By Frank Addante
Often times, companies get distracted by all the things that they -could- do, and don't focus enough on what they do best. This is especially true, and very tempting, for startup companies who can seemingly do "anything" because they are so flexible and agile. This is dangerous behavior. It results in a lack of focus and diluted brand equity.
You want to pick the #1 problem that you solve and be the absolute best at solving it. This way, when someone says "I have X problem" the default company everyone thinks of is yours.
Here are some examples:
"I have a database problem" = go to Oracle
"I have a networking problem" = go to Cisco
"I need to sell something on the Internet" = go to eBay
"My cell phone is dropping calls" = go to Verizon
"I need a portable music device" = iPod
"I need a photocopier" = Xerox (this worked for them years ago, then they started to dilute their core message and competitors quickly stepped in with a vengeance)
Sure, all of these companies do a lot of other things... But, each have positioned themselves as the "default" or "defacto" standard for solving a problem.
With startups, it is difficult to commit to just one thing that you are best at because:
a) You don't know if that one thing is always the right thing
b) You aren't confident that you truly are "best" at solving it yet
c) You try to cast a wide net so you don't miss out on any opportunities
Bottom line is that you have to do it. Pick something, stick to it and be best. Period.
My first company, Starting Point (Startup 1.0), was an Internet search engine and directory. We were simply the best metasearch engine on the Internet. When people wanted to "search the search engines", we were the place to come. At the time, finding stuff using search engines was difficult. You had to go to multiple sources before finding the results you were looking for. (It seems as though this trend is starting to repeat itself with today's search engine results). Starting Point was best at searching the search engines and, as a result, we quickly became the 7th most popular site on the Internet.
L90 (Startup 3.0), my third company, was the "premium advertising network". When companies wanted first class advertising placement and high-end marketing technology, we were the place to come. Sure, we lost out on some of the low end business, but in the end, that actually helped the business survive the dot-com bubble burst.
At Zondigo (Startup 4.0), my fourth company, we never really answered the question "what do we do best?". So, what we became best at was changing our business plan. As a result, we ended up doing a lot of one-off custom work for clients and never really gained traction in any particular area. The company eventually failed.
At my current company, StrongMail (Startup 5.0), we struggled with trying to stick to only one core message. We can solve so many different problems with email delivery ranging from performance to reliable email delivery to dynamic content. As a result, we weren't the default answer for companies when they said "we have X problem". So, we put a stake in the ground. We focused on proving that StrongMail is the best way to get email reliably delivered to the Inbox. We went out with the message that we are like "FedEx for email delivery" and now, when people have email delivery problems, we are their first call.
It takes confidence and discipline, but it is very important to be best at something. It will help your company stay focused, it will build confidence in your entire organization (especially your sales/marketing team) and most importantly, your customers/users will think to go to you first.
By Frank Addante
The Kool-Aid Test:
1. Why do I need anything?
2. Why do I need yours?
3. Why do I need it now?
Put yourself in the shoes of your customers or users. If you cannot come up with very compelling answers to all three of these questions, you likely do not have a viable business. Answering only one or two of these questions won’t work. The more compelling the answer and wide-reaching the audience, the more successful your business will be.
Examples:B2C Example (for an eBay user):
1. Why do I need anything?
> I need to turn my junk into money.
2. Why do I need yours?
> eBay has the most reach.
3. Why do I need it now?
> I need to pay the rent.
B2B Example (for a StrongMail user):
1. Why do I need anything?
> I need to send marketing, e-commerce or e-statements emails to my customers to drive revenue or reduce costs.
2. Why do I need yours?
> StrongMail is proven to be the fastest, easiest and most reliable solution for email delivery. The world’s most demanding enterprises, such as Ticketmaster, Fox Sports/MSN, Intuit and Williams-Sonoma turn to StrongMail for their critical customer communications.
3. Why do I need it now?
> On average, 25% of legitimate business email goes undelivered and every day that I don’t fix it, I’m likely losing money or revenue potential.
Most companies can answer #2
(Why do I need yours?) because they are so focused on being better than their competition.
Some companies are good at answering #1
(Why do I need anything?) if they started a business that was driven by market demand (as opposed to new/cool technology).
Few companies are good at answering #3
(Why do I need it now?) - what is the compelling event that will cause people to use it
today?
For me, this test also serves as a strategic guideline for almost everything I do:
- business plans
- investor pitches
- sales pitches
- marketing messaging
- product management
- press/media calls
- etc.
Try it! Take your last business plan, the marketing/messaging on your website or sales PowerPoint deck and see if you have
clearly provided answers to these three questions. If not, go back and update it – I bet you will find it to be much more effective!
By Frank Addante
My first lesson in entrepreneurship:
I got bit by the entrepreneurial bug early at the age of 18, while in college, when I started working for myself installing car alarms under a company that I named "CyberCircuit Security Systems". I made my first $400 (to pay for books) in the freezing cold Chicago weather by ripping apart people’s fancy luxury cars and re-wiring them with security systems. I got paid $75 for the security system and $325 for the feature that would remotely (from inside someone’s warm house) turn on the car and the heater. (Lesson learned: people paid more for convenience than they did for security). I connected a market (very cold people) with a solution (very warm cars) and after that, there was no turning back...
[Startup 1.0] Starting Point – Internet Search Engine and Directory
Age: 19-21
Time Period: 1995-1998
My Role: Webmaster and Owner
High Point: 7th most popular website on the Internet (Microsoft was #8)
A year later, at the age of 19, working from my fraternity dorm room… I jumped into my first official startup company; Starting Point. It was an Internet search engine and directory "dot-com" (competitor to Yahoo!, we didn't even know Yahoo! existed at the time). We were a handful of people with the mission of "organizing the Internet." I dropped out of college, and eventually, we grew the site to be the 7th most popular website on the Internet (Microsoft was #8 at the time). We were not venture-funded (in fact, at the time, I didn't even know what venture capital was). Eventually, the site was acquired by CMGI/YesMail.com and later sold to another public company named TechLabs.
Starting Point would also serve as the "starting point" and foundation for my entrepreneurial career (as a substitute for completing my college degree). It seems as though all five of the companies that I have been involved in, to date, somehow have roots reaching back to my first company. As a matter of fact, part of the inspiration behind my current company, StrongMail Systems (Startup 5.0), an email infrastructure company, dates back 10 years ago to Starting Point. At Starting Point, 100% of the interaction with our users/customers was via email. We had millions of interactions with users each month: no paper, no telephone, no face to face meetings, just email. We took email correspondence very seriously and used it to attract new users and keep existing users happy and loyal. Email was the primary vehicle that drove Starting Point to quickly become the 7th most popular site on the Internet.
There is no cure for the entrepreneurial "bug bite", however, it is contagious... Many entrepreneurs start multiple companies and many people who go to work at a startup (becoming entrepreneurs themselves) go on to work for multiple startups in their careers.
Do serial entrepreneurs look at each individual company as a journey in itself? Or is each company a better version of the previous... part of a bigger roadmap?
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SNAPSHOT:
Venture Capital Funding: $0 (profitable)
Exit: acquired by CMGI/YesMail.com
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LESSON(S) LEARNED:
Keep it simple: While everyone was developing very complex websites with the latest bells and whistles… Our simple, clean user-interface prevailed (a strategy later adopted by companies such as Google) You can take a look using the WayBackMachine: Starting Point Website (1996) (however, it doesn't look so impressive these days!)
Take care of the customer: Good ‘ole fashion customer service works. We had millions of users and a link on every page that said “Questions, comments? Contact the Webmaster.” We had one (yes, only one) person answer thousands of emails a day. ROI: extreme user loyalty (cost of acquiring a new customer is much higher than keeping existing ones)
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BIGGEST…
…reason for success: Right timing.
…mistake: Now finding ways to grow the site more aggressively.
…challenge: Competing with Yahoo!, Microsoft/MSN, AltaVista, AOL.
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IF I WERE…
…smarter: We could have been Yahoo!
…dumber: I would have learned even more. It was my first company - everything I did was dumb.
…to do it all over again: I would have raised venture capital to much more aggressively grow the business.
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Next on deck: Startup 2.0… “The Internet is Coming! How will we make money?”
