Key Business Principles from Peaky Blinders

Here is what you missed last month

• Building The Right Team: A Guide to Early-Stage Startup Hiring
• Partnership Tips for Startups

If you are reading this newsletter for the first time, welcome.

You can subscribe to the newsletter for updates here.

Building Digital Product (BDP) by Osita is a newsletter published monthly that supports founders and startup enthusiasts with insights and principles to build better products and startups.

This is my 14th edition so far.

Here is a little snapshot of me.

Osita James?is a technology entrepreneur building?an innovative product called?Sureagent?which enables safe online shopping in Africa, by leveraging a network of agents to physically verify online orders for customers before payment. verification. He is also a partner in?BlackcrestLP, a start-up advisory law firm that has successfully advised start-ups across Africa in investment deals worth over $4 million. He holds an MSc in Innovation Management and Entrepreneurship from the Nottingham Trent Business School and a Diploma in Technology and Innovation from the Nigerian University of Technology and Management. He writes poetry and fiction in his free time.

I support African founders with legal and start-up operations advice. You can reach me?here?for enquiries.

Hello founders,

Welcome to the 14th edition of Building Digital Products with Osita

I am writing today's edition by the order of the peaky blinders so you better not question me. I spent a chunk of last week watching the Peaky Blinders, a series set in Small Heath Birmingham in the 19th century. I have learned a lot about business and thought it would be a great idea to share with you.

Before I begin I would like to make a disclaimer. Mr. Thomas Shelby, the main character of the series was a gang leader. He was a murderer, an armed robber, ran an illegal betting chain and extorted money from people for a living. He and his gang of Peaky are perhaps the definition of an English Mafia.

This edition is not about Mr Thomas's morals but about the principles he applied to build the Shelby company from a small-time illegal betting chain to an import, real estate and manufacturing giant.

I will discuss the business principles in three parts for ease of reading.

1. Business Leadership Principles
2. Business Negotiation Principles
3. Business MOAT principles

1. Business Leadership Principles from the Peaky Blinders

What stands out the most in Peaky Blinders is the leadership of Thomas Shelby who is fondly called Tommy by his family and his men.

Arthur is the oldest son of the 4 brothers (Arthur Shelby, Tommy Shelby, John Shelby and Finn Shelby) and fought in the First World War with Tommy and John. The war however changed him significantly and he did not have all his wits together. Tommy took over the family as gang leader and started his ambition to expand the Shelby family business beyond Birmingham.

Legitimacy

Arthur conceded the leadership position and the rest of the brothers accepted Tommy as the leader. Tommy however had to establish his legitimacy among his followers.

According to the Harvard Business Review,

Legitimacy-based leadership is based on behaviors and actions that inspire others' trust, respect, and commitment

Tommy did this by continually emphasising - often through violent repercussions - that everyone who was a peaky blinder was to be respected and honoured.

In season 3 of the show, he approves of John's action of cutting the face of Angel Chagretta for refusing an order to stop dating Lizzie who was John's ex. When Danny, a Peaky Blinder stabs an Italian from his Post Traumatic Stress Disorder, he pretends to shoot him according to his agreement with the Italians but shoots pig blood instead and secretly sends him away to London.

By consistently supporting the members of the gang and building relationships with the police and opposing gangs to enable them to operate freely, Tommy established himself as the King of the Peaky Blinders.

In the series, May Carleton described her appraisal of coming to see him thus;

When I drove to small heath, I thought I was going to be murdered. Then I mentioned your name. It was like being escorted to see a King.

In addition to supporting members of the Peaky Blinders, Tommy also ensured they all wore distinctive garments. Each Peaky Blinder could be identified by their Tweed suits, long overcoat, collar-less shirts, baker boy hats and black shoes. People who were dressed this way throughout the series were identified as members of the Peaky Blinders.

Tommy ensured through bribes, relations and violence where necessary that they could operate their illegal betting chain and occasional robbery freely.

As a business owner looking to control market shares in your market vertical in your territory of operations, you have to think like Tommy on how you can make doing business more smooth for your team. There are several things to can do to achieve this, they include;

• Pay your taxes on time.
• Embark on corporate social responsibility in your territory of operation.
• Communicate your value through the impact of your products on the users.
• Create a distinctive trait all members of your team would be known for.
• Create a reputation for your company either through profit margins or distinctive products.
• Create relations with other players in the market and collaborate where possible for mutual benefit.

Leadership Disposition

Tommy was not very talkative, unlike a lot of the other Peaky Blinders. He was often seen smoking a cigarette, calculating and planning.

Tommy has a unique ability to stay calm under pressure. In season one when Billy Kimber found out about his plans to take him out to dominate the race tracks he knew they were outnumbered 1 to 3. He did not relent but went out with his Peaky Blinders to confront Billy Kimber and his men.

Many have referred to Tommy's calm disposition to stressful situations as non - non-reactivity.

According to Eightify,

Non-reactivity is known as emotional control of regulation. It is the ability to remain composed and calm under stressful situations by controlling one's own emotions and showing any external signs of being affected.

In season 3 of the series, they arrested Tommy on the orders of a Priest who was a member of a secret organization known as the "odd fellows." When the priest came to see Tommy to remind him of their agreement and keep him in line. He asked the policemen in front of his cell if he was afraid, and they said he did not seem moved by the situation at all.

As a leader of a business, you will face challenges. It could be an economic meltdown, a product war with the competition or even an exodus of key talent. It is very important you don't show how you feel.

Leaders inspire their followers. If you are afraid and you show you, you chisel away at the confidence of the rest of the team.

Tommy never ever showed fear in the face of all his adversaries from Kimber, to Sabini, to the Odd Fellows and to Oswald Mosley.

2. Business Negotiation Principles from Peaky Blinders

Tommy Shelby knew he was playing a dangerous game when he decided to expand into London. He had dominated Birmingham and was looking at establishing some business interests in London. But London was already been controlled by Alfie Solomons and Sabini.

Tommy knew what Solomons wanted. He wanted more race track access and Sabini had controlling interests and nearly all the race track licenses in London. Tommy made Solomons an offer. In exchange for the use of his warehouses in Camden town, Tommy would give him access to the race tracks once he defeated Sabini.

Research the market

Tommy identified between Solomons and Sabini who he should negotiate with and then determined what would be his bargaining chip. Tommy knew Sabini had no motivation to give up his race tracks. Tommy also knew Solomons was losing the war between himself and Sabini over territory in London. Tommy saw an opportunity in this.

Understand the players

Sabini relied a lot on the police to maintain his control over territory in London. He owned several clubs and properties and had a group of men he trusted. Tommy knew the police in the series had one loyalty stronger than their loyalty to the bribes they were paid regularly - their loyalty to the king. In the final episode of season 2 of the series, Tommy shot and killed Field Marshal Russel on the order of Major Campbell and fired several shots into the air. This made all the policemen in the race tracks to head to the King's location to protect the King. This accomplished 3 things;

• Allow the Peaky Blinders on standby to storm the race tracks and collect all of Sabini's licenses and burn them.
• Allow Tommy to go scot-free from the murder because the police were busy protecting the King.
• Allow Tommy to fulfil his deal with Alfie; to give him access to the race tracks.

Tommy understood the players well and this gave him negotiation leverage.

As a business leader, you need to research your competitors and key players before you approach them for a partnership. They might have certain vulnerabilities you can exploit. Tommy knew Solomons was losing the war on territory and this was the basis for negotiation. If you do not have insight into the challenge of the other players in the market, getting them to agree to a partnership can be a hard sell. Especially of they have every reason to distrust you.

According to Indeed, there are 7 key strategies you can employ in negotiation to achieve a positive outcome, they are;

• Focus on good relationships.
• Take a positive approach
• Don't underestimate yourself.
• Enter negotiations fully prepared.
• Prepare for best and worst-case scenarios.
• Give and take in negotiations.
• Be clear and highlight the benefits.

Tommy Shelby exemplified all of these in his dealings with Solomons, Sabini, Billy Kimber and even Campbell.

3. Business MOAT Principles from Peaky Blinders

Tommy did not want to remain a Birmingham gangster forever. He wanted to become a successful businessman. But in order to achieve this he needed to consolidate power across several territories and manage those assets to consistently generate good returns.

Tommy Shelby's Peaky Blinders was largely run by family members, this reduced his risk because the success of the Shelby company was also the success of the of the Peaky Blinders.

The Shelby company, after Tommy defeated Sabini and took over his race tracks on Derby day, grew tremendously. It however needed to become legitimate in order for the assets to be lasting.

Legitimization of the Shelby Company

Tommy hired Michael Gray as an accountant to work on the legitimate part of the business. He also bought several real estate properties and trucks to carry the Shelby company whiskey to their warehouses and boats to export overseas. This became possible after Tommy requested an export license as payment from Churchill for the murder of Field Marshal Russel on the order of Major Campbell. Tommy knew that if the Shelby company became legit, if anything happened, their assets would not be seized as part of the proceeds of crime.

Protection funds to keep competition at bay

The Italians, Sabini and other gangs in Birmingham and London paid a protection fee to the Peaky Blinders after the fall of Sabini on Derby Day in the final episode of the second season of the series. The fees were not because the Peaky Blinders lacked money, it was a way of showing fealty to the dominance of the Peaky Blinders.

According to the Merriam-Webster dictionary,

Fealty implies a fidelity acknowledged by the individual and as compelling as a sworn vow.

By keeping their potential competitors at bay through the protection fees they paid, Peaky Blinder dominated the race tracks, and illegal betting and expanded into other businesses unfettered.

As a business person, the only way to ensure competition doesn't take away your market share or keep all of your market share is to have a strong MOAT strategy to maintain a competitive advantage.

You have to create a situation that makes the competition dependent on you or at least unable to avoid you. Google's search engine is a good example of a MOAT that is hard to ignore. Many other companies created their own search engines but Google dominated them all by offering superior search results, more relevant results and integrating a fleet of useful apps all linked to the Google brand. All other companies who made mobile devices and laptops then found it hard to ignore Google because so many people knew and used them.

Operations support expenses

The Peaky Blinders often paid different people ranging from the police to factory workers to either look the other way or allow them access to a place for the purpose of their business.

The Peaky Blinders support expenses were so strategic that they powered most of their operations. They used a combination of bribes and the threat of violence to mandate compliance.

As a business, you of course cannot go on paying bribes, that is very illegal. You however can identify what powers your value network and improve on it.

According to the Pareto principle;

80% of outcomes are produced by 20% of causes.

The Peaky Blinders knew what led to the 80% of their outcomes - their strategic bribes. They therefore doubled down on it.

As a business, a great MOAT that can confer competitive advantage is knowing what aspect of your business generates 80% of your results and focusing on it.

The aspect of your business that may be the one which generates 80% of the positive outcomes can be any one of the following;

• Your content marketing team.
• Your customer support team.
• Your business development team.
• Your engineering team.
• Your research and development team.

Do not use guesswork to determine this. Let the data on your company's progress guide you.

For more details on building out a MOAT strategy for your business, you can read our newsletter edition here.

Conclusion

The Peaky Blinders series is a must-watch for every business leader who expects to meet adversaries in his vertical and wants to gain some insights into how to negotiate with powerful people, make tough calls and build a company from a small company to a very big and successful one.

You may not be Tommy Shelby or dress as well as he did, but you can certainly build a successful company for yourself with business insights you have learned from the Peaky Blinders.

I look forward to writing to you again soon.

Keep building.

Osita.

BDP Startup Spotlight

Today's startup on the Spotlight is Autoware Africa.

Autoware Africa is a consumer tech IOT Automation solutions company focused on smart home automation solutions. They have built products such as the smart pump controller, smart change-over, and smart gas alert system. It is positioned as the smart consumer tech supporting safe living in Africa.

It has made over $40,000 in revenue since its launch and is currently raising a pre-seed of $150,000. If you are interested in investing or being introduced to this startup please send me a DM here.