When and How to Focus (When Building Tech Companies)
Specific situations when the need for laser sharp focus and prioritization really matters
Thinking back to both my early stage as well as scaling situations at both Issufy (Startup) and MoneyHero Group (Scaleup to IPO), the need to focus to make actual P&L progress has been a key theme.
Focus can mean different things in different situations. These are some examples of situations that I’ve personally experienced in which focus really matters (and what you need to do about it):
If you are interested in collaborating directly with me to you prioritize to grow REVENUES please…
Scenario: Creating your first product and trying to find product market fit
The common mistakes are to be too vague about the specificity and magnitude of the pain you are trying to solve for and too wide in terms of defining the actual persona you are trying to help.
At the early stages, it’s most important to have a really critical understanding of the needs of a VERY small subset of personas that can drive a purchasing decision. Don’t worry about things like the total addressable market or diversifying you risk exposure before you have at least $5-10m of revenue (depending on your industry, product etc).
Really listen to the feedback of your main persona and make sure the appropriate feedback loops (from an org structure and information design perspective) have been implemented so that the right type of product is built in a decent amount of time. You need to go deep and really nail the set of problems for your most critical set of customers before thinking of branching out.
Once you start going too broad and dealing with too many different variations of a given set of problems, it becomes increasingly difficult to gain focus as the sunk cost fallacy ends up taking hold - you think that you need to continue because you’ve already spent time and effort on those situations.
Scenario: Creating your initial go-to-market revenue motion
If the nature of your industry and solution potentially allows for different types of GTM sales motions to happen (for example, selling to SMBs, selling to larger enterprises), choose one and test your expectations for revenue generation against that, only moving to another method once you’ve completely exhausted your key hypothesis for your 1st choice.
Do not try and do both at the same time. If you do that, you will systematically underestimate the impact that running both GTM motions will have on your team’s ability to understand what their goals actually are, the overhead of time spent on creating 2 sets of forecasts and plans, managing against 2 different sets of operating metrics from a sales and customer success perspective, and maintaining product analytics and testing infrastructure to try different types of feature sets and user journeys.
Each of the risks highlighted above can feed upon each other and compound over time making the problem even more acute - you’ll end up burning more capital and find it progressively harded to change tack.
Scenario: Fundraising for earlier stage private capital rounds
A ‘spray and pray’ type of approach does not really work when raising financing rounds for earlier stage ventures - you need to be really clear about WHICH investors you are reaching out to and WHY. This is because you need to craft the narrative and the business metrics that you want prospective investors to focus on as in the majority of cases, you won’t have enough evidence of revenue based traction to work from.
Choosing the “right” type of investors is crucial. Focusing on targeting based on clear criteria is paramount. Apart from the provision of the initial round of capital, you will probably need to rely on these investors to inject more capital into the business as you scale. Raising from existing investors is MUCH easier than syndicating from others, irrespective of whether or not they have a Right of First Refusal. Also, you need investors that are supportive of your journey and understand the difficulties and overall business model sensitivities associated with what you are building - they need to be patient and know WHY they are being patient. Lastly, they will be best positioned to help you with their networks across many aspects of your business.
If you don’t do this well, life will become very painful. Dealing with larger minority investors, especially those that have board representation, when you are misaligned in terms of your objectives and how to run the company can be extremely painful.
How you approach these prospective investors also requires deep focus. You need to craft a compelling narrative which includes a clear structure of specifically which operating metrics that you want investors to focus on. This also means that the collateral you create needs to be done in a considered way (financial models, data room, investment teasers and decks). Finally, the actual pitch needs to be carefully crafted and practiced.
Examples of other scenarios that also require a focused approach when building are:
Designing a marketing strategy to capture your first set of cohorts or qualified leads
Determining how to create your first cross sell and up sell strategy
Creating your first customer success infrastructure with retention KPIs
Inorganic growth through M&A
If you are interested in collaborating directly with me to you prioritize to grow REVENUES please…
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