Category: Startups

Losing strategic focus

When companies are founded, there is normally a single vision that identifies the purpose of the company. A powerful market need. A set of target customers. A compelling value proposition. Things look beautiful on paper.

However, as founders quickly discover, no plan survives contact with reality. Once they start interacting with the market by selling to a few customers here and there, they begin adding requested features, making changes to their value proposition, and adjusting their business model to fit circumstances they encounter.

Is your startup a lifestyle business?

Do you believe your startup ought to be featured in TechCrunch in an article that announces you were just acquired for $200M? Do you dream of hyper-growth, customers flocking to your site by the millions and changing the world?

One way to know if this is in the cards for you, is by reviewing your priorities.

From Devices to Ecosystems

As computing has become cheaper and connectivity pervasive, the emphasis of our relationship with technology has changed. In the developed world, instead of optimizing technology purchases on the basis of cost, we now optimize them around use cases.

The Giant Pendulum

In today’s technology industry, having a better product is not enough to win. Ten years ago, you could produce a component that was better, faster or cheaper than the competition and you could be reasonably certain that, as long as you executed properly, sales would go up and profits would increase. Things are not so simple any more.

One of the reasons is that, as the industry moves beyond the PC, it is quickly moving from a horizontal, modular structure to a more integrated vertical structure with competing ecosystems – something we had not had for quite some time.

CEOs and Love

As I evaluate the prospects of a startup, one of the key aspects I look for is whether the CEO is in love or not.

You see, to be a great CEO, you need to be in love with the company. Enthusiastic about your products. Passionate about your people. Fanatical about your customers. This is critical because the entire company reflects the speed, values and commitment of the CEO. Every day, every employee of the company is carefully – many times even unconsciously – observing the actions of the CEO to understand what the acceptable patterns of behavior are. As these patterns are repeated over time, they develop into the corporate culture.

Startups: Risk, Growth and Friction

When I work with a startup, typically one of the first exercises I help them go through is a visioning exercise that starts with a simple question:

“How big do you want to be five years from now?”

What matters in the answer is not the first digit of the number, but the quantity of zeroes after it. The mindset of companies that aim to grow to $5M, $50M or $500M in revenue after five years is totally different. They indicate different points in the risk/reward continuum and imply very different requirements for growth speed.

Applications, Platforms and Layers

Over the past 15 years we have evolved into the growing Digital Neighborhood. I think a particularly interesting effect is the transformation of applications into platforms, and platforms into layers.