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May 18, 2011

Just say “no”!

By: jonnyjunction

“The truly free man is he who can decline a dinner invitation without giving an excuse.” Jules Renard.

Frequently, if not always, early stage companies face the very difficult dilemma of being opportunistic or being very focused. I have experienced this dilemma many times and each time it is an extremely tough decision. This occurs in all facets of the business including product development, HR, marketing and especially concerning sales and customer acquisition.

For all companies, resources are always limited and therefore tough decisions need to be made. Everything has a price and a trade-off associated with it. Unfortunately (or luckily), you can’t do everything and my belief is that companies cannot be all things to all people. Therefore when I analyze and evaluate companies that I am hoping to invest in, the main thing I want to understand (after the people of course!) is; what is your focus? do the entrepreneurs and management understand what the company’s core value is? I understand that start-ups need to be agile, flexible and nimble but they also need to be able to articulate what it is exactly that makes them special.

In the initial stages of development and growth they need to do exactly that – focus on that core value and prove that it is indeed special and valuable. It is very tempting to add additional features to the product, because it is “only another few weeks of development” or “a potential reference-able customer requested this feature”. But invariably what happens is that companies follow opportunities and (for example) expand the range of features or services and find themselves offering any feature or service that customers requested just to “win business”. By doing so they compromise on their focus and their initial core value and their advantage is lost.

So when it comes to early stage companies I strongly believe in the principle of building the company around a core value and sticking to it. Prove that this core value is indeed valuable and that your company can deliver on this before expanding. Proving that your (focused) product has value is achieved by customers buying your product. So when a brand name customer comes knocking at your door, wanting to do business but the trade off is a minor deviation from your core focus, or the addition of a small feature and capability, or the hiring of a sales person from a vertical you are not experienced in, (…and more good reasons…) the decision is a very difficult one.

So I would add another definition to the “how to determine our focus” question and that is when, and to what, customer do we say ”no” to. I admire and respect early stage companies who are confident and focused enough to decline customer approaches and requests because the trade-off is a de-focus to the business.

I know these do principles do not guarantee the success of the business (“it’s all about the people!”) but they’ll at least give you a fighting chance to stand out from the noise.

1 Comment

  1. rutipo

    19/05/2011

    So true! We had this problem very recently. It is so hard to say no when a client asks for a feature (and says he is willing to pay for it), even though we know it is not our main focus.
    Very important post for me. (I actually requested this issue for your talk next week) Thank you.

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