This is one of the most common pieces of advice given to startup founders. As with most advice, it’s much easier to say than do…especially when it’s you in the situation and are faced with dozens of bright & shiny opportunities and death-defying uncertainties every day as a startup founder.
In my hunt for lessons to help fellow startup founders, I found this particular podcast (at minute 26:44) as one of the best examples that I’ve ever heard of how product focus enabled a worse product to win because it nailed what mattered most. The product example is how Google Docs successfully competed with Microsoft Office, with Google betting that “free plus sharing” would be way more valuable than all the rich features of Microsoft Excel & Word.
They were right.
So why does this happen? A few thoughts…
– Startups launch with a clear value proposition to their customers. This passion and focus is the foundation of the business and felt deeply by your initial customers. This is a very powerful foundation that creates a moat for other competitors, but has its downsides. You don’t need to look any further than the app Foursquare for an example of a startup that was build on one powerful thing (check-ins) and then rode it all the way up and down.
– Big organizations optimize to (a) protect large revenue lines and (b) serve shareholders. Plus they tend to be set-in-their ways when it comes to organization, habits & market assumptions. This allows scrappy startups — with acute focus — to get some scale and potentially become a threat before the larger company takes much action.
– Do you get your craft beer from Walmart? Customers don’t want one company doing everything for them. This is one of the main reasons why there’s often an opportunity for startups in established industries. A great local Atlanta example of focus is how Nick Miller led his team through the earliest phases of Gather. The original Gather vision— after a few other products pivots — was to allow consumers to book events at restaurants and venues.
Once the team had a sense that focusing on consumers wasn’t the right place to start, they started focusing on both sides…consumers & restaurants. Even then Nick realized that this spread their limited resources too thin. Gather only got meaningful traction with their product when they focused only on the restaurant and venue side. This focus was so tight that they only focused on three features — auto-document generation, a lightweight CRM, and a daily email digest of bookings.
Nick says, “This tight tactical path is the #1 under-appreciated thing about capital constrained startups…you have to go step-by-step through the early product work to know exactly where/how to focus.”
David Payne is a serial entrepreneur and co-founder of Switchyards, a consumer-focused startup hub in downtown Atlanta. You can read more about his startup journey here. Follow him on his blog and Twitter.
[photo credits: Jason Seagle]