“The difference between successful people and very successful people is that very successful people say “no” to almost everything.” – Warren Buffett
We’ve been spending the past few weeks at Homebrew helping several of our portfolio companies work through their planning for 2015. It’s no surprise that during these conversations incredible ideas for new products and features, partnerships, revenue streams, technologies, etc., emerge. So we and our founders all remind ourselves about the value of doing just one thing (or a very small number of things) exceptionally well.
Often times it’s easier for companies to choose to do lots of different things. New initiatives are fun and energizing and get lots of attention while the effort required be truly exceptional at one thing can be an exhausting grind. But being adequate at lots of things almost always comes at the expense of being excellent at the most important thing. Great companies are born of focused excellence. Google was the best at search before it expanded into new product areas and markets. Facebook was a powerful social network before venturing into mobile communications and virtual reality. Narrowing from lots of good ideas to just the most critical ones is the lifeblood of a successful company. We constantly remind our teams that startups rarely die from lack of ambition, only from a lack of focus. And we insist that there’s incredible power in saying “No” to the things that distract them from being best in the world at whatever they are doing.
So what are examples of things that startups should be saying “No” to so they can focus on what really matters?
- Settling for the good enough hire: It’s tempting to fill the hole on the team that seems like the obstacle to progress. But hiring people with enough aptitude but the wrong attitude is guaranteed to impede and even reverse progress in the long run. These kinds of early hiring mistakes can cripple a company.
- Building new products or more features: There’s that one customer that is willing to pay a lot for just one new feature. Or if you just add this small feature that will solve your user growth problem. Or you’ve got early customers that love your product so you want to give them more to love before growing the customer base. Do any of these help you deliver the simplest offering for the core use case you’ve identified? Are you sure that you’re not iterating toward a local maximum versus placing a bet that might unearth a global maximum?
- Short term revenue: Revenue can be found in lots of places, such as consulting contracts, project development work, one-time ad sponsorships, etc. But does generating revenue in an ad hoc way help you build a business that will scale and be sustainable? Is the revenue you’re generating the income stream you want to bet on long term?
- Potential investors: The dirty little secret about “coffee meetings” with investors is that even though they’re positioned as relationship building, you have to treat them like you’re actively fundraising. Because most investors are judging you and your business in every interaction (a few are genuinely trying to be helpful or to get to know you). So the easiest thing to do is politely pass on that coffee and stay focused on the business until you really want to be fundraising.
- Big company partners: Big companies offer the promise of distribution, revenue, resources and many other things. But the vast majority of the time you get stuck in a never-ending cycle of meetings, negotiations and more meetings. And if a partnership is struck, the likelihood of it amounting to anything is next to zero. In the meantime, you’ve taken up a ton of time, resources and mental energy that has a real opportunity cost. More often than not, these types of relationships can be all consuming for small companies and can distract them from your ultimate goals.
- Corporate development: See Paul Graham’s excellent post.
- Networking events: Just build a great company. Your network will grow because you’re creating something incredible, not because you drank beer and ate cold pizza with a bunch of entrepreneurs in a converted warehouse somewhere.
At Homebrew, our primary goal with Fund I has been to overdeliver on our brand promise to the founders who’ve chosen to partner with us. We prioritize our time and efforts such that the needs of our companies come first. We often choose to pass on meeting with new startups, speaking at conferences, attending happy hours, etc., because none of those are immediately and directly in service of our founders. And we’ve found that because we’ve made making these types of choice a habit, they get easier to make over time.
Saying “no” absolutely requires discipline and grit, because “yes” doesn’t disappoint someone or necessitate a difficult conversation. But there is real value in saying “no” because it orients startups towards spending their limited time and resources on doing just one thing incredibly well. And if you can do one thing exceptionally well, chances are you’ll have the opportunity to try another in time.
Any other things startups should say no to in the interest of focus and pursuing excellence?