The Single Biggest Reason Startups Succeed
Scott Maxwell is Founder and Managing Partner at OpenView Venture Partners, the leading expansion-stage B2B software venture capital firm. Follow him on Twitter @scottsnews. Imagine for a moment that you’re a fisherman. How would you approach your job? Would you fire up your boat, blindly navigate to a random spot on a lake, cast your line and hope for a bite? Or would you be more strategic about where and when you went fishing — targeting fishing holes known to breed the type of fish you want to catch — and which types of tackle you need to use to catch those fish?
Obviously, you’d go with the latter approach. That strategy would help you more effectively and efficiently target, locate and catch a higher quantity of fish, and build a healthier, more sustainable fishing business.
The process of growing a startup isn’t much different. Sure, you could randomly target a market need, rush into building a product and then release it to the market hoping someone buys it. And, just like a fisherman who blindly casts his line and reels in a 10-pound bass, you might get lucky and have some early success. But eventually, that luck will run out. And when it does, you’re in a lot of trouble if your startup's strategy lacks one key elemental ingredient: Focus.[bctt tweet="The reason startups succeed is the same as the reason fishermen succeed, says @scottsnews"]
Whether You Sell Fish or Software, Focus Breeds Sustainable Growth
Yes, fishing and building a tech startup are very different professions. But the similarities between how fishermen approach their trade and the ways in which most successful startups grow are very similar. Namely, they share one particularly relevant goal: To acquire the largest quantity of a particular target as quickly and efficiently as possible.
For startups, the first part of that goal (acquiring large quantities of customers) can be accomplished by blindly experimenting with product design, sales and marketing until that process yields a batch of early customers, but it’s hugely dependent on luck and happenstance. Also, depending on how long it takes you to achieve that early success, this shotgun approach can be costly and it can lead to significant headaches. Specifically, if the customers you acquire aren’t a good fit for your product, it will lead to poor customer retention, higher customer service costs, fewer referrals, a lack of product clarity in the marketplace and flat-lined growth.[bctt tweet="Blind experimentation can yield a lack of clarity + flat-lined growth - @scottsnews"]
The better approach is this: intelligently designing a systematic process for identifying and engaging the right buyers, influencers, partners and indirect sales channels in the right target market segment, and leveraging that process in a way that efficiently delivers consistent impact over time.
This approach will allow you to meet your expansion goals in a much more targeted, focused, and predictable way. Sure, you might bring in fewer customers initially, but those customers will be better aligned with your product’s core value proposition, which means they’ll be more likely to buy more, stay longer, and organically evangelize your brand in the market.[bctt tweet="Focusing on the right market segment breeds sustainable #growth - @scottsnews"]
4 Questions to Help Bring Focus to a Startup’s Strategy
To bring focus to your startup, your overarching goal should be to think more deeply about how, why, when and where you engage prospective customers, as well as which external forces are most likely to impact those customers’ buying decisions. In a way, this is akin to how professional golfers approach their shots. Instead of pulling out a club, stepping up to the ball, and hoping for the best, they consider factors like wind speed, shot risk and course elevation, and then decide how to attack.[bctt tweet="To bring focus to a startup, think deeply on how why when + where you engage - @scottsnews"]
To do this, a company must be able to answer four simple questions:
- Who are the buyers, influencers and partners that best align with our product?
- What do they care about most and how does our product align with those interests?
- Which marketing channels or tactics are they most influenced by?
- What can we do to stimulate specific behaviors among those audiences?
As you answer those questions, it should become very obvious what you should be building, who you should be selling it to, where you should be marketing to them, and how you can amplify your presence in that market. This focus is critical to intelligent growth and the more you’re able to integrate it into your go-to-market approach, the easier it will be to zero in on the right activities and investments.
At the end of the day, doing that won’t just help a startup to acquire more customers. It will allow you to acquire more of the right customers, and drive the kind of smart growth that is scalable, sustainable and cost-efficient.[bctt tweet="Focus is key to driving growth that is scalable, sustainable, + cost-efficient, says @scottsnews"]