand, you want to ask who specifically do I want to serve? And then what you do is you actually think about these people and then you build your entire brand and your strategy around their hopes, their dreams, their frustrations and

their values. The. Best products that I've ever used are the ones that are like hyper focused on their customers and understanding them super deeply. All right, that concludes the section we're moving on. OK.

So the next section we're going to talk about is product innovation. So for product development and innovation, between the two of us, we've worked on this for almost 20 years, crazy put together. So we could probably talk about this for 1000 hours. So we'll just go really, really quickly into the main take away.

The number one thing to know about product development that we learned at HBS is that you can't just guess at what a person's problem is. You have to really very specifically identify the customer's problem and work to solve specifically that. And the example we're going to use is Netflix. There's actually a lot of Business School cases written about Netflix, yeah. Actually, I met Reed Hastings because he came to Stanford GSB last year when I was a student and he gave a speech.

Oh, nice, yeah. And I read his book and I've done like a book report on on him so. A book report. I literally did a book report. How old were you? This was last. Year when I was a student at Stanford. So you're obsessed with him kind. Of so I'm really excited to talk about. This. Oh good.

The main take away here, and it's kind of related to our previous section, but it's getting to know your audience and your customers super deeply. And we're just going to give you 2 specific tactics on how to do that. And the first is user feedback and iteration. One way to do this is AB testing. Famously, Netflix ran a bunch of AB tests, meaning they ran like two different types of products with their customers to see

which ones they liked better. All of this is in service of getting to know their customers and what their customers prefer. Yeah, Netflix is infamously known for always AB testing every single little thing. So one example that you may or may not notice is if you compare your Netflix account with your friend's Netflix account and you look at the same title that's being presented to you, you may have a different photo for for the title. You may have a different

thumbnail. So for example, one thing I noticed is that I think Netflix has identified that I like handsome Asian men because it doesn't though, because first shows that for example, if there's like a movie with Henry Golding in it, they'll always show Henry Golding as the thumbnail versus for someone else, they'll show the other main character who's actually the main character when Henry Golding is more like a secondary character I. Want to see Henry Golding in every thumbnail?

So they know that I'm more likely to click into this the movie when they're showing me Henry Golding versus the actual main character and not him. This is. My cue to promote our dating episode podcast. So if you guys are new to our podcast here at Tiger Sisters, we also talk about lots of other things outside of Henry Golding Miss Festival. So check out our dating podcasts. So the main take away from this section is to really understand the problem that you're trying

to solve. Iterate like crazy and don't be afraid to pivot when you get new data and information. And test, test, test, test, test.

Test and our last and final section in this episode is on finance. Here are some terms that you should know and also like how to not feel dumb in these conversations. Yeah. And the HBS approach to finance that they would always tell us over and over is not that every single student at HBS is supposed to graduate as some sort of financial genius and be able to actually run DCF models on your own all the time.

It's actually more so that you want to graduate with the ability to run your own company or be a CEO somewhere and have conversations with the CFO and with the board where they talk about finance and you understand everything that they're saying.

So that's really the goal. I actually like that approach because I don't personally enjoy being in the weeds of finance and actually putting together all the models myself, but I love to talk with my counterparts in the Financial Group about how things are going and like adjusting the projections and getting more money. I mean, but also it goes to say like if you are ACEO or a leader of a company, like it's not your job to be the expert.

Like that's the CFO, that's like your right hand man or woman who is supposed to better understand it as the expert and like help you make decisions with that information. Right. But you need to understand what they're presenting to you so that you can make those decisions with confidence and then also represent all those decisions to the board. True Debt.

So we're going to go really quickly through 5 concepts. The first one is revenue versus profit. Shree, can you start us off with revenue versus profit? OK, guys, this is the first concept you really need to know. You've heard of revenue, you've heard of profit. How are they different? And we're going to use the example of Netflix. Revenue is how much money is coming through the door. And with Netflix, it's basically like their subscription fees. Profit is what's left after all

the bills are paid. So Netflix is a tech company. They probably have a lot of servers, they have employees. They need to pay all those costs. Profit is after all those costs are covered. This is really important because you can have billions of dollars of revenue. Like you can bring in a lot of cash, but if you have really high costs, you might still not be a profitable company. The next concept we're going to

talk about is cash flow. Gene, can you explain this? Sure. So cash flow is essentially the closest item to I think your bank account. So if you think about Netflix, what they do is they invest billions of dollars upfront to actually produce the shows that they produce in house. So those shows are actually marked as a asset. So you can, it can seem like you actually have that money on hand in terms of your balance sheet, but you don't actually have the cash on hand.

So that's why it's really important to differentiate between cash flow and revenue versus profit. Yeah. And something they say in Business School when they're like evaluating businesses, some businesses might be cash poor. They might just not have a lot of cash on them. Yeah. And then some businesses are seem very, very boring, but they actually throw off cash in a very recurring manner. And then the third concept to talk about is unit economics.

This is a really important term to know and to understand because we'll get whenever you're evaluating a company, like it will always inevitably come up, people will ask about the unit economics. So the unit economics actually just refers to the cost per unit. And in this case of Netflix, it's the cost per subscriber. For Netflix, it's like the margin that you get per subscriber. So for example, each subscription cost $10, you get that money in.

But then for Netflix, they have to like, create movies and TV shows and if they're able to like figure out each subscriber actually cost them $12.00, then they're like losing money. Yeah, it makes sense. I think also in terms of marketing, a lot of times people look at the cost for marketing versus your lifetime value of the subscriber.

So you need to make sure that the amount you're spending to get each incremental subscriber or for each unit economics makes sense in terms of how much you think that they're worth. So that's actually a lot of times companies such as Netflix, I know for sure, actually Netflix spends a ton of time doing this analysis with their their hordes of data scientists. Yeah. And I guess for us, for Sisters Matcha, for our Matcha brand, something we think about is unit

economics. So basically for our brand, the example is like breaking it down per customer if they're ostensibly if they're a first time customer, they're buying one. How much does it cost for us to you know make the can per can? What is it? If we're shipping all these cans, just bring it down to the most basic unit of just one can. Well, per. Can per can exactly, yeah. So the 4th finance term you should know is forecast and. Runway. Yeah. So this one's pretty very

simple. Runway is basically how much money do you have left if you continue to spend at your existing burn rate. So if you're spending for example, $100,000 per year, how much money do you have? If you only have $200,000 a year, your runway is 2 years. After that you will run out of money. So as ACEO, you have to always be looking out for your run rate to make sure that you can stay afloat.

And the last group of finance terms you need to know are valuation metrics. These are terms that you've probably heard about or read about somewhere, maybe the Wall Street Journal, for example, price to earnings ratio or EV to EBITDA. That's enterprise value to EBITDA. These are all things that essentially are projecting what the worth or value of your company is. Don't be afraid of these acronyms because it's just a way for investors to express the

value of your company. And the actual number itself doesn't really mean anything unless you look at it within the context of what your category is. So if you look at a company and you say, oh, they have a price to earnings of 20, that can mean that they're doing amazingly or can actually mean that they're really below the bar depending on what category they're in. So it's like tech versus, you

know, industrials, for example. So we can talk about this for way, way, way more, but we're not going to. We're just going to leave it at that. And let us know if you have any questions in the comments and if you want us to do a longer episode on this.

So that wraps up the HBS hard skills you need to know. There's so much more we can talk about the soft skills on leadership and networking, which is honestly what HBS and Business School is known for. Thank you guys so much for

tuning into this episode. Please leave comments about what you want to learn more about and we'll create a follow up episode on that. And Please remember to like, comment and subscribe and please leave five star reviews on Spotify and also Apple podcast. It helps us so much and it keeps our podcast alive. If you enjoyed this podcast episode, please share it with someone who might find it helpful and leave any questions you guys have in the comments.

This is honestly one of our first like explainer episodes and if you want to see more stuff like this, please let us know and give us suggestions. We read every single comment. Thanks for tuning in. Bye. Hey everyone, quick break to share something special. Sisters Matcha. We've launched limited batches of ceremonial grade single estate single cultivar matcha straight from the family farm Sheree worked on in Japan. It's pure, authentic, and crafted with intention.

Head to Sisters matcha.com to grab yours before it sells out. Make Matcha your daily ritual for lasting energy and focus.