How to deal with the stormy seas of starting a company
Soon may the Wellerman come
To bring us sugar and tea and rum
One day, when the tonguing is done
We’ll take our leave and go
It’s an indisputable fact that everyone loves a sea shanty. Recently, I was listening to The Longest Johns’ version of Wellerman and became intrigued at the origin of the song. I did a little digging and being a Kiwi was surprised to find that the term “Wellerman” refers to supply ships that were owned by the Weller Brothers, English immigrants to New Zealand, who had supplied whalers with supplies in the 1830s. The Wellerman brought “sugar and tea and rum” for the thirsty sailors.
The Weller Brothers’ success was a result of their focus on creating a unified supply chain that gave seafarers access to supplies and simple luxuries that they otherwise wouldn’t have been able to get their hands on.
A number of times over the last few weeks, I’ve been asked about how start-ups should weigh various opportunities that begin to appear as they reach for product-market fit — If a path diverges in the forest, which way should you go?
Resource constrained
Firstly, it’s important to highlight the fact that early-stage companies are typically resource (time, money, energy) constrained so they cannot pursue all of the opportunities that a more mature business would. An oft quoted remark from Steve Jobs:
“People think focus means saying ‘Yes’ to the thing you’ve got to focus on. But that’s not what it means at all. It means saying ‘No’ to the hundred other good ideas…”
It’s even more important to make the right decision at the early stages of the company. A wrong step could not only mean potential growth left on the table but also complete failure.
Typically, at inception, it’s important to say “Yes” to as many things as possible to open up the opportunity set. However, as more defined paths emerge, it’s necessary to shift mindset and focus on the one or two things that are core competencies and ignore all of the other distractions. This results in you shifting towards a Hell “Yeah” or “No” approach relatively quickly.
Simple in the abstract but difficult in practice because there’s no definitive point where it’s clear that priorities need to shift so how do you determine when to focus?
Frameworks
The first framework that comes to mind is Regret Minimisation — What would you feel the most disappointed if you didn’t do? This allows you take deal with the decision with some level of abstraction — What would an older version of you do in this situation?
Pre-mortems are another framework that could be used. However, they can be more difficult to apply in early-stage businesses because most aspects will be very subjective, i.e. there aren’t hard financial metrics that you can tie yourself to.
Both of the frameworks, enable a level of metacognition where you’re able to step outside of the current situation and think about possible futures. I’ve found the Regret Minimisation framework more useful because of the difficulty in quantifying outcomes when using Pre-mortems.
Changing tack
As I wrote previously, you can’t know about all of the issues that you’ll come up against in the future so you need to plot a true course based on your origin and the information that you have. That said, it’s far better to make a decision and focus all of your resources on that path as opposed to diverting resources to a path to keep your options open. If you’re attempting to plunder too many channels, there’s a chance that you won’t get any booty at all.
If the course that you’ve set doesn’t yield the bounty that you’d hoped, you always have the opportunity to change tack and go after one of the other opportunities that you had previously identified. This means that you can be completely focused on one goal at any given time instead of having multiple currents pulling you in different directions.
As a less abstract example, if you are able to pursue two different verticals with your product at the same time, focus on one. It’s difficult to nail down your Ideal Customer Persona (ICP) if you’re looking at multiple verticals. Once you’ve got your ICP locked for one vertical, you can then create a playbook and scale up the operation. If instead, you focus on various verticals at the same time, then it will be difficult to know what’s working and when to change. If you’re 100% focused on one, then you will be able to adjust quickly and pivot from the current strategy.
Set a vector, pursue it with confidence, and if it doesn’t work, change direction and start again. You cannot know with complete certainty what the outcome of your ventures will be. However, you can be certain that if you don’t dedicate yourself to your selected path you’re less likely to achieve your goals.
Setting sail
Even though it feels like you might have a heap of momentum and thus opportunities in the early-stages, if you don’t focus, there’s a good chance that you could fall off your foils and end up sitting dead in the water.
Returning to the Weller Brothers, their success at sea enabled them to (questionably) buy 3,000,000 acres in New Zealand by 1840 or about 5% of the total land mass of New Zealand. They branched out into industries such as timber, spars, flax, potatoes, and dried fish amongst others. As they attempted to snatch opportunity, they expanded beyond their core competencies and arguably stretched themselves too thin. This led to them being declared bankrupt and slipping out of the pages of New Zealand history.
Conclusion
When you have a variety of opportunities, use one of the decision making frameworks mentioned above and focus on one vertical or option in front of you. If it doesn’t work out, don’t be afraid to change tact, lest you end up like the Weller Brothers who failed to focus and were largely relegated from being commercial juggernauts in the annals of New Zealand history to sea shanties.
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