Losing entrepreneurs to the Perennial Dilemma

Where we lose our entrepreneurs? Here: I want to be a product company! But I will start as a services company for now and fund my product creation! Soon my product will be ready and then i will focus on selling my product and move from a services company to be a full-fledged product company.

How many times have you heard this from entrepreneurs? I soak myself up in the start-up ecosystem quite a bit and so I get to hear this quite often. When I detest this thinking as ‘lack of focus’ – many entrepreneurs aggressively raise questions if this approach is totally wrong? In my recent workshop at Kolkata we had this discussion again, especially because we were discussing ‘Go to Market’.

Nothing is absolutely right or wrong, but many decisions can lead you down one of the paths.

Most entrepreneurs get caught up in the above thinking, which by itself is not wrong totally. Why not do what you know and quickly raise cash for building the dream product? The trouble is not at the start of this thought process, but somewhere along the way. Most often in a few years the above route produces enough cash flow and makes the entrepreneur think that services is an interesting business and it should be a division by itself. They invest in many activities like setting up an office, building a marketing force for services, creating P&L responsibilities for it and still keep the product initiative going, albeit at a reduced momentum. Soon the product takes the back seat as a paying customer is not going to keep quite. The entrepreneur being one who loves taking on challenges gets fully involved in growing the services business and eventually loses focus on the product. At some point in time the goal moves from creating the best product to creating a large profitable company! This is the place we lose the battle.

If you do decide to take the above route here is my advice:

  • Ensure enough checks to ensure services income is being used only for product development.
  • Ensure no extra services business is being taken-on beyond what is needed to keep the product development funded.
  • Ensure there is enough wise counsel to stop you in case you are over stepping towards quick money and compromising on the long term bounty.

It’s not an impossible route, but one needs to be extremely focused and avoid distractions. We need more companies that grow on purpose and for that we need mentors / coaches who will ensure they help their CEO’s keep focus. I enjoy doing this with my entrepreneurial CEO’s, especially because they are early stage high growth ventures where distractions are too many. Hope to see many of them blossom!

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