Mike Schultz - President at RAIN Group
Building successful startups is not easy. That is why only one in ten startups actually succeed. But, if you are going to have any chance of success, you need to K.I.S.S. -- Keep It Simple Stupid. You have to boil your idea down to one specific thing, and stay religiously focused on that end goal. Which means not getting distracted by the various “flavors of the month” that can lead you down rabbit holes and stress out your organization in the process. Allow me to explain.
The other day, Red Rocket had a call from a startup seeking to raise capital. When I asked him to explain his business model, it went something like this. We are a human services company, and an artificial intelligence company, and an ad sales network, and a consumer marketing brand, and an ecommerce business (in one of the hardest industries to break into). I kid you not, that was the pitch, trying to be all things to all people in their industry. And, the problem was: the entrepreneur had no clue there was anything wrong with that strategy.
First, from a business model perspective: the tactics required for successfully running a B2B business is completely different from the tactics required for successfully running a B2C business. The former is more sales driven and the latter is more marketing driven, as an example. So, strike one. Then, drilling down even further, running a B2B services business is completely different from running a B2B technology company. The former is human driven and the latter is software coding driven, as an example. So, strike two. And, drilling down even further, running an artificial intelligence company is materially more complex than building a simple piece of B2B software, with hardcore data science and machine learning required. Strike three, you’re out! And, I didn’t even get to drill down on the various B2C complexities here.
When I told the entrepreneur, of the FIVE different business strategies discussed, they needed to pick only ONE, whichever one would be the easiest, most-lucrative one to pursue, I was met with a blank stare on his face, with him not exactly knowing which one was the best, or why he couldn’t reasonably be doing all five strategies at the same time. I told him, Keep It Simple Stupid; pick one which will be your core competency that you will do better than everyone else, and outsource and partner for the other pieces of the puzzle if you feel they are important.
We recently acquired Restaurant Furniture Plus. When the entrepreneur was pitching their business to us, their communicated mission was very clear: we are the leading ecommerce seller of furniture to restaurants. And, they differentiated themselves with a “free furniture sourcing service”, to take work off the plate of busy restaurant owners that didn’t have the time to research furniture themselves.
Why did that pitch resonate? First, the restaurant industry is large, at approximately $800B a year, so a big business could be built. Second, all the competitors lead with products and prices, and this company lead with service, as a clear differentiator. Third, given the heavy B2B services nature to the business, it would be more defensible versus the big ecommerce-only players in the industry, like Amazon, that are not deep in services. And, the company’s clear focus showed in their financial metrics. The business was growing very quickly, with a very high conversion rate and many happy repeat customers, both data points which spoke to the high quality of the service and its appeal to customers. All in all, it was very simple in its design and execution. And, guess what? We bought the company!
The above case studies were speaking to high level business strategies. But, simplicity applies in all other areas of the business. Is your product offering streamlined? Are your operational processes simple? Are your sales and marketing efforts laser-focused on the most profitable tactics? Is your company culture clearly communicated for all others to follow? Are your monthly financial statements reporting the most important key performance indicators, so you can best manage them? Etc. Etc. So, critically look at all areas of your business to streamline and better focus the business.
So, my pitch to all of you entrepreneurs out there: stop what you are doing, take a breath and re-assess everything you are doing today. Is everything as simple and laser-focused as it can be? If not, you have some fixing to do. And, oftentimes, entrepreneurs are simply too close to their own business to clearly focus. So, maybe you need a non-biased outsider to come in with a fresh set of eyes, to help you “navigate the forest through the trees”. If you K.I.S.S. your business, good things will surely follow.
Source: Entrepreneur Middle East
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