Build One Startup at a Time
Chapter Twelve Excerpt: Startup Muse available from Amazon
Entrepreneurs are inventors and builders by nature. Their vision rarely has limits, but the reality of building a startup is the simple fact that startups are resource constrained. I can’t tell you how often I meet with a one or two person team with an interesting product or service only to hear about the additional ten products or services they ALSO plan to launch. Their chances to launch the original product or service are often slim to none — much less the next ten other products or services. Many early stage investors can withhold disbelief for the first product or service, but their imagination is often strained by the second or third. My advice to entrepreneurs — keep your future plans to yourself. Focus on the ONE thing you might be able to launch.
I’ve always considered myself an entrepreneur and as a result I’ve OFTEN lacked focus. For example, my earliest memory of my own lack of focus was in my last high school debate round. I stared at my legal pad deciding which of the five arguments I would go for in my last speech. The weakest argument was a stock issue called inherency — but the opposing team had failed to address it in their last speech and as a result it is considered “conceded” under the rules of debate. My strongest arguments were the last two — I thought I had an excellent chance of winning at least one of them. Fatefully, I decided to go for all three and as a result I lost the round. The decision was split. The first judge agreed that they had dropped the stock issue and awarded me his ballot, but the second two judges explained that they felt I had won the stock issue and lost the other two arguments. Their justification for awarding their ballots to the other team was simple — they won 2/ 3 of the final issues in the debate. Offering an investor a second or third reason to say no is an unforced error. They might love your primary product or service, but hate something about one of your less developed or researched “future” products or services.
Almost twenty years later I still struggle with a lack of focus. I had been working with Benchmark for months and was expecting a term sheet for ShopSavvy if our final partner meeting went well. Things were going well for the company and our numbers looked great. We had recently started working on a wallet/ payment feature for the application and I had decided to include it in my final pitch. I thought it was game changing and answered a bunch of the questions we had about monetization. The pitch went well right up until Bill Gurley started digging into the wallet/ payment feature. He knew the new head of wallet/ payment for Google, Osama Bedier, and explained that he couldn’t tell us — but Osama was working on something that would destroy us. It was surreal. We had actually been working with Osama for about a year when he was at PayPal and our relationship with Google was even better (we were the winner of the first Android Developer Challenge and the first application available for Android). I was confident that whatever Osama had up his sleeve would likely help us — not hurt us. At the end of the day Gurley vetoed the investment.
In both cases I failed to focus. In the first case, I’m confident that if I had simply extended the one argument my opponents had failed to answer I would have won the debate. My failure to do so allowed the judges to consider other options — options that felt more fair and reasonable. My opponents would have spent their time arguing the ONLY point they weren’t allowed to continue to argue. In the second case I’m not certain it would have made a difference, but I’m confident that Gurley wouldn’t have vetoed the deal in the room based on a secret he couldn’t share.
Just recently I caught a post by Sarah A. Downey from Accomplice where she explains why VCs pass when they sense a lack of focus,
“The VC thinks you’re trying to do too many things at once. This could apply to several spots in the business, including product (you’re trying to build too many things), go-to-market (you’re trying to sell to an array of customers without understanding which one’s truly best), business model (e.g., you have freemium, paid with multiple pricing tiers, and enterprise sales, but you haven’t sold anything yet), team (multiple part-time people who should be full time, including founders who haven’t quit their day jobs yet) or operations (e.g., you have a time-consuming services studio in addition to the startup business).”
At the end of the day, the realities of software development and time force you to focus on developing and releasing a single product/ service. The same should be true for your pitch. If your product does everything for everyone it is going to take forever to build and forever to finance. Instead successful entrepreneurs settle on an MVP (minimum viable product) and launch — when you’re working on your pitch you need to settle on an MVP (minimum viable pitch). The more you pitch the more you’ll have to defend. Entrepreneurs need to focus on the ONE thing they can actually execute on. Those other products and services will be great conversations to have with your board AFTER you’ve raised capital.