“Wait,” I said, “You’re a software guy. How did you end up building ships?”

Last night, I was at a happy hour with the Rotary Club and struck up a conversation with a retired entrepreneur. He told me how he started in Silicon Valley, made a bunch of money in software, then bought a ship building business, and then went back into software and services before retiring.

The sandwich of software and huge transportation vehicles piqued my interest so I asked how he had made this transition?

He explained that flush off the success of a VC startup, him and a friend began asking around about businesses that they might acquire. They knew an attorney who heard of a business in the local shipyards that was on the verge of folding. They raised a little money from investors and put in a lot of their own money and bought the business.

“What’s your criteria for buying a business?” I asked.

“It’s got to have a solid product. If the product is different and has real advantages to customers and a good team behind it- that’s when I want to take a closer look.”

“So why the ship building business?”

“Well, it already had a great customer list with big oil corporations like Exxon using it. It had a deep well of tribal knowledge with three generations of families that had been building ships since when Henry Kaiser opened the shipyard in World War II. And it had the largest dry dock on the west coast. The only liabilities were that it was on the rocks, financially speaking, and the previous owners hadn’t managed it well.”

He and his friend negotiated their way through the debts and fixed the operational issues that were holding it back. Five years in, his friend bought him out, and a few years later sold the business to a large private equity firm.

There’s a lot to take from this story. But, to focus on one idea, an important lesson that stands out is the emphasis on differentiation.

In boxing, there are just a handful of moves: jab, cross, uppercut, and hook. Essentially just straight punches and curving punches. And they only hit two spots on the body: the front of the head and the stomach.

If you know a punch is coming, it’s easy to defend it. The game of the boxer is to create opportunities to deliver punches from unexpected angles.

Businesses are like boxers in that competition prevents simple approaches in most markets. You need an angle to give you leverage and make sure you connect. Your business needs its own version of the largest dry dock on the west coast.

Featured image is the USS Chepachet, a type of WW2 oil tanker built at the Portland shipyards, provided by Captain Mike at en.wikipedia used under Public Domain.