Is ‘growth-at-any-cost’ worth the price?

“My dad taught me that when you borrow money, it’s the worst day of your life.”                      

– Gary Vaynerchuk 

Go Big or Go Home!

Starting a new company? And feel like growing it, big time, like there’s no tomorrow?

If not, you should!

Or at least that’s what the conventional wisdom suggests.

Why?

Hint – it has to do with money (more on that later)…

The next Uber of Whatever

But since we’re talking about money, let’s bring in the conversation the dream of pretty much any young aspiring entrepreneur these days.

Which is of course, creating the next “Uber for [insert service here],” making it big and then going and live the good life!

I know, I might exaggerate a bit, but don’t tell me I am the only one thinking that the “unicorn fun club” is going from strength to strength.

So, assuming you are still with me don’t you think it’s about time to explore a) whether the growth-at-any-cost is worth the price and b) at what point becomes a reckless strategy?

Glad to hear that!

Let’s jump straight in…

The case for going BIG

Before getting into today’s question(s), I think it’s worth opening a small parenthesis and briefly see what’s feeding the ‘go big’ trend.

The answer?

Here you go:

Factor #1: The grow or die inevitability

This of course refers to the long-held belief that growth and (business) survival go hand in hand.

And, in short, the rationale behind this argument is that since, in a competitive marketplace, there will always be other players on the lookout to eat our lunch (aka market share), by not aggressively growing our business and diversifying our portfolio, we make ourselves vulnerable to their attacks.

Factor #2: The bigger, the better logic

You saw that coming, right?

I know.

Aside from the pile of cash that comes from joining the big league, there seems to be another big driver.

Which is that?

Introducing the impact entrepreneurs:

According to Adam Levene, the person that coined this term, “impact entrepreneurs are driven by a desire to disrupt the status quo. Doing their bit to push the world forward is what gets them out the bed in the morning…{And they} do what they do for legacy,

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Struggling to decide what kind of business to start? Beware of the passion project syndrome…

 Expecting the world to treat you fairly because you are good is like expecting the bull not to charge because you are a vegetarian.”

~ Dennis Wholey

Do what you love…

How many times have you been told to follow your passion?

I bet more than you can remember…

And when you asked, “But what about money?”, you probably received the classic response: “Do what you love and the money will follow.”

Am I right?

I know. And if you think about it, it’s no wonder why that piece of advice is super popular. Who wouldn’t want to do what s/he loves and get paid for it?

But at this point, you’ll probably wonder: what that has to do with today’s post?

You guessed it: when you are stuck and try to figure out what will be “your thing” (namely, the type of business you’ll get into), following a passion and building a business around it conceptually kind of makes sense.

And today, as we usually do, will dive deep into the subject and see what’s true and what’s BS…

The case for following your passion

Let’s first start with the reasoning in favour of this business model.

According to ‘the believers,’ there are 2 core advantages of following your passion:

Advantage #1: It gives you the drive to persevere through setbacks and roadblocks

How about?

Well, typically the story goes something like this…

– Business is tough

– Plan A rarely works

– Sh*t happens so…

… unless you are all in (and deeply passionate about what you’re doing), chances are you won’t have the necessary mental strength and motivation to face up to the challenge.

Or asGautam Gupta, an advocate of this model, says: “anyone can start a business but it’s infinitely harder to grow and sustain it. When a company faces challenges and falls on hard times (and it always does), it’s your passion and commitment that ultimately get the business through to the other side“.

Advantage #2: It makes your workdays more fun and enjoyable

This doesn’t require a long explanation.

As Confucius said thousands of years ago; “Choose a job you love, and you will never have to work a day in your life.

Kind of a no-brainer,

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To Scratch (your itch) or Not to Scratch, That is The Question…

“The easiest, most straightforward way to create a great product or service is to make something you want to use.

— Jason Fried

User Entrepreneurship Comes Back

I don’t know about you, but I would never start a business unless I felt confident that I understand the market on a deep level.

Yep, call me old school, but I have always felt that (blindly) jumping in an industry that know little to nothing about just because there seems to be a market opportunity is kind of reckless.

I know, I know – many experts think otherwise (mainly because they believe in the “fresh pair of eyes” advantage), but if you ask me that “advantage” is grossly overrated.

Anyhow, no matter in which camp you belong, the conventional wisdom suggests that market understanding comes either:

a) Through domain experience (hands-on industry experience)

b) Or market research (i.e. secondary research, customer interviews, online surveys)

But you know what? Many think there is another way!

Which is that?

That’s right – via user entrepreneurship (aka scratch your own itch).

As you probably already know, this is when you decide to create a product that will address one of the problems you experience yourself, with the hope that if successful, many others that share that itch will be willing to pay for it.

Which is exactly what iconic founders of the likes of Spanx, Airbnb, Dropbox, Basecamp, Dyson, and Patagonia, just to name a few, precisely did…

In fact, this way of starting a business might be a bit more popular than most think, since according to a study released by the Ewing Marion Kauffman Foundation, 10.7 percent of U.S. startups overall came from this group of entrepreneurs.

Yes, 1 in 10!

However, as you would probably agree, that alone says very little. What matters most is whether that model, outliers-aside, works or not.

And on today’s post, as we usually do, we will dive deep into the subject and see what is true and what is BS.

Shall we?

Just Do It!

First allow me to start with the case for scratching it…

Benefit #1: You avoid solving imaginary problems

Imaginary problems?

Yes, you did read that correctly.

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The ‘Be Everywhere’ Strategy: A winning formula for just-launched startups or a simple way to screw things up?

“Win the battles you are in before you take on new battles”

– Mark Cuban

Life After Launch

Ever heard of the ‘self-selling product’ narrative?

Come on, you know the drill – creating a great product and letting it sell itself!

As we established in an older post, this line of thinking is an almost guaranteed way to go out of business.

Yep. No matter how good your product is, getting customers through the door won’t happen by magic but…

…will require some good, old-fashioned marketing.

Which brings us to today’s subject – the ‘be everywhere’ strategy!

What’s that about?

Simply put, is the idea that when starting out, you absolutely have to put yourself out there and spread the marketing message across ALL the marketing channels that are available to you.

That’s right, we need to let our people know we exist by:

– Creating accounts (and be active) on all the major social media outlets

– Blogging, vlogging, and podcasting

– Publishing ebooks

– Spamming the universe (via email)

– Doing SEO

– Going to events/conferences/meetups

– Jumping into paid advertising

– Getting into webinars

– Putting together a referral program

– Reaching out to influencers

And MUCH more…

But what’s the logic behind this strategy?

Well, according to the “be everywhere” supporters it boils down to these two factors:

Factor #1: Diversification

If you’re anything like me, you’ve probably been advised to ‘never put all of your eggs in one basket’ multiple times.

And I bet quite a few of you probably thought: ‘that’s sound advice.’ – after all, in business as in life, sh*t happens and having a single point of failure is very dangerous.

How is that translated into startup marketing?

No guesses here; the conventional logic suggests that by spreading ‘your marketing eggs’ around, not only do you avoid relying exclusively on one marketing channel (and mitigating the risk if something goes wrong with it) but…

… it also provides you the opportunity to “throw everything at the wall and see what sticks” rather than picking winners based on guestimates.

Factor #2: Expanding Reach

Want to broaden your market reach?

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Looking for early adopters? Don’t hold your breath!

“The secret of getting ahead is getting started. ”

– Agatha Christie

Willing to put up with a buggy product? Join the club!

As a customer…

Have you ever got scre*ed by a company?

In a big way?

If so, don’t despair; you’re not alone!

Even though in this day and age people, in general, have become much more sophisticated buyers than they used to be, from time to time, they still end up not getting their money’s worth.

And needless to say, most disgruntled customers don’t keep their feelings secret…

But what if I told you that there is a group of people that are not only willing to put up with a buggy, half-baked product but also are happy pay for it?

I know; Shocker!

So, who are these mysterious individuals?

Behold: The Early Adopters…

According to Steve Blank, These are the people that… see the finished product 18 months from now even if you didn’t show it to them. You know you’re in front of an early adopter when they stop you in the middle of your presentation and run in the whiteboard and draw your diagram even better than you are.”

Yep, this rare breed of people buy into your vision early on, even if the product is still incomplete because:

a) They love the idea of being in an elite group that tries new things before anyone else has

b) They have the ability to see the market potential (and capitalise on it) way earlier than the general public – hence for them it’s an area of opportunity to stay ahead of the curve

So, why are they considered by me many “startup experts” as crucial for getting a new product off the ground?

Three reasons:

Reason #1: Are willing to take a punt on unproven products

Whether new entrepreneurs like to hear it or not, unless a new product is battle-tested in the market (with real, oxygen-breathing… people) you don’t know with certainty whether that thing works as expected or not.

But the thing is, for most people, unless there is a proof (through consumer reviews, testimonials, word of mouth, etc.) that a product does the job, they will simply NOT be willing to park their hard-earned cash.

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