Startups are about choices. Lots of choices. From small to big, short to long, cheap to expensive, these interlinking series of choices shape your journey and ultimately your level of success. But within the thousands of choices you will make along the way, there is one that is bigger than all the rest.
What is your company going to be the best in the world at?
I’m not just talking about what differentiates you in the market. I’m talking about THE one area in which you are going to deliver better than any company on the planet.
Amazon’s choice: to deliver the best customer service in the world. That’s bigger than e-commerce, marketplaces, cloud storage, grocery delivery, reading devices, or the dozens of billion-dollar businesses they have created. They have organized their people, resources, values, and decisions around how to deliver the best customer service, period.
At Contour we weren’t the best in the world at anything. We designed thoughtful, easy-to-use products, but they weren’t heads and shoulders above everyone else. We sold through every kind of retailer, but profitably building channels wasn’t our differentiator. We created a solid brand, but not a marketing machine of dominance. We supported our customers, but the experience didn’t leave them ecstatic with joy. We did a lot of things right, but unfortunately nothing world changing.
Instead we lost to a company that created one of the best marketing vehicles anyone has ever seen. A content generating machine that is bigger and more successful than nearly every brand on the planet.
So how do you decide what your company will be the best in the world at?
Understand the Lifecycle
Ideally a magnitude better than what currently exists in the market, most startups begin with a clear advantage in their product. Resulting in early customer traction and outside capital, these startups move from an idea to a company.
But in order to scale, these companies begin to invest in areas other than their core competencies. Spending valuable resources on people, systems, distribution, and customer acquisition, they begin to dilute themselves. Adding more capital, board members, and expectations along the way, these companies leverage their initial differentiator to feed the never-ending growth machine.
No longer owning a world dominating strength, they do a lot of things, well.
- Microsoft’s dominance in operating systems has resulted in cash they now have to spend just to stay relevant.
- InCase’s design focus turned into cheap product that maximized investor margins.
- Monster’s product engine has been replaced with a channel marketing machine that Beats abused to own the headphone market.
- Facebook’s existence is being challenged by a collection of vertical apps, while it tries to build walls around its one billion users.
- Cisco’s dominate networking products are being eaten by the cloud and a culture that isn’t scaling.
Being consistent about the unique value you bring to the world is hard, especially as the pressure to grow distracts your valuable resources.
Be Committed to One Thing
Entrepreneurs love to build, which means we generally fall into three traps. First we think our time is unlimited. It’s not. Second we treat one incremental objective on the list as equal to the next. It isn’t. Third we think growth is the true metric of success. Guess again.
What we often forget to realize is that every choice has a cost. Whether it’s mind share, cash, or energy, everything added to the list is a multiplier, not an addition. Especially as we learn how to grow from being a founder to a CEO, we have to replace our intuition of doing with thinking.
When Steve Jobs returned to Apple he made it very clear that their world-dominating strength was to deliver the best portable and desktop products in the world for both consumers and professionals. Drawing his famous diagram on the wall, he made it clear that the company was going to focus on a single solution in each quadrant, delivering a product experience that would forever be better than any company in the world. He did that.
IBM on the other hand, has survived 100 years because along they way learned how to shift their core competency. Even in the face of $8.1 billion in annual losses, they were able to pivot from making the best technology to creating a service organization, integrating existing solutions. Changing their focus from hardware to people, they have spent the past 20 years re-learning their focus.
Picking your superhuman strength is much deeper than identifying the technology or features in your product. It requires you to think hard about the DNA of your company and what competencies you want to build into your history from day 1.
- If you want to continue delivering the best products, then what do you need to be amazing?
- If you want the best customer service in the world, what does it require?
- If you want the best engineering in the world, then how do you accomplish this?
- If you want to create the most efficient distribution channels, then what should you constantly be investing in?
When you select the strength at which you want to dominate, you have to be maniacally focused on being the best in the world. As you constantly re-think your own experience, you have to resist all temptation to indulge in the team’s growing list of additional needs.
Even if your superhuman strength shifts over time, that’s ok. As long as you are clear about why and consistent about where you invest, you can develop core competencies that keep you dominating for a very long time.
Focus The Rest
An important element of defining what you will do better than anyone else, is deciding what you aren’t going to do. It doesn’t mean you can ignore key functions required to make your business sustainable. It just means you’re going to be incredibly selective about what areas you gain competency. Just because you can hire someone to execute a new function, doesn’t mean you should.
Beats headphones is a fantastic example. Focused on brand, they partnered with Monster, whose expertise in manufacturing and retail was the perfect complement. It would have been easy for Beats to spend countless cycles finding their own supplier, building retail distribution, learning how to execute in store, etc. But they didn’t. Instead they found a partner who overnight enabled them to blow past Skullcandy, Sony, Phillips, and every headphone maker in between.
Nixon watches, a $400M company that few in Silicon Valley have ever paid attention to, sold their business early on to Billabong. This enabled the founders to focus on their brand and product offering as the company leveraged Billabong’s capital and reach to scale their business. Eventually buying the company back, Nixon took a unique path to market.
Several successful software startups have followed a similar journey. Instagram relied on Facebook for distribution. Pandora built their customers on the back of Apple. Twitter accelerated their growth with a robust developer network. Kickstarter created a network effect with every project shared on its platform. Amazon’s marketplace encouraged 3rd party sellers to promote the platform, driving more customers back to Amazon.
Being the best in the world at product, distribution, marketing, systems, and service isn’t possible. But deciding what you don’t invest in enables you to preserve the few resources you have to be remembered for one thing.
Resisting the temptation to build is hard. I meet plenty of entrepreneurs who think they need to hire someone to solve their problem. I understand, because I tried to solve my problems at Contour the same way. I hired people.
Without a clear understanding of what we were going to be the best in the world at, we did a little bit of everything. Solving our problems by doing instead of thinking, we built a nice company that didn’t survive the marketing domination of our competitor.
Be incredibly amazing at one thing and the rest will work itself out.
*Image Credit: via Wikimedia