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Published on February 11, 2014
The underdog can't afford to fight several wars at a time, but it can certainly win the one that matters most. In order to do that, focus becomes an important tool. Any effort or investment not pointing to the right direction should be immediately dismissed. Focus means ruthless optimization, insatiable obsession, narrow execution, and going beyond where no other human has been before.
It all looks good on paper, yet reality tells a whole different story. In this article I'll relate my personal struggles with focus at iomando. Because as much as I understand and love the idea of focus, when you find yourself in the context of a growing company, the lines become blurrier than the success stories you read on TechCrunch every now and then.
When we first launched iomando, back in early 2012, our offering was truly unique. There was nothing like iomando. On one hand, you might think that's great since we faced no competition. Truth is though, because of the lack of market structure, we were conflicted in two ways.
The problem though, cut both ways.
The market was literally empty and we could start wherever we wanted. We had the first mover advantage, but we were also walking a path nobody had walked before, exposing our steps for others to learn. On top of that, making a decision meant opportunity cost — or a mistake we might not be able to recover from given our early stage.
We were afraid of making a decision in the dark.
Our reaction to that was to simultaneously explore several options. Since our product was unique in the market, most of our customers were satisfied with the small delta of improvement we offered. The first consequence of the combination of a market with plenty of empty space and the activation of several channels at a time is, inevitably, growth.
As a result, we set the focus problem aside, pretending it didn't exist, in order to postpone the decision. Money kept coming in from our different sales channels and it is truly difficult to say "no" to money when you're starting out — even in small amounts.
Our sales were growing, but the diversity of our customer base was growing even at a faster pace; and that was a bad thing. They keep asking new features — that our competitors that actually made a market decision were already offering — but we couldn't keep up with all the requests coming in from such a vastly different range of customers.
Looking back, this ultimately led to one of the biggest mistakes we've ever made at iomando. It was one of those situations where everything seemed "so far so good" and by the time we realized something was broken, it was already to late. It reminded me of Hemingway's quote:
How did you go bankrupt? Two ways. Gradually, then suddenly.
To recap, on one hand, our customer grew more sophisticated and wanted more features, but since our customer base was abnormally diverse because we wanted to be everything to everybody, we couldn't keep up with their requests.
On the other, more and more competitors started popping up with optimized solutions for certain verticals. Unlike ourselves, they saw the first mover mistakes and could learn a lot from
our its errors.
Then product management became a nightmare because it was impossible to maintain a healthy balance among all the use cases. For instance, an admin of a city council had a totally different set of problems than a homeowner or a small retail might have. All of them used our product because we were afraid say "no", but we just opted in for a bigger problem down the road.
Yet it got worse. Tensions started to pop up everywhere across the company: sales blamed development teams because they weren't delivering and our competitors were advancing faster than we did. Development blamed management because we were not communicating a clear strategy. Investors blamed all of us because churn was increasing and sales were stalling. We were going through an all-time low at iomando, and we were all suffering because of this.
We were overspending in product development, because we needed to keep up with a dozen, more optimized, competitors. Each of them had mastered one layer of the market, and we had to compete against everybody in its own terms.
Marketing and sales strategy was confusing, we weren't able to craft a targeted message that resonated with an audience, because our audience was diverse, granular and scattered all over the place.
Yet worse, we couldn't get to deeply understand our customers because we were spreading ourselves too thin. Consequently, we were running out of money faster than we could have ever imagined.
And this inevitably led to the next big problem.
Paraphrasing, the playbook says that a startup is able to grow in a harsh, saturated environment because it serves a narrow subset of the market with an optimized approach that an incumbent can't match. From there, VC money helps accelerate growth and capture value from adjacent verticals and competitors have a hard time keeping up.
While there is money in the bank, you can stay true to the initial plan, despite the current returns might be unsustainable in the long term. The money in the bank (among other things) buys you time to keep at it, stay focused and eventually come up successful.
But when something doesn't go according to the plan, and eventually start to run out of money without compelling metrics, you find yourself in a really bad position. I call this situation the SMB disease, when the entire company has to turn on the survival mode. Instinctively, the first measure is to cut expenses all around the place in order to become cash flow positive as soon as possible and auto sustain the business. From there, start growing organically until the company recovers the strengths to fly high again.
But the SMB disease is a bad place to be, because the remedy to the short term is usually the precursor of greater problems in the future.
Cutting expenses means focusing on tomorrow, not on the long term. Paradoxically this means not being able to execute a long-term strategy, because all the money is good money and thus you should say yes to everybody. Then keeping your burn rate low means under spending in product development, while you get tangled again in the aforementioned problem with your customers pulling from every direction.
The worst part though, is that while organic growth is healthy, it's usually not enough to keep up with your competitors and your own survival is always shadowed under a lot of uncertainty, which creates a lot of strain within the company.
I won't claim to have the solution to the problem. iomando got out of this self-destructing path almost by chance and necessity. Because at the end of the day, we all get focus, on paper. The problem is not focus itself, but carrying on with all of its consequences.
Sometimes, focus comes at a cost, and if you don't plan for focus from the beginning you'll eventually find yourself in a spot where focus is almost impossible to regain.
That being said, both in business and personal life, focus is a great value to hold onto. So the next time I'm presented with a choice I'll make sure to say "no" before it is already too late.