November 14, 2011

Startups Rarely Do Anything Well

Startup founders have boundless ambition.  Most founders can imagine
their platform concept having broad appeal and meeting the needs of many
customers, with numerous products, often across many markets. 
Investors love to hear about platforms and big visions for success. 
This ambition is contagious but also very dangerous.

Repeat after me: “Startups Rarely Do Anything Well.”  I believe this
mantra is the key to startup success.  The sooner a founder gets
realistic about the need to focus, the more likely the founder will be
successful.  To succeed, a startup needs to become world class at
something that a large enough group of customers value.  Becoming world
class at something is non-trivial.  It is very challenging for a small
group of people to create something that is world class.  It is nearly
impossible for that group to create multiple things that are world

Think of most of the fastest scaling startups of our time and how
they started. Twitter, Groupon, Gilt Group, Dropbox, AirBnB etc.  They
didn’t start with multiple products or even multiple target audiences. 
Over time, they may have grown into broader platforms, but even today
those platforms have limited capabilities that most people would refer
to as world class.  Given the billion plus dollar valuations of these
startups, one might expect that many of them would now offer multiple
products and broaden their platforms, but looking back at the list, the
range of products offered from each of these companies is highly

Ultimately, the reason this is such an important mantra for startups
is that success is so dependent on focus and prioritization.  A music
student who wants to become a world class cello player needs to practice
for hours a day.  That almost definitely prevents the same student from
also being a world-class soccer player or even a world class piano
player for that matter.  Being good at both pursuits is possible, but
being world class at either activity requires an incredible amount of
focus and prioritization of which activity to be practicing many hours
per day.  The same is true of startups.  Division of extremely scarce
resources among multiple goals is highly detrimental to becoming among
the best in the world at something customers greatly value.  The
challenge is deciding which of these goals is truly the big opportunity
and justifies all the resources.  Hedging or multi-pronged ambition is
almost never an outcome maximizing option.

I encourage startups to dream big, but to focus small.  While having a
huge vision of the future, remember that if you are among the best in
the world at solving one problem, you’ve achieved something rare.
Aspiring to this goal alone is likely a multi-year rollercoaster


Paley is a Managing Partner at Founder Collective.  You can
find this blog post, as well as additional content on his blog called Anything's Possible.  You can also follow Eric (@epaley) on Twitter by clicking here.

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