Joost’s B2C strategy failed due to lack of focus

Om Malik has a great post up today on GigaOM reporting on Joost’s announcement that it will now offer a white-label video hosting platform whilst at the same time letting some people go and closing its Netherlands office.  The reason for this shift in strategy is clear in the chart below – they haven’t got enough traction.

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As well as covering the change in strategy (which he describes as a strategy of last resort) OM does a bit of post mortem analysis on the the consumer play.  He lists the many things they had going for them at the start (many of us were very excited by their prospects at the time) and then the reasons they went awry.

According to OM these are the top three reasons things went wrong at Joost:

  • Too Big, Too Fast: Joost hired too many people, too quickly. It never behaved like a startup but instead always felt like a grown-up company with too many bureaucratic layers.
  • Too Geographically Spread Out: The company was based in multiple geographic locations — New York, London and The Netherlands — and as a result, each location became somewhat of a silo.
  • Not Enough Focus: Remember what your mom used to say when you took too big of a bite? If you’re not careful, you’re going to choke. Startups are just like that. Unless you focus, you’re going to choke. Joost couldn’t focus on one single market — and startups need to focus on one market at a time in order to win.

The reason I am bringing these out is that I think they apply to just about all startups anywhere.  I actually think they all boil down to the same thing, which is focus. 

In my experience companies which think of themselves as big companies from day one rarely succeed because they start doing too much.  Instead the great ones focus obsessively on doing one thing brilliantly.  That can be a single product that works globally (Skype, Google) or it can be a service that you perfect in a single country before going international – and most media and advertising businesses fall into this second category.  Just look at Hulu, which has made itself successful by focusing on the US (much to my irritation as I’d love to be able to use it here..).

Once you have success in one area it becomes much easier to grow either geographically (which is where Hulu is going) or by adding new products.

The other great virtue of this approach of course is capital efficiency.

I think these arguments have much more weight than the opposing one of wanting to get everything done super-quickly for fear of ‘missing the window’.

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