In this 1997 video interview with Jeff Bezos, the Amazon founder discussed how his startup was focusing on selling books on the internet, and how his ecommerce business model was ideal for a product category with millions of titles. A year later, the New York Times declared “Amazon.com Is Expanding Beyond Books.” Fast-forward another 20 years, and it’s not unusual to see analysts predicting that Bezos’s behemoth will grab nearly 10 percent of all retail sales by 2020. It started with a relatively modest and focused plan, became best in the world at doing one thing, and only then expanded off that base.
Netflix took a similar approach: Launched in 1997 with a simple focus of renting VHS tapes and DVDs on the internet via U.S. mail delivery-and-return, it has since expanded its business model to include streaming and production of original content. In the process it has grown its subscriber base by over 40 percent per year, from 700,000 in 2002 to 117 million in 2017.
The “Peet’s formula” — start small and focused, refine your success formula, then expand — has been repeated by a number of gourmet coffee startups over the years, most famously by Starbucks. A current up-and-comer is Sweetwaters Coffee & Tea. Twenty-five years ago, co-founders Lisa and Wei Bee started out with a single shop in Ann Arbor, Mich. as a newly married couple fresh out of the University of Michigan. They’re now in the process of building out a national franchise presence, and along the way, have introduced bottled retail beverages for retail such as Chinese-inspired iced teas.
How you can apply these lessons
Step back and look at these examples and the same pattern stands out: Start small and focused, be best-in-class at one thing, then expand off that foundation to achieve a broader dream. How can you apply this approach in your own startup? In my new book, The Launch Lens: 20 Questions Every Entrepreneur Should Ask, I delve into this in some detail. Here are some tips to consider:
- Develop a preliminary product roadmap for your startup.
- Start by first describing your “big vision” — your proverbial version 5.0.
- Then back off from your big vision to describe your preliminary launch configuration — your version 1.0, or what I sometimes refer to as your VNS (“version no, seriously”). This represents the bare minimum you’ll need for a successful commercial launch.
- Finally, back off yet further to describe the minimum viable product, or MVP — that version of the product that you can cobble together as a prelaunch test case that will enable you to gather the most customer input while expending the least effort and resources.
You can describe your small-to-big product road map using a range of characteristics. For instance, if you’re developing a B2B SaaS platform for customer relationship management (CRM), the growth path for the product might be described by features (e.g., starting out with the few most demanded by your customers); language (perhaps starting with just English and expanding to include Spanish, Hindi, Mandarin, etc.); vertical markets (say, focused on manufacturing and eventually expanding to services industries, etc.); platform (e.g., starting out with a browser-based platform and eventually expanding to include mobile apps); and even third-party integration (for instance, systematically adding integration with key enterprise resource planning systems).
To look at a B2C example, let’s say you’re launching a new line of all-natural canned vegetables. Your small-to-big road map might include both product and other business factors, such as: products (say we start with pickled carrots, and eventually expand to include a family of different vegetables and various flavors/spices); packaging (e.g., start with one jar size and add others over time); distribution channels (for instance, starting with farmers markets, adding online sales and expanding to regional and eventually national store chains); and perhaps distribution and sales partnerships.
So, as you can see, it’s great — indeed, advisable — to have a big, long-term vision as you’re getting started, but don’t try to boil the ocean. Start by boiling a pot of water better than anyone else.