There are a multitude of problems in the world that need to be solved. And every minute of every day people around the world are trying to solve them. The key to success for founders, especially in the early days of building their companies, is to focus on solving one (or two) major problems first before trying to solve all the problems they believe their customers may have.
I tell founders to maniacally focus on one or two things they do exceptionally well and put less important products or features on hold. The best founders we’ve met at Serac Ventures are ones that did exactly that. Despite their desire and ability to do and add more, they didn’t. Instead, they waited until they built a solid foundation with one product or service before expanding and adding others.
As an example, I once asked the founder of one of Serac’s portfolio companies why she didn’t offer her company’s services directly to retail customers. She said that while she could do that, she and her team decided it was better to focus on selling to businesses that could get them in front of multiple customers. We, of course, encourage and prefer B2B business models. However, in the due diligence process, a lot of individuals we spoke with wanted to see a retail offering, so we felt compelled to ask about it. By focusing her company’s resources on a specific type of customer, her company has been able to create a loyal customer base that trusts her company’s expertise in one area (for now). Because she is focused, her company can continue to build products that meet specific needs that her customers actually care about.
On the other hand, companies that we’ve seen struggle or outright fail are ones that let scope creep slip in during the early stages of their business. Ultimately, these companies end up running out of resources trying to build products or services that are too broad and confusing to potential customers. In many cases (not all), when an early stage (pre-seed or seed) company’s product or service is too broadly focused, it’s a potential sign that the founder hasn’t identified their ideal customer profile resulting in poor product-market fit.
Unfortunately, in today’s high-growth, fast-paced technology market that we’re in, every dollar a founder spends doesn’t get them as far as it did in the past. The solution for early-stage founders isn’t simply to raise as much money as possible because they can. If you’re not focused on a specific problem, then no matter how much money you raise, you’re going to end up in the same failed situation. Founders should be aggressively intelligent with how they spend money until it’s clear they’ve identified the one or two things their customers want. That way they don’t spend time and resources building a broad product or offering too many services that no one wants to purchase.
Take Steve Jobs, for example. Apple fired him and then brought him back as the CEO to save the company from bankruptcy in 1997. The first thing he did was eliminate several products and services that Apple was offering and directed the company’s efforts and resources on four products: the Power Mac G3 desktop, the PowerBook G3 laptop, the iMac desktop, and the iBook laptop. Reducing, not adding to, the total number of products saved Apple from going out of business (source).
No matter what the industry is, when founders have a small company with fewer resources, it’s better for them to start with a narrow focus than a wide one. It may sound counterintuitive, but in order to grow into a large company that is capable of solving multiple problems for customers, founders have to start by mastering one problem. Operating in this manner allows founders to direct their time, energy, and resources more efficiently and more often than not increases their probability of success. And “yes,” there are many companies that have failed because their focus was too narrow. However, there’s an argument to be made that perhaps it’s not being “too narrow” that causes some early-stage companies to fail, but rather the founder’s unwillingness or inability to recognize when to change their focus (i.e., pivot) that causes them to fail. I’ll save that discussion for a future blog post 😉.
Cheers — KM
