Dockerizing a web app, using Docker Compose for orchestrating multi-container infrastructure (part 1 of 3)

 

This is a GUEST BLOG POST by Andrew Bakonski

Head of International Engineering @ Veryfi.com

Andrew heads up International Engineering efforts at Veryfi supporting Veryfi’s Hybrid Infrastructure on AWS & Azure making sure the lights stay on.

Andrew’s LinkedIn: https://www.linkedin.com/in/andrew-bakonski/

A couple months ago we decided to move Veryfi’s Python-based web app onto Microsoft Azure. The process was complicated and involved several stages. First I had to Dockerize the app, then move it into a Docker Swarm setup, and finally set up a CI/CD pipeline using Jenkins and BitBucket. Most of this was new to me, so the learning curve was steep. I had limited experience with Python and knew of Docker and Jenkins, but had yet to dive into the deep end. After completing the task, I thought I could share my research and process with the Veryfi community.

I’ve compiled a three-part series that will cover these topics:

  1. Dockerizing a web app, using Docker Compose for orchestrating multi-container infrastructure
  2. Deploying to Docker Swarm on Microsoft Azure
  3. CI/CD using BitBucket, Jenkins, Azure Container Registry

This is the first post in the series.

I won’t go into a full blown explanation of Docker – there are plenty of articles online that answer that question, and a good place to start is here. One brief (and incomplete) description is that Docker creates something similar to Virtual Machines, only that Docker containers run on the host machine’s OS, rather than on a VM. Each Docker container should ideally contain one service and an application can comprise of multiple containers. With this approach, individual containers (services) can be easily swapped out or scaled out, independently of others. For example, our main web app currently runs on 3 instances of the main Python app container, and they all speak to one single Redis container.

Dockerizing an app

Note: the example included in this section can be found in this GitHub repo: https://github.com/abakonski/docker-flask
The example here is a minimal, “Hello World” app.

Docker containers are defined by Docker images, which are essentially templates for the environment that a container will run in, as well as the service(s) that will be running within them. A Docker image is defined by a Dockerfile, which outlines what gets installed, how it’s configured etc. This file always first defines the base image that will be used.

Docker images comprise multiple layers. For example, our web app image is based on the “python:3.6” image (https://github.com/docker-library/python/blob/d3c5f47b788adb96e69477dadfb0baca1d97f764/3.6/jessie/Dockerfile). This Python image is based on several layers of images containing various Debian Jessie build dependencies, which are ultimately based on a standard Debian Jessie image. It’s also possible to base a Docker image on “scratch” – an empty image that is the very top-level base image of all other Docker images, which allows for a completely customizable image, from OS to the services and any other software.

In addition to defining the base image, the Dockerfile also defines things like:

  • Environment variables
  • Package/dependency install steps
  • Port configuration
  • Environment set up, including copying application code to the image and any required file system changes
  • A command to start the service that will run for the duration of the Docker container’s life

This is an example Dockerfile:

FROM python:3.6

# Set up environment variables
ENV NGINX_VERSION '1.10.3-1+deb9u1'

# Install dependencies
RUN apt-key adv --keyserver hkp://pgp.mit.edu:80 --recv-keys 573BFD6B3D8FBC641079A6ABABF5BD827BD9BF62 \
    && echo "deb http://httpredir.debian.org/debian/ stretch main contrib non-free" >> /etc/apt/sources.list \
    && echo "deb-src http://httpredir.debian.org/debian/ stretch main contrib non-free" >> /etc/apt/sources.list \
    && apt-get update -y \
    && apt-get install -y -t stretch openssl nginx-extras=${NGINX_VERSION} \
    && apt-get install -y nano supervisor \
    && rm -rf /var/lib/apt/lists/*


# Expose ports
EXPOSE 80

# Forward request and error logs to Docker log collector
RUN ln -sf /dev/stdout /var/log/nginx/access.log \
    && ln -sf /dev/stderr /var/log/nginx/error.log

# Make NGINX run on the foreground
RUN if ! grep --quiet "daemon off;" /etc/nginx/nginx.conf ; then echo "daemon off;" >> /etc/nginx/nginx.conf; fi;

# Remove default configuration from Nginx
RUN rm -f /etc/nginx/conf.d/default.conf \
    && rm -rf /etc/nginx/sites-available/* \
    && rm -rf /etc/nginx/sites-enabled/*

# Copy the modified Nginx conf
COPY /conf/nginx.conf /etc/nginx/conf.d/

# Custom Supervisord config
COPY /conf/supervisord.conf /etc/supervisor/conf.d/supervisord.conf

# COPY requirements.txt and RUN pip install BEFORE adding the rest of your code, this will cause Docker's caching mechanism
# to prevent re-installinig all of your dependencies when you change a line or two in your app
COPY /app/requirements.txt /home/docker/code/app/
RUN pip3 install -r /home/docker/code/app/requirements.txt

# Copy app code to image
COPY /app /app
WORKDIR /app

# Copy the base uWSGI ini file to enable default dynamic uwsgi process number
COPY /app/uwsgi.ini /etc/uwsgi/
RUN mkdir -p /var/log/uwsgi


CMD ["/usr/bin/supervisord"]

Here’s a cheat sheet of the commands used in the above example:

  • FROM – this appears at the top of all Dockerfiles and defines the image that this new Docker image will be based on. This could be a public image (see https://hub.docker.com/) or a local, custom image
  • ENV – this command sets environment variables that are available within the context of the Docker container
  • EXPOSE – this opens ports into the Docker container so traffic can be sent into them. These will still need to be listened to from within the container, (i.e. NginX could be configured to listen to port 80). Without this EXPOSE command, no traffic from outside the container will be able to get through on those ports
  • RUN – this command will run shell commands inside the container (when the image is being built)
  • COPY – this copies files from the host machine to the container
  • CMD – this is the command that will execute on container launch and will dictate the life of the container. If it’s a service, such as NginX, the container will continue to run for as long as NginX is up. If it’s a quick command (i.e. “echo ‘Hello world'”), then the container will stop running as soon as the command has executed and exited

The Docker image resulting from the above Dockerfile will be based on the Python 3.6 image and contain NginX and a copy of the app code. The Python dependencies are all listed in requirements.txt and are installed as part of the process. NginX, uWSGI and supervisord are all configured as part of this process as well.

This setup breaks the rule of thumb for the “ideal” way of using Docker, in that one container runs more than one service (i.e. NginX and uWSGI). It was a case-specific decision to keep things simple. Of course, there could be a separate container running just NginX and one running uWSGI, but for the time being, I’ve left the two in one container.

These services are both run and managed with the help of supervisord. Here’s the supervisord config file that ensures NginX and uWSGI are both running:

[supervisord]
nodaemon=true

[program:uwsgi]
# Run uWSGI with custom ini file
command=/usr/local/bin/uwsgi --ini /etc/uwsgi/uwsgi.ini
stdout_logfile=/dev/stdout
stdout_logfile_maxbytes=0
stderr_logfile=/dev/stderr
stderr_logfile_maxbytes=0

[program:nginx]
# NginX will use a custom conf file (ref: Dockerfile)
command=/usr/sbin/nginx
stdout_logfile=/dev/stdout
stdout_logfile_maxbytes=0
stderr_logfile=/dev/stderr
stderr_logfile_maxbytes=0

Launching a Docker container

I’m not including the instructions on installing Docker in this post (a good place to get started is here)

With the above project set up and Docker installed, the next step is to actually launch a Docker container based on the above image definition.

Frist, the Docker image must be built. In this example, I’ll tag (name) the image as “myapp”. In whatever terminal/shell is available on the machine you’re using (I’m running the Mac terminal), run the following command:

$ docker build -t myapp .

Next, run a container based on the above image using one of the following commands:

# run Docker container in interactive terminal mode - this will print logs to the terminal stdout, hitting command+C (or Ctrl+C etc) will kill the container
$ docker run -ti -p 80:80 myapp

# run Docker container quietly in detached/background mode - the container will need to be killed with the "docker kill" command (see next code block below)
$ docker run -d -p 80:80 myapp

The above commands will direct traffic to port 80 on the host machine to the Docker container’s port 80. The Python app should now be accessible on port 80 on localhost (i.e. open http://localhost/ in a browser on the host machine).

Here are some helpful commands to see what’s going on with the Docker container and perform any required troubleshooting:

# list running Docker containers
$ docker ps


# show logs for a specific container
$ docker logs [container ID]


# connect to a Docker container's bash terminal
$ docker exec -it [container ID] bash


# stop a running container
$ docker kill [container ID]


# remove a container
$ docker rm [container ID]


# get a list of available Docker commands
$ docker --help

Docker Compose

Note: the example included in this section is contained in this GitHub repo: https://github.com/abakonski/docker-compose-flask
As above, the example here is minimal.

The above project is a good start, but it’s a very limited example of what Docker can do. The next step in setting up a microservice infrastructure is through the use of Docker Compose. Typically, most apps will comprise multiple services that interact with each other. Docker Compose is a pretty simple way of orchestrating exactly that. The concept is that you describe the environment in a YAML file (usually named docker-compose.yml) and launch the entire environment with just one or two commands.

This YAML file describes things like:

  • The containers that need to run (i.e. the various services)
  • The various storage mounts and the containers that have access to them – this makes it possible for various services to have shared access to files and folders
  • The various network connections over which containers can communicate with each other
  • Other configuration parameters that will allow containers to work together
version: '3'

services:
  redis:
    image: "redis:alpine"
    ports:
      - "6379:6379"
    networks:
      - mynet

  web:
    build: .
    image: myapp:latest
    ports:
      - "80:80"
    networks:
      - mynet

networks:
  mynet:

The above YAML file defines two Docker images that our containers will be based on, and one network that both containers will be connected to so that they can “talk” to each other.

In this example, the first container will be created based on the public “redis:alpine” image. This is a generic image that runs a Redis server. The “ports” setting is used to open a port on the container and map it to a host port. The syntax for ports is “HOST:CONTAINER”. In this example we forward the host port 6379 to the same port in the container. Lastly, we tell Docker compose to put the Redis container on the “mynet” network, which is defined at the bottom of the file.

The second container defined will be based on a custom local image, namely the one that’s outlined in the first section of this article. The “build” setting here simply tells Docker Compose to build the Dockerfile that is sitting in the same directory as the YAML file (./Dockerfile) and tag that image with the value of “image” – in this case “myapp:latest”. The “web” container is also going to run on the “mynet” network, so it will be able to communicate with the Redis container and the Redis service running within it.

Finally, there is a definition for the “mynet” network at the bottom of the YAML file. This is set up with the default configuration.

This is a very basic setup, just to get a basic example up and running. There is a ton of info on Docker Compose YAML files here.

Once the docker-compose.yml file is ready, build it (in this case only the “web” project will actually be built, as the “redis” image will just be pulled from the public Docker hub repo). Then bring up the containers and network:

# build all respective images
$ docker-compose build

# create containers, network, etc
$ docker-compose up

# as above, but in detached mode
$ docker-compose up -d

Refer to the Docker commands earlier in this article for managing the containers created by Docker Compose. When in doubt, use the “–help” argument, as in:

# general Docker command listing and help
$ docker --help

# Docker network help
$ docker network --help

# Help with specific Docker commands
$ docker <command> --help

# Docker Compose help
$ docker-compose --help

So there you have it – a “Hello World” example of Docker and Docker Compose.

Just remember that this is a starting point. Anyone diving into Docker for the first time will find themselves sifting through the official Docker docs and StackOverflow forums etc, but hopefully this post is a useful intro. Stay tuned for my follow-up posts that will cover deploying containers into Docker Swarm on Azure and then setting up a full pipeline into Docker Swarm using Jenkins and BitBucket.

If you have any feedback, questions or insights, feel free to reach out in the comments.

~ Andrew @ Veryfi.com

About Veryfi

Veryfi is a Y Combinator company (W17 cohort). Located in San Mateo (CA) founded by an Australian, Ernest Semerda, and the 1st Belarusian to go through Y Combinator, Dmitry Birulia.

Veryfi provides mobile-first, HIPAA-compliant bookkeeping software that empowers business owners by automating the tedious parts of accounting through AI and machine learning.

To learn more please visit https://www.veryfi.com

IQBOXY is machine powered bookkeeping for your business

IQBOXY was started by 2 software engineers with a common main point — outsourcing the health of our company’s bookkeeping to cheap labor was slow, led to more accounting errors and exposed personal financial information to preying eyes.

Along the way we were also inspired by John D. Rockefeller and his most sacred relic, Ledger A. He kept a detailed record of his receipts and expenditures so he could always know the health of his business and life.

“No less than his business life, Rockefeller’s private life was ruled by bookkeeping entries. Since he found numbers so clean and soothing in their simplicity, he applied the business principles…to his own personal economy. When he started working in September 1855, he paid a dime for a small red book, anointed Ledger A, in which he minutely recorded his receipts and expenditures. Many of his young contemporaries kept such record books but seldom with such exacting care. For the remainder of his life, Rockefeller treated Ledger A as his most sacred relic.”

~ (Chernow, Ron (2007–12–18). Titan: The Life of John D. Rockefeller, Sr. (Kindle Locations 1321–1325). Knopf Doubleday Publishing Group. Kindle Edition.)

It is 2017 and we believe that we needed to own the pulse of our business and that machines could do a far better job than a human behind a spreadsheet in the cloud.
Enter IQBOXY — machine powered end-to-end bookkeeping. With 0 (zero) human intervention.

Ernest Semerda & Dmitry Birulia hacking at Y Combinator (W17 — https://www.iqboxy.com)

IQBOXY Lessons

Here are a few lessons from our journey building IQBOXY during the Y Combinator (YC) W17 — Winter program.

(A) How we figured out at IQBOXY how much to charge our customers

When we launched, customers questioned our FREE model.

“what’s the catch? why is it free?”.

So we said, “ok, how about we charge you”. And so we did and peace was restored in the kingdom. We used Stripe to process all our subscriptions — honestly don’t waste your time with anything else. Stripe is so simple to setup and get going.

Lesson: some products customers expect to pay for. Especially when it deals with their financial records. So research your market and find a spot that’s competitive. Never get into a price war since the strongest financially always wins (MBA 101).

During the YC W17 program, Dalton Caldwell (a YC Partner) encouraged us to experiment with pricing. If you are a software engineer, you know this is fast to do — ahh the power of being able to hack something yourself really fast without the need for any fancy tools. Our KPI was revenue so we used Stripe to monitor the outcome of introducing randomly rotating pricing pages. You can also achieve this in JavaScript (the crude way) or do it on the server side using Python / Django templates. But if you knew that this is the cost of renting a server for your company, then you bet you’d tread carefully. Then watch your Stripe subscriptions and compare to previous historical subscription data. The goal is to find a sweet spot where the change in pricing is positive or neutral.

Here is what we settled on (IQBOXY plans): https://www.iqboxy.com/business/#pricing

(B) What metrics are important to IQBOXY and why

Our KPI has always been MRR (Monthly Recurring Revenue). Apart from being at the root of business fundamentals it is also a good indicator whether your customers love your product. This also decides if you can scour for your customer in your customer base, which you might have had invested heavily in, after researching from places like https://www.salesforce.com/hub/crm/zendesk-crm-competition/ about maintaining all customer transactions.

It’s easy to give away product for free. Anyone can do this in today’s digital distribution market. It is a lot harder to sell. Turning a user into a paying customer requires hard work to perfect product market fit.

  • The product has to be of quality,
  • The product has to solve a pain point and
  • The product has to add enough value that your users love it.

Apart from being at the root of business fundamentals it is also a good indicator whether your customers love your product or simply using it as a temporary swap in for the more expensive one. And whether you own a small or large business, working with a merchant service provider to make it easier for you to set up payments is a move you should seriously consider. Streamline your payment processes with the advanced technology of Elavon merchant services.

(C) How do you balance trying new customer acquisition strategies and doubling down on ones which are working?

We followed the actionable framework and advice of Gabriel Weinberg in his famous book “Traction: A Startup Guide to Getting Customers”.

The book covers every possible marketing channel you can use to get traction, and shows you which channels will be your key to growth. You need to be organized and fastidious in measuring each channel. Then once you see 1 or 2 channels working, milk them.

Observe your Metrics

Finally, make it a ritual (a good habit) to review your business metrics daily. At first, most of it will be numbers and a bit chaotic. But over time your brain develops this beautiful connection and insights will appear.

Hiring one of the top seo companies in toronto will help your business to entice prospective customers who are currently looking for the products or services that you provide. As a result, you will get higher returns than what you had actually invested, and will have a better foundation for building a brand. Furthermore, the results you achieve from professional SEO services are permanent and will benefit your business for many years.

Quick hack: To kick start this habit, create a new Chrome User called “Metrics”. Set Chrome to “Always open previous tabs” (located in Chrome > Settings). For each tab, open the sites you use to measure your business. For example:

Tab 1 — Stripe dashboard to measure Revenue KPI,
Tab 2 — Google Adwords to measure your Campaign Strategy,
Tab 3 — Google Analytics to measure Web User Engagement or Blog performance,
Tab 4— Google Firebase to measure mobile User Engagement and catch errors,
Tab 5 — SensorTower to watch Customer Feedback and App performance,
and so on… you get the drift. Make this a habit! Otherwise you will never do this.

(D) Tips for driving mobile conversions

Today (2017) this is harder and slower than in 2012. But there are ways. And these methods require patience and persistence.

We started mobile first and did ASO (app store optimization) with the help of SensorTower. Initially it moved the needle slightly so but nothing like the early days of iTunes when the app market for keywords wasn’t so crowded.

Word of mouth ended up being the strongest driver for us. Our early users love the product and kept on spreading it to their friends and colleagues. A mobile bottom up approach is truly the most powerful form.

We ended up creating a communication strategy around this and would reach out to our users asking for reviews and comments on iTunes. Positive reviews & comments moved the needle the most on iTunes. This started to push our app position into a more visible spectrum. More downloads, more love, more ratings and more visibility — recursive circle.

~ Ernest & Dmitry
IQBOXY Cofounders
Y Combinator W17 cohort

Thanks to Alexander Strunkin (Deako YC W16), Urszula Semerda, Olia Birulia and Andrzej Bakonski for reading drafts of this.

This post was 1st published on March 20th on Medium under YC Stripe Publication: https://medium.com/yc-stripe/iqboxy-is-machine-powered-bookkeeping-for-your-business-f7c9af314866

Y Combinator’s Startup School 2016 — the recap, highlights & lessons

Another amazing Startup School 2016! Each year Y Combinator has something fresh to deliver at Startup School. This year was without exception. Apart from a stellar lineup of speakers (founders and investors) there was something new — a Founder-VC pitch role play (more on that below). Those who are planning events like Startup School should prepare everything ahead of time. You need to book a venue, setup an av installation with the help of companies like https://www.signalsolutions.com/audio-visual-san-francisco and look for available speakers for the event.

I still remember my first Startup School in 2010 hearing Brian Chesky (AirBnB founder — pictured left) speak with so much energy and excitement on stage. Heck, I was so inspired that I went to the 10 man office in SF the following day to see them. Next day Office visits no longer happen but you can still get inspired by attending Startup School.

Ernest Semerda with Brian Chesky circa 2010 — Founder of Airbnb @ AirBnB headquarters in SF

Each year Startup School reminds me about the fundamentals of starting and running a business;

(a) build something people need,

(b) execution is king and

(c) move fast.

Without further ado, here are my 2016 Startup School highlights.

2016 highlights

(1) Gobble — killer charts & “very crowded market”

These 2 pictures below should motivate you. This is what 6 years from an “overcrowded market” to killing it looks like. Well done Gobble for staying around and showing the disbelievers that you can do it.

“Gobble helps busy professionals easily cook dinner in just 10 minutes with 1 pan. The company designs gourmet dinner kits and completes all the sourcing and prepwork — washing, chopping, marinating, and sauce-making — so all one has to do is combine the ingredients together in one pan and be a dinner hero.”

Founders never forget. Note the “very crowded market” excuse.

Next time you are told this lame excuse of an “overcrowded market” or “no market” don’t be put down. Think AirBnB, Uber, Gobble et al.. and thank the investor for their time. Move on. And prove them wrong.

(2) — Rigetti and their Quantum Computer

Rigetti and Quantum Computing

I don’t remember last time I was this excited to hear about Quantum Computing.

This IS the next major evolution in computing. It’s that extra layer of precision that’ll open up new opportunities like seconds did for the clock to crystals for GPS and parallel for processing.

And maybe, just maybe we might be able to solve “Health” after all —from efficient drug discovery by mapping out all molecular combinations quickly to identify the ones that would most likely work to simulations. I’d love to see health go open source and have every software engineer contribute (as a way of giving back to society) to solving health related issues. Maybe this is where Mark & Priscilla Zuckerberg $3B effort to rid the world of major diseases be focused on — a contrarian approach to health efforts?.. maybe this is what we need since existing efforts are slow and buried in red tape.

Sam, congrats on convincing Rigetti to join YC. I want them to succeed!

(3) The Art of Pitching with Sam Altman and Paul Buchheit

This is the Founder-VC role play I mentioned above. I was super impressed with Sam being able to soak in the founder’s pitch and then within seconds craft a kickass (alternate) version. Brilliant way to educate everyone listening on the art of pitching.

Here are the videos — Note: Sam is role playing the founder role and Paul the VC role.

3 Takeaways:

  1. Articulate clearly what your business does, what market its addressing and why it matters,
  2. Explain the Fundamentals of what Drives your business and
  3. Don’t leave a meeting without some kind of a follow up (tip: don’t ask for a cheque).

(4) Marc Andreessen live and uncut!

Marc is always amazing to listen to. He commands so much power and energy in the room because his awesome! YouTube his name to hear many many recordings of his talks.

Marc stressed that to get yourself in front of the partners at a16z you need to pass “a bunch of tests”.

1st test — network your way into a venture firm. It tests your ability to hustle. It also paints a picture of your ability to hire. Someone that cannot hustle will find it a challenge to bring in top hires.

2nd test — formal presentation — “can you execute a formal speech” — this gets tested once you get yourself in front of the partners. Marc says this should be easier to do than in front of your customers since they are a lot tougher when it comes to selling by being a “default no”.

What I’d love to see in the future Startup School

  • Mobile focus — it’s no surprise the super computer in everyone’s pocket is changing how we interact and engage with “always on services”. I’m yet to see a startup that has truly revolutionalized a service on the mobile. For example; I’d love to see the spreadsheet evolved into mobile form where the shell looks nothing like a spreadsheet in a smaller mobile window. I don’t mean a dashboard of numbers but an actual pleasurable experience end-to-end that works as well offline as online and is supported by intelligence to automate the meh pieces of my workflow. This could really be applied to any industry. There are ample opportunities and those that experience the pain and understand the technology will be leading it.
  • And more from The Art of Pitching!

Have I missed anything?

How was your 2016 YC Startup School experience?

PS. This article also appeared at https://medium.com/the-road-to-silicon-valley/ycombinators-startup-school-2016-the-recap-highlights-lessons-7222ed84218a#.gn23gyc8z

~ Ernest

Give $100 of value for $10 in return

So last week I was doing some streamlining with the number of stuff I carry on me. Call me picky but carrying a phone and a wallet 1.0 is a nuisance. It is one too many occupied memory registers that could be used for something better to worry about. So I decided out with the wallet and in with a ultra-slim self adhesive credit card wallet 2.0 for my iPhone. Garbage collection complete. Now whenever I get the urge to check if my credit cards are with me, I know by default that if my phone is with me my cards are too.

But what’s this got to do with giving $100 of value for $10 in return? Well it’s what I found during this cleanup process inside wallet 1.0 that I want to share with you. I found this note…

“How can I give $100 value to 1m people and ask for $10 in return? Give value!”

The backstory

Circa 2008, I still remember when I 1st wrote this note on that yellow postit. I was a young snotty kid in search for “the secret to business success”. Ploughing through books, videos and seminars including the actual The Secret movie, I found zilch. Zero. Nada. Until I ran into a successful business owner who said to me “Find a way to give $100 of value for $10.”. I heard a pin drop (metaphorically speaking of course). Something so simple yet profound. It left an impact on me and thus had to be noted on paper so I could recall it every so often.

This is not a revolutionary idea nor is it a new one. But it helps me focus on what matters when it comes to making money through a vehicle like business or startup or whatever the fancy word will be tomorrow. The more this note soaked in, the more I realized we all have seen this in some other forms in the last few years during the startup gold rush.

Make something people want – YCombinator

If you are familiar with the good work of YCombinator then you already know of their motto “Make something people want”. You may also remember the famous advice by PG (Paul Graham, YC Founder) to AirBnBs founders; PG told Brian Chesky to go and speak with their NYC customers to find out exactly what their needs were and then deliver it. i.e. “Make something people want”. It’s not revolutionary. But it serves as a reminder to us, to be laser focused on the customer, execute and create magic.

10:1 (value to investment) Ratio

What I love about the 100:1 or 10:1 (value to investment) ratio is it helps you build a cash cow business. Building a profitable business gives jobs, changes lives and usually has a social impact. If you can give a 10:1 ratio of value:investment to your customers then; (a) you won’t have to compete on margins with the “me too startups” and/or (b) get into price wars with other companies/startups. You may recall from school business 101; price wars end with the one with the deepest pockets. From a customer point of view, getting a 10x in value is an opportunity cost worth putting money on.

“Rule #1: Build Proprietary Technology That Is 10x Better” – Peter Thiel

This is #1 Rule from Peter Thiel’s famous book, Zero to One, around business philosophy on creating a successful company. It is a great way to think about how your business creates value. If your not shooting for the stars then what’s the point. Now notice how the 10:1 rule fits into Thiel’s 10x better thinking. Of course it’s not easy to achieve those sort of ratios but when you do you know you are onto something special.

Venture Capital

The Startup gold rush has given anyone with an idea a reason to start a business. Venture Capital is often used as a means to fuel rockets (performing startups). We all believe our ideas are rockets. However the only rockets are those that have a competitive advantage like; (a) unique distribution, (b) talent and/or (c) 10x/10:1 customer value ratio. VCs love these because a VC firm is for profit; check out how VC funds work for an overview of the Venture Capital world. What I’m saying is that if you start a business with the 10:1 ratio you will have market elasticity in your favor and metaphorically speaking VCs knocking down your doors.

“Fortuna audaces iuvat”

Fortuna audaces iuvat

So let’s wrap this up…
It feels like if you put in the hard work and create a product that gives $100 of value for $10 (or somewhere abouts there) then..

  • Customers will love you,
  • Investors will love you,
  • Market will love you,
  • Employees will love you,
  • And the media + the startup community will love you.. and maybe dissect you (in a good way of course).

What’s not to love about solving a hard problem?

Let me know what you think in the comments section below.

~ Ernest