Startup Success: The Phenomenal Force Of Focus

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Startup Success: The Phenomenal Force Of Focus

 


If you’ve been doing any amount of reading about startups (or for that matter, business strategy in general), you’ve probably heard at least a few times how important it is to focus.  I find it interesting that though there is general consensus among successful entrepreneurs on this topic (i.e. focus=good, lack of focus=bad), the advice to focus continues to be hard to follow.  I’ve struggled with this challenge myself, even though I know how important it is to focus.

This past week, the topic of focus came up again in discussions with a startup team that I’m involved with.  Brian Harrington and Josh Lesnick are the co-founders of a cool new startup here in the Boston:  I’m In (disclosure:  I’m an advisor to the company).  After months of development, the I’m In team launched their consumer product last week.  I encourage you to check it out.  Their offering allows for the creation and coordination of gender-based trips.  For example, you and a group of your guy buddies from grad school want to coordinate a ski outing.  Or, you and the gals want to coordinate a New Years party in Vegas.  The idea is interesting and the user experience is pretty slick.  Create your own group and try it out. 

But, this article is not about I’m In the company, or its product.  It’s about focus.  I asked the co-founders what big lesson they have learned now that they have a product out there.  Their response can be paraphrased as follows:  “Focus!”.  But, if it stopped there, it wouldn’t be particularly interesting.  So, let’s take a look at why focus is important andwhy it’s just so hard sometimes to focus.

The Phenomenal Force Of Focus
 
  1. The Temptation Of The Big Market:  Because software is so malleable and we’re all so smart, we tend to think that our product can (and should) have a nice, big market to address.  For example:  In the case of I’m In, they could have easily tried to argue that the product is could be easily “reused” for organizing trips for small businesses.  Just a tweak hear and a tweak there and instead of limiting its market to gender-based social trips, it could expand the market considerably.  The same can be said for many software products.  There’s no technical reason to limit your software to a niche market.  Why not “go broad”?

  1. Figuring Out What The Customer Wants:  One of the biggest reasons not to “go broad” is that it becomes very difficult to figure out what to build.  For example, in the case of I’m In, small business group travel and social group travel have lots of overlap – but vary in some key ways. Businesses might care about things like rules and policies for travel – social travelers care more about fun, bonding and memories (like photos of the trip).  By trying to address the needs of two different customers (despite the fact that there are some needs they have in common), you end up compromising one or the other. 

  1. The True Cost Of Broad Products:  Lets stipulate for a moment that you and your team are smarter than average (just like all founding teams believe they are).  Despite your brilliance and the unquestioned ability of the team to create an exceptionally cool product that can address the needs of millions of users, the harsh truth is that broad, flexible, products that can address the needs of many types of users are almost always more expensive to build and maintain than products that only address the needs of a small group of people.  The larger the divergent needs of a group of users, the more complexity that has to be baked into the software to address the needs of these disparate users.  Even with our brilliant ability to deal in high-order abstractions, the very fact that we have to have lots of high-order abstractions makes the product harder to build and get right.  If you ever run into someone that tells you that they can build a really flexible product that can do lots of things (add an option here, set a configuration there…) at the same cost or lower than one that doesn’t have that much flexibility, run.  Certainly don’t send them my way and make me expend the effort to resist the temptation to smack them upside the head.

  1. It’s Not Always About The Product:  Lots of software people fall into the trap of believing that the primary cost factor is product development.  This is not always true.  The primary cost is often not building the right product, but getting it into the hands of the right customers.  This is where focus really starts to play a big role.  By focusing on the needs of a small subset of the potential market, lots of things become much, much easier.  A direct quote from Josh at I’m In:  “By focusing on a tight customer segment (gender-based travel), it has been much easier to write copy for the site, select photography, create tonality, and develop a list of targeted fulfillment partners.”  Though I don’t know what the heck tonality is, what I do know is that it is much easier to figure out what you’re going to say (your message) and get the word out there when you have a smaller, more focused audience that you’re trying to reach.  It’s really hard to believe how much of an impact this has until you actually experience it.  Literally overnight (the day you make your decision to tighten your focus), your discussions become clearer, your meetings more productive, your product roadmap more defined and you become immensely more attractive to members of the opposite sex.

  1. Restrictions Are Not Permanent:  Just because you start with a narrow niche and focused strategy does not mean you have to remain there for all eternity.  It’s simply a better way to start a company because it makes the early stuff so much easier.    As the company evolves and you learn more and more about the market, you can decide whether you want to go broad (i.e. tweak the product to meet the needs of another segment of customers) or go deep (build more products/features that serve the needs of the customers you already know).  The point is, don’t convince yourself that you have to widen your potential market now – because you don’t.  In most cases, you’re better off starting narrow and broadening later.


If you’re interested in this topic, I’d strongly recommend “Crossing The Chasm”.  It’s on my permanent list of recommended reading for entrepreneurs.  

I’ve had several startups in the past that I’ve been involved with that could have benefited from more focus.  What do you think?  Are there situations where an early-stage startup shouldn’t focus?  Would love to hear your thoughts.

Finally, my best wishes to my friends at I’m In.  Look forward to watching your progress.  If any of you end up setting up an entrepreneurial group trip to Las Vegas, I’m In!

Posted by admin_onstartups.com admin_onstartups.com on Wed, Nov 22, 2006

COMMENTS

Great article! One thing that never fails to amaze me is how early stage companies or startups get sidetracked by inquiries from larger media companies or potential partners. Without fail, once a startup releases their press release that they have opened their doors, a larger company will contact them about a biz dev deal and the startup will solely focus on that. 9 times out of 10, that biz dev deal never comes to fruition but the startup wasted 6 months chasing that unfocused dream. Stick to your guns, focus on what you're doing and if there are things that happen parallel to you - make them happen... do not go perpendicular.

Rock-on.

posted on Wednesday, November 22, 2006 at 10:59 AM by Darren Herman


Darren: This is an excellent point.

That whole partnership/bizdev thing in the early stages of a startup can be hugely distracting (and rarely does it actually amount to something useful).

It's hard to resist the temptation, because the story sounds good (and startups are sometimes desperate to try and break-through the early credibility barrier).

posted on Wednesday, November 22, 2006 at 11:32 AM by


The only case I can think of where this might not apply is if you're making a tool that can do lots of things. The canonical example would be the computer itself-- it can do spreadsheets, games, word processing, web browsing, scientific data crunching, multimedia, etc. But such products are rare. If you are a startup, there is a 99% chance that this advice applies to you and a 1% chance that you might be different.

posted on Wednesday, November 22, 2006 at 12:46 PM by Adam Ierymenko


Very useful post Dharmesh!

Read... AWESOME!

Worthy of Digg and Reddit!!!

posted on Wednesday, November 22, 2006 at 1:11 PM by Sheamus


Critical point!!! I absolutely echo the need for focus at all stages. Here is a fairly simple way to think about product focus that makes for a practical requirements tool.

Envisage a three-dimensional spreadsheet. Label each axis with (say) customer type, focus area, and features. From this enormous cube you need to pick the slices that will define your focus. The practical test is to define the experience within EVERY cell.

In the imin.com example: the customer type is perhaps “gender-specific groups”. The focus area is “recreational group travel” and features are “create group”, “plan”, “photographs” etc. At first glance it seems they have picked only a single slice from two dimensions eliminating thousands of cells. A quick look at the create group page reveals the danger of abstraction. In reality males and females are different and have different preferences. Group size plays a big part in travel options. On imin.com, the “Create Groups” page offers choices for males, females, other and for four different group sizes. They really have 3 x 4 = 12 focus areas before applying the feature dimension!!

The team must understand, describe, write content, build, market and support EVERY cell of this matrix. Covering a whole row or column by some abstraction, as you point out in your post, isn’t enough. If there isn’t something unique about every cell then the solution is unfocused and is likely ineffective. Obviously this is a multiplicative problem and limiting the number of slices dramatically reduces the complexity.

/andrew

posted on Wednesday, November 22, 2006 at 1:14 PM by Andrew Lavers


Excellent and (for me) timely piece. I'm 2 days into a "1 day" side project that I thought would be fun but has no bearing on my core business. Time to cut the cord.

The funny thing is, I consider myself very focused when it comes to product itself. I target a very specific niche. But... I seem to forget about that when it comes to advertising and SEO.

posted on Wednesday, November 22, 2006 at 2:25 PM by Nicholas Hebb


A big reason to stay focussed is that it gives your small startup a chance to appeal to customers in a way that big, established companies will or do not. Find the niche underserved by - or too small to warrant attention from - big competitors that are potential competitors. A niche like that is the number one success factor for a small startup.

Once successful in that niche, grow by finding the next vertical market for your product and focs on that.

posted on Wednesday, November 22, 2006 at 3:48 PM by Scott Meade


Very astute observations, Dharmesh. I'm curious to know what you would say to the founders of eBay if they pitched you in an elevator.

In the case of our fledgling startup, I continuously hear the criticism of being *too broad* (thanks, pg).

Personally, I've embraced the "big market" perspective because (1) like eBay, our technology can easily be replicated to serve the needs of a diverse community of buyers/sellers, and (2) as with most brick-and-mortar examples of "one-stop shopping" (grocery stores, Amazon.com, etc.), being broad increases our chances of satisfying a large, diverse pool of interested buyers, while satisfying the long tail.

But I am never one to follow my own a priori theories on what customers want. Perhaps I should ask them...



posted on Wednesday, November 22, 2006 at 3:57 PM by Ryan Morin


Ryan - is akopa to be replicated by your customers or by you? In the case of companies building a tool to be used by other companies - especially other IT folks - then I think it's ok to be broad (e.g. present a platform upon which something specific and targetted would be built). In the case of consumers, it gets more difficult to present something with the message "here it is - let's see all the things you can do with it". This second situation is where online spreadsheets find themselves, I think.

posted on Wednesday, November 22, 2006 at 5:08 PM by Scott Meade


Disclaimer: *my apologies* for making one last self-serving comment. But to answer your question, Scott, I'd recommend taking a look at Etsy.com. Maybe this could give you a concrete example of "akopa-in-practice" and serve as a provisional answer to your question. Would you consider Etsy to be a focused startup? And furthermore, do you think *focus* gives a startup sustainable competitive advantage?

Cheers. -r

posted on Wednesday, November 22, 2006 at 5:32 PM by Ryan Morin


Awesome post Dharmesh. Our plans for world domination (aka blind ambition and naivety! ;) ) can often lead us to fall into the trap of aiming for a broad product. There is nothing wrong with this if your R&D budget is large enough to buy a chain of tropical islands.

I came across a similar post also addressing the importance of focus, well worth a read -
http://markeseremet.blogspot.com/2006/11/focus-grasshopperfocus.html

posted on Wednesday, November 22, 2006 at 7:14 PM by Scott Carpenter


Dharmesh and Ryan -
Great post Dharmesh. Ryan - I think I'mIn and Etsy are both good examples of focus. In my mind, Etsy seems to have received the focus that Dharmesh was referring to. A platform or expertise can, I believe, be used across niches, but just make sure that your org. has the resources and bandwidth to provide *focus* to each of the niches at which you have aimed a version of the platform. I think a good strategy is to deploy a product or platform or organizational processes, etc. to one niche, and then as you learn from that experience, target other niches. You may have plans to be everything to everyone, but target customers don't need to see that aspect. Seems like I'm preaching to the choir here though!
Thanks,
Scott

posted on Wednesday, November 22, 2006 at 7:32 PM by Scott Meade


Great article, my website has this exact problem
http://bla.st/
Targets many countries over many subjects = not enough focus.
Thanks!

posted on Saturday, November 25, 2006 at 4:10 PM by Tim


Woooh. I want to start a startup like GOOGLE, YAHOO, FLICKR, YOUTUBE did many years ago. Now, half of employees are millionaire. We should do the same too... Conquest. Winner takes all !! Destory their idea is art of winning competition.

Microsoft, APPLE, Orcale created wealthiest employees. Startup should be fun too.

posted on Saturday, November 25, 2006 at 4:38 PM by Jim


u guys are very generous with your time and attention;
sites like yours plus the authorial response and permission to reprint- wow, then rewriting a huge proportion & OFFERING IT up in an online dialogue. just to help? to establish community! great karma such as this flies in the face of farm/splod extortionists who are basically saying fuck you to those of us nurturing new markets, making alliances, giving thought to the future. the mindless under the radar phrase generators whose output fill my mailbox- a mac even- w/ a 9 to 1 ratio- fake to real. i'm mad as hell.... at the farm and splog swineherds. anti existentials, society & community and tech impede to hell by their massive corrosives subsuming the hell out of the servers and pipelines, then online potential and ability to actualize.
they won't stop me- just flay me. when i get to point c, the resources sufficient to bunghole these whatevers, is mine. mine. ha hahaaaa.
i had to vent. forgive.
great site

bear

post rant scriptum-
boy, do i have the start ups. they break all the rules and in doing so achieve first notoriety, then controversy then the- oh i see; s w/ nary an apology "e'er heard
anon in the halles and hous'es o' commerce an' trade'


substantive content is lacking in my post. total absence. truly sorry. next time... facts figures, percentages, reportage- et al. this launch is hard work.
very very hard. and when a real film director says that, you know the scales are accurate

posted on Thursday, November 30, 2006 at 3:14 PM by bear


Nice read, Dharmesh. I found your blog tonight and have already read most of your posts.

There is truth in this need to “focus” for every business, online or not. We feel we are leaving money on the table by not offering a huge menu of services to our potential audience. In reality, we give them the impression that we have no specialty thus diluting our overall message. The “jack of all trades, master of none” cliché is great for a handyman service, but not so impressive for other professional services. Would you use an accounting firm that also lawn care and wedding photography? (don’t laugh, I have seen this…)

I would be interested in your opinion on a recent distraction at our company. Our business is built on the “build it once, sell it many” ASP-like model. We are still in the “start up” phase, but have seen some recent success and growth that has garnered conversations with some fairly large potential customers wanting some custom solutions. This is exciting for us, and a great problem to deal with, but with our “focus” being building a platform that earns ongoing revenue with little overhead, this temptation becomes more complicated.

In the “pros” column, we have (1) the opportunity for what I would call “project work” or “professional services” that will certainly help our cash flow in the short term; and (2) We add a few big names to our customer base that will have a ton of PR mileage and opportunity for future work.

In the “cons” column, since we don’t have the staff this project work will shut down development of our “focus” work until these projects are completed, delaying new revenue-generating services and enhancements.

This is a bit different proposition compared with the above-mentioned biz/dev temptation since we are talking about an offer for a paying project, although one that is not an ongoing revenue stream. Is it worth the trade-off?

posted on Sunday, December 17, 2006 at 1:06 AM by Chris Langston


Excellent post and fascinating discussion. We started our company out as a consumer focused podcasting creation and publishing site with a secondary focus on being a podcasting platform for publishers (business, media, etc.), and we're now narrowing that down to just business in a specific industry, then a sub industry of that industry.

It's been an interesting process. The desire to go broad is very strong (it can do so many things for so many people!) and the distraction factor from the one-off bizdev deals from the big guys (you can be on every one of our X million of set-top boxes, or, you can reach all the internet users in China!) is exceptionally distracting.

The problem with the (first) consumer approach is that you can't really ever get focused if your audience is everyone. You become obsessed with gaining eyeballs and keeping up with competitors features. Revenue? opps...

And on the second, the bizdev deals from big guys: you're reduced to being a for-hire supplemental development group for a big corporation. I think this one is the most dangerous for an early stage startup. The dollars they'll pay seem big when you have little or no revenue, but to them, it's not much money and really just cheap development. Unless your bootstrapping, best to let those one-off deals with the big guys just go on by.

posted on Tuesday, December 26, 2006 at 1:40 PM by Scott Converse


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