Some more (refined) thoughts on focus

Earlier this week I blogged Some thoughts on focus quoting from former Apple exec Adam Lashinsky to make the point that many startups would benefit by focusing more, and concluding that unless a team feels real pain from the potential lost opportunity of projects that haven’t made the cut then it probably isn’t focusing enough.

Rait Ojasaar replied with a great comment which expanded my thinking on this point. Here it is in full:

Good observation Nic.

My experience is that when you start a new venture, you usually have quite broad approach and very general focus that comes from the initial set of product / demand / technology hypothesis. Mostly because you don’t know better in the very beginning. 
The more you work on your initial hypothesis, the clearer you start to see what matters. With an open mind for experimenting and good mentoring you can start narrowing down the focus to ensure you’re spending your scarce resources on the most essential parts.

But the real trick is to find an optimal level of focus (and it tends to change over time), since if you focus too narrowly, then you start to get objections like – this is too niche, its a feature not a product, etc. Too much focus can also kill side-experiments that could reveal new opportunities and provide useful when the startup has to pivot.

There are a couple of points here. The biggest is that over-focus is possible. Lack of focus is generally easy to see for what it is – resources in a company are spread too thinly across too many products or opportunities and none of them is working well enough to make the company a success. Over-focus, however, can often look like a decision to focus on a small opportunity, or taken to extreme on developing something that is a feature or a product rather than a company – i.e. a question of strategy rather than execution.

The trick then is to find the optimum level of execution, and as Rait says that varies over-time. If you are aiming for a large outcome then it makes sense to start with a broad focus and then narrow down once you identify an area that has enough potential to match your ambitions. A narrow focus is the way to go once you get to product market fit and start to motor though. Then when you get really successful more products can be added, but focus shouldn’t be lost.

It’s been a good week here on The Equity Kicker. I love it when we have discussions like this and there have been a couple more this week. In the comments on the focus post Neil Lewis and I had a sidebar conversation about the differences between due diligence for VCs and accelerators, and on our debate on whether we are entering a post app era was instructive. Nobody thinks we are.

Thanks again for your participation. Keep it up!

  • Interesting post. Of course, it would be wrong to inversely equate focus with target market size: Google and Twitter started out extremely focused, yet their products scratched an itch for millions. Conversely, there are all too many startups that pile features into a product that is only ever going to appeal to a small demographic.

  • I think I’m right in saying that Twitter and Google were both broad in their earliest days. Google thought about licensing their software rather than going B2C and Twitter started life as one of many projects at Odeo.

  • Martin Stillman

    As a Business Mentor, I’m bound to like Rait’s astute observation “with an open mind for experimenting and good mentoring you can start narrowing down the focus to ensure you’re spending your scarce resources on the most essential parts”

    However, it’s very easy when fighting alligators, to forget you were sent in to drain the swamp – for this, touching base with a good mentor increases successful outcomes five years out by twice the level of non-mentored entrepreneurs….

    A mentors ability to re focus entrepreneurs ~ clear from the bias that may exist from other sources ~ can be invaluable in driving up success.

  • So from a Product Point of view I agree on the focus – in most cases one product sometime maybe two.
    Consulting (Business or Software) and Product Development does not work very well – as they are quite different areas and require different skills.. So focusing on one or another is a must in my opinion.

    (However if a big client lands at your door take the consulting project). It does not happen anyway.

    My question – the BIG focus question – product development versus financing. They are both a must.
    Where you draw the line?

    A lot of succesfull startups almost run out of cash -> was that because they focused on product development and took more risks?
    While other failed because they spent to much time on financing instead of focusing on product development ?

    The issue here is that if you need to do Financing and Product Development in paralel that’s not relaly focusing so how can you mitigate that risk?

    Is it “slow death” versus “maybe succcess”?

    Thank you
    Andrei Kovacs

  • Financing is like IT infrastructure or office space – it’s critical that you have it, but the trick is to spend as little time on it as possible.
    Startups shouldn’t be focusing on financing at the expense of their products for anything more than a short period of time.

  • So if I understand correctly you are saying a startup with a decent product can get financing fast enough when needed. On contrary if a startup spends to much time on Financing the actual problem is probably the startup does not ring a bell to anyone hence it is more like a lifestyle business or just really a bad idea (all else beeing equal) ?

    I hereby inherit that the general rule would be that an inovative startup would find a way to get financed at least initially (after all even some of them which go bankrupt managed to get financed even at VC level).

    So to sumarized luck (on top of ahrd work) would play the major role more on product development rather than getting financed ?

    And your advice would be to get a fast decent deal rather than spending time to much on shopping around etc.. as the real gain will be in the product development which means a higher valuation which will compensate for a not so perfect financing deal ?

    And yes I don’t think I could type this much on a tablet. I actually use a keyboard even if it is not a PC but a mac.

    Thank you for the feedback – I think this one is quite relevant at least for startups – I know quite a few examples where financing is a never ending saga.

  • The good thing about financing is that investors generally demand focus. If you are not focused and attempt to raise funds, investors will surely advise you to find your focus before they can even start evaluating the opportunity. 

    I agree with Nic on keeping the focus on financing as short as possible. But the real life isn’t always as merciful. Provided that fundraising can easily take between 3-12 months (depending on stage, industry, investment climate, etc), then it can easily account for up to 50% of the time spent on building your startup. And it may still not be enough. You may still end illiquid.

    One way of finding synergy between focusing on product and raising funds is to learn pitch investors using your product instead of slide decks. Slides take a lot of time to polish and this time would be better spent on refining your product and building proof of concept / value / business model. 

  • Yes to ‘it’s better to take a decent deal than hold out too long for a great one’. Also, it’s true that raising finance is often a time sink and that some companies get stuck in seemingly endless fundraising processes. Where possible I would advise taking the time to figure out if you are likely to be successful and don’t spend too much time on it if you aren’t, even if that means changing strategy.

  • Focus – from an Entreprenur’s Perspective.. A few more thoughts.

    Please jump to For MBA’s at the end to see common english explantion 🙂 :

    1. Is a VC which invests in 10 bussiness focused ? Focused as a more general rule – industry etc?
    2. Creating value – a VC invests in 10 bsuinesses in order to get 20% return overall
    3. A Startup is 20% hard work/ideea and 80% luck (give or take ?) . and you have 20% chances to get decent traction (anyone can use whatever number they wish – its the principle)
    Which means.. you have 1 in 5 chances to see the light iwth one idee/startup. And one year time per ideea.
    However.. if you manage to test/prototypr/launch/ whatever 3 startups at the same time – as long as you can kind of capitalize on the same skills .. and do it in paralel then instead of 3 years you have the results in one year and you chances of success would be as follows:
    Instead of 20% for hard work/ideea let’s put 10%.. so not focusing on only one thing does decrease the results whic depend on you. so 0.9 * 0.2 = 0.18 x3 + xxxxxx = at least  54% chances of success with at least one ideea ..(xxxxxxxxx is one othe math stuff  like the cnahces that you suceeed with al three etc).

    For MBA’s:
    As luck plays a huge role in startup – especially in anincipient phase and lack of focus does slighyly affect one product it seems that matehmatically it is better to test the market/try at lest 2-3 products in paralel in order to maxime your chances for having a winner. You have certain synergies when doing things in paralel.
    Also if you are 14 or Napoleon you might very well be able to do 2-3 things in parallel as you brain is better at multitasking.
    There is only ONE FOCUS – which is the general vision – not of a product “features” not even a certain startup – but the rather general life philosophy – from “I want to save the planet” to “I really like things which work” to “I believe robots whould do the work not humans” to anything which starts with “I think it is right to …. “.  and you transform whatever broken space to fit your vision and make it better.

    So in regard to focus – I think like everything else it really depends on when, how much, on what , synergies delegation etc. An entreprenuer is also much more likelly to “fail fast” with a product rather that the whole company.. (Fail fast is another discussion – maybe we can see another post about that 🙂 )?

  • I think it is really hard to focus on more than one product at a time. Which one do you choose to talk about with press and investors for example? They will only want to talk about the one you think is best.
    The best strategy is the one you hint at – focus, and if you are going to fail, do it quickly.