I was enjoying a morning espresso at my favorite café in Rio the other day. I'm usually a big cup of coffee person, but the quick bite of espresso serves a purpose. It is focused in its objective.
Bigger isn't always better.
I was preparing for a client meeting. The discussion that I wanted to have with my client was about focus, about nailing their value proposition and traction before looking to expand too quickly.
All too often, risk-taking is equated with rapid expansion. ("Let's take a risk and launch in other cities"; "Let's launch that second product now.")
I'm a big believer in focus. My client had launched in Sao Paulo, a market big enough to scale the company significantly for at least two years. They were looking to start operations in a few other cities in Brazil, and even in another country.
We discussed the opportunity cost of such expansion:
How much management focus would be lost in the Sao Paulo operation?
Will new fundraising efforts (time! Management focus!) be required?
Does expansion to other cities add intrinsic value to the business model now?
Do we risk that competition emerges/catches up before we claim the space?
Focus assures all resources are aimed at the prize. Densification is a big piece of that. The more our resources are applied to a contained geography (and/or product, market), the quicker we gain traction, the quicker our product evolves, the better we get.
Of course, expansion is an important element for a startup. The question is, when? All too often, in my experience, the desire to expand begins to rear its head well in advance of traction and readiness.
Keep the team focused on proving the model, gaining market traction and claiming the space before expansion. Try to resist the urge to dilute your resources and focus too early.
Remember that little cup of espresso. Bigger isn't always better.