Why most internet startups keep failing: ‘The Going Small’ Fallacy

“If you chase two rabbits, you will not catch either one.

– Russian Proverb

The mantra…

Be honest – whether you’ve been a “startuper” for years or are just starting out you probably got this advice: ‘Blast Through Your Limitations: Think Big, Act Bigger.’

And when it comes to building a startup, for many this approach kind of makes sense.

Why?

Well, according to Tim Ferriss, author of The 4-Hour Workweek, “Having an unusually large goal is an adrenaline infusion that provides the endurance to overcome the inevitable trials and tribulations that go along with any goal. Realistic goals, goals restricted to the average ambition level, are uninspiring and will only fuel you through the first or second problem, at which point you throw in the towel.”

So, Tim’s point is clear: do yourself a favour and go for the big prize!

The side-effect of this strategy?

Typically, it motivates…aspiring and new entrepreneurs to go and put a dent in the universe (aka go-ahead-and-conquer-the-world)!

But you know what? That’s not the only reason why many suggest to go big.

As Jeffrey Carter, an advocate of this model points out, “[since] most startups don’t make it, if you are going to undertake the pain and effort, and assume the risk of starting an entrepreneurial company, it pays to go big.”

And that, my friends, is one of the main reasons why most internet startups keep failing!

So, what’s on today’s menu?

2 things…

–  Explain why this seemingly sound business mantra sabotages new and aspiring entrepreneurs time and time again (and how is that connected with the “going small fallacy”)

– Introduce the alternative

The “going small fallacy”

WTF is this fallacy about?

Is the notion that when a founder decides to “go small” it immediately means that s/he lacks ambition, somehow selling him/herself short and wilfully giving in to mediocrity.

So, is that truth? Do these individuals simply are thinking too small?

Wait for it…

NO!

Why?

Because even though, as with everything in life, it’s true that the majority of people consciously or unconsciously decide to ‘live in the middle’ (aka being average) and follow the crowd, in reality “going small” can be a powerful method for dramatically increasing the chances of making it as a new founder.

What’s the rationale behind this claim?

When you want the absolute best chance to succeed at anything you want, your approach should always be the same. Go small…It’s realizing that extraordinary results are directly determined by how you narrow you can make your focus.”

– Gary Keller, author of The One Thing

In the business world, this is called a beachhead strategy  In simple words, it refers to focusing all of your limited resources (time, money, energy) on winning just one key area before even thinking about moving into something bigger (aka as adjacent areas).

Hence, by reducing the scope of your business proposition, not only you are NOT doing yourself a disservice but instead you are growing stronger.

But I know that doesn’t sound as sexy as the “go big or go home” BS advice slogan that we typically hear from “the experts.”

Nonetheless, since on this blog we’re not into fairy tales let’s see how most iconic companies really got started!

Stop Romanticizing the Past: How Business Icons Really Got Started

Many iconic brands are often cited as shining examples of the “go big” mantra, but they simply didn’t start that way.

1. Amazon

Current status: The 2nd largest online retailer by market capitalization after Alibaba.

Current product range: Amazon sells products ranging from books, computers, furniture, and electronics – and everything in between.

How Amazon got started: Amazon.com started as an online bookstore. 

2. Facebook

Current status: The world’s biggest social network with stock-market valuation more than $230 billion.

Current product range: Facebook offers a wide variety of products and services, including communications and advertising platforms, independent apps, mobile messaging services, etc.

How Facebook got started: Facebook started as a site specifically for Harvard college students to get connected.

3. Ralph Lauren

Current status: Ralph Lauren Corporation is a United States-based fashion design house with annual sales of more than 7 billion dollars.

Current product range: Ralph Lauren sells men’s, women’s, and children’s apparel, accessories, fragrances, and more. 

How Ralph Lauren got started: Ralph Lauren started by designing and selling ties. 

4. Google

Current status: Google is an American multinational technology company with annual revenues (2015) amounted to 74.54 billion US dollars.

Current product range: Google provides Internet-related services and products such as online advertising technologies, search, cloud computing, and software applications.

How Google got started: Google started out with the idea of making searching for papers on a campus library system easier

5. Kate Spade

Current status: Kate Spade New York is an American fashion design house with an annual retail footprint of more than a billion dollars.

Current product range: Kate Spade sells products ranging from handbags, clothing, jewelry, shoes, accessories, and much more.

How Kate Spade got started: Kate Spade started by producing and selling women’s handbags. 

6. Bonobos

Current status: Bonobos is an e-commerce-driven apparel company that has raised more than $120 million so far.

Current product range: Bonobos offers a full line of pants, suits, denim, shirts, sweaters, blazers, shoes, shorts, swimwear, and outerwear.

How Bonobos got started: Bonobos started by producing and selling men’s pants.

The pattern is clear: All of these successful companies started their journey − consciously or subconsciously –by going small.

Having said that, of course, I am not suggesting that it’s impossible to go big and succeed; after all, there are a number of companies that did that. However, what I am saying is that ‘going big’ very often sabotages new entrepreneurs because most companies’ propositions typically have been developed gradually after years of trials and errors (and 1000s of iterations) and of course, NOT overnight.

The alternative – start with something minimal

So, what I am suggesting is simple: defy the “ suicide mission and start small with a tightly focused single product that does the job.

Michael Skok couldn’t have said it better: “Whatever the case, don’t be afraid to focus at the start. You can always build on success, but it’s hard to cut back on failure if you’ve already spread yourself too thin and fail.” 

But let me say this again:  going small doesn’t necessary mean that you’ll stay there forever. It’s just a “trick” for beating the startup odds. Having said that, it’s not a secret that I don’t believe in the tyranny of growth but instead, I support building businesses just big enough to keep US happy. But it’s your life, you call the shots!

So, let’s wrap things up with today’s key takeaways…

Today’s Key Takeaways

– Stop glorifying the “lottery ticket winners”

– Understand that the odds of succeeding with the go big “model” are minimal

– Don’t forget how today’s business icons really got started

Start small with a tightly-focused, single product that does the job

So, what do you think? Are you ready to start a business the right way?

***

Ok guys, that’s all from me for today.

If you enjoyed today’s post, check out my brand new book, The Aspiring Entrepreneur Entry Strategy: A practical Step-by-step guide for finding a validated, winning business idea that stays true to who you are, that is currently available at Amazon.

I hope to see you soon.

Best,

Andreas

“Be stubborn about your goals, but flexible about your methods”

– Anonymous

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