There is no formula by which a startup can rocket to fame and fortune. A different combination of factors contributes to the rise of each one and only in hindsight do the exact reasons for its success become clear. But during my decades in the venture capital industry, I’ve repeatedly observed—and clearly articulated—that a lack of focus is the main reason some otherwise promising startups fail to reach the pinnacle of success.
Imagine that you are a venture investor and an IT entrepreneur has just given you a less-than-convincing pitch. Seeing that he’s failed to make you reach for your checkbook, he suddenly changes tack and says, “OK, we’ll come back to that idea later. I actually have another great project that I’m working on at the same time that you’ll definitely like.” What is your first thought when you hear this?
I have been in this situation numerous times and have always said no to such entrepreneurs, even if some of their many projects looked interesting. The fact is, a person might have 10 great ideas, but if he tries to execute all of them at once, none will succeed. The way to become a champion is to focus on one thing to the exclusion of all else.
Don’t spread yourself too thin; after all, you can’t sit on more than one chair at a time. This is timeless advice, but it takes on special meaning in today’s entrepreneurial culture. The lower barriers to entry, plethora of information and huge number of tools now available create the impression that absolutely anything is possible. And entrepreneurs—especially young ones—often want to try all of them at once. One person might start several businesses simultaneously to reduce the risk of failure, while another might just have trouble choosing. But either approach leads to the same disappointing result.
To use a simple sports metaphor, an all-round athlete might be a good runner, cyclist and marksman, but he usually isn’t good enough in any one sport to take the gold. The same holds true for business. A person might own a store, car wash and several phone apps as well. There’s nothing wrong with this, and these businesses might even produce decent revenues, but it’s unlikely these people will become champions in their respective industries or even their niches.
Venture investors look for superachievers. They don’t want to back a founder who lacks the ambition to become a champion, who is content to simply run a few good businesses. Sure, such entrepreneurs have created companies that provide them with a comfortable living, but why should an investor, whose goal is to multiply his investment by 10, 50 or 100 times, bother to get involved? This is why my fellow investors and I prefer not to back founders who pursue multiple projects simultaneously: we simply do not want to help other people diversify their risk at our expense. What we are looking for is someone who is so confident in himself, his team and his product that he doesn’t create additional projects as a safety net.
To this line of reasoning, I often hear the counterargument: “But look at Musk, Branson and other rock stars of business—they manage to do many things at once without a problem.” Of course, there are exceptions, but even Musk and Branson achieved their initial success by first focusing on a single thing. They later leveraged that experience and the resultant resources to build other successful businesses. To try to achieve the same thing from Day One and with other people’s money to boot is simply wrong. Besides, it takes a towering genius to manage multiple enterprises properly. I myself once had several solid businesses at the same time, but the larger they grew, the blurrier the big picture became and the more difficult I found it to delve deeply into specific projects. As a result, emerging players that maintained a tighter focus and had better management quickly outpaced us.
Of course, even focus has its limits. I have seen people concentrate so maniacally on one thing that they lose not only sleep, but also their sanity. You can be the very best at something and still pursue a hobby or interest—but just be sure to pursue them only in your free time. If you focus on your business and truly dedicate a part of your life to it, it will surely pay off.
Imagine that you are a venture investor and an IT entrepreneur has just given you a less-than-convincing pitch. Seeing that he’s failed to make you reach for your checkbook, he suddenly changes tack and says, “OK, we’ll come back to that idea later. I actually have another great project that I’m working on at the same time that you’ll definitely like.” What is your first thought when you hear this?
I have been in this situation numerous times and have always said no to such entrepreneurs, even if some of their many projects looked interesting. The fact is, a person might have 10 great ideas, but if he tries to execute all of them at once, none will succeed. The way to become a champion is to focus on one thing to the exclusion of all else.
Don’t spread yourself too thin; after all, you can’t sit on more than one chair at a time. This is timeless advice, but it takes on special meaning in today’s entrepreneurial culture. The lower barriers to entry, plethora of information and huge number of tools now available create the impression that absolutely anything is possible. And entrepreneurs—especially young ones—often want to try all of them at once. One person might start several businesses simultaneously to reduce the risk of failure, while another might just have trouble choosing. But either approach leads to the same disappointing result.
To use a simple sports metaphor, an all-round athlete might be a good runner, cyclist and marksman, but he usually isn’t good enough in any one sport to take the gold. The same holds true for business. A person might own a store, car wash and several phone apps as well. There’s nothing wrong with this, and these businesses might even produce decent revenues, but it’s unlikely these people will become champions in their respective industries or even their niches.
Venture investors look for superachievers. They don’t want to back a founder who lacks the ambition to become a champion, who is content to simply run a few good businesses. Sure, such entrepreneurs have created companies that provide them with a comfortable living, but why should an investor, whose goal is to multiply his investment by 10, 50 or 100 times, bother to get involved? This is why my fellow investors and I prefer not to back founders who pursue multiple projects simultaneously: we simply do not want to help other people diversify their risk at our expense. What we are looking for is someone who is so confident in himself, his team and his product that he doesn’t create additional projects as a safety net.
To this line of reasoning, I often hear the counterargument: “But look at Musk, Branson and other rock stars of business—they manage to do many things at once without a problem.” Of course, there are exceptions, but even Musk and Branson achieved their initial success by first focusing on a single thing. They later leveraged that experience and the resultant resources to build other successful businesses. To try to achieve the same thing from Day One and with other people’s money to boot is simply wrong. Besides, it takes a towering genius to manage multiple enterprises properly. I myself once had several solid businesses at the same time, but the larger they grew, the blurrier the big picture became and the more difficult I found it to delve deeply into specific projects. As a result, emerging players that maintained a tighter focus and had better management quickly outpaced us.
Of course, even focus has its limits. I have seen people concentrate so maniacally on one thing that they lose not only sleep, but also their sanity. You can be the very best at something and still pursue a hobby or interest—but just be sure to pursue them only in your free time. If you focus on your business and truly dedicate a part of your life to it, it will surely pay off.