Launching New Ventures: Be Something, Not Everything

A while back, I had the chance to serve alongside a few academics and venture capitalists on the internal venture board of a large tech company. The goal was to augment internal teams’ work with a little outside perspective and advise the company on which ventures to fund. I suspect I got a lot more from the experience than I gave, particularly in my understanding of why new ventures get stalled in big firms.

The company had an impressive body of technology that it had developed. There was significant intellectual property to commercialize. And each of the new venture teams was made up of incredibly smart and motivated people. And yet, every team struggled to get to a clear and compelling business that was worth funding. For their part, company leadership seemed more interested in killing potential ideas than growing them.

The company’s CFO had declared early on that they were “only interested in billion-dollar ideas.” Everything else would be too small to pay attention to. The teams responded dutifully by presenting large-scale ideas that could appeal quickly to the company’s core customer base. Not surprisingly, most of these ideas were either too vague or too undifferentiated to be interesting. Businesses were designed for everyone. Products were envisioned to do everything. And growth projections defied the laws of gravity. Teams had done a good job giving their management exactly what they had asked for. And as a result, there wasn’t much to invest in.

When you’re running a large enterprise serving thousands, or even millions, of customers, it seems reasonable to focus on big ideas. Why wouldn’t you want a new product or service to conquer as much of the world as possible? To grab the biggest market share right out of the gate? If you’re a globe-straddling tech firm like SAP or Salesforce, you’re targeting businesses everywhere. If you’re a food multinational like Nestlé or Unilever, you want your snacks to penetrate every store and home in the world. Anything smaller just won’t move the needle.

Yet this drive to be everything to everyone ignores how real businesses grow. And if you’re running a large business, it probably ignores how your own business grew, too. Most large companies took decades to get to the scale they are now. And while those companies may now offer a wide array of products to a large number of customer segments, that’s usually not how they started.

Before something is everything, it has to be something.

Curated over Comprehensive

Before Facebook was a vast global information platform, it was a way for Harvard students to get a date. Before Apple Music was a media juggernaut, it was a way to rip, mix, and burn compact discs.  Before Amazon was the everything store, it was a way to buy books online. These businesses each started off with a clear and focused idea of the customer they served, the needs they solved, and the features that were most important. 

Uber started off as a way to hire a limousine in San Francisco. Its app had just one big button, and when you pressed it, a Lincoln Town Car pulled up, and you told the driver where you wanted to go. It was a lot nicer than hailing a cab, but it also cost 50% more than a taxi. It wasn’t trying to be for everyone. It was an exclusive and aspirational experience. Something “uber.” 

That’s not to say that these companies’ founders didn’t have larger ambitions. They just needed to focus first on what was most important. Their solutions were curated, not comprehensive. They focused on a single compelling use case that would validate the concept and give it the foundation from which to grow. That’s a lesson the rest of us can learn. Curation starts with who you serve, what you offer, and how you plan to grow.

Focus On Your Most Interesting Customers

Too many companies focus on their largest customers. They aim all new business innovation at the middle of their market. That makes no sense. If you’re a market leader, your customers are likely happy with your existing offerings. You’re much better off focusing on your most interesting customers: people who have needs and behaviors that don’t look like the wider market. That small segment of unsatisfied customers might, in turn, grow quickly over the next few years. They might be your future.

These quirky subsets of customers are often overlooked by established firms. If you were Yahoo or AOL in the early 2000s and someone pitched you “a social media platform for Harvard students,” you would have laughed. Four thousand people a year? Maybe 15,000 across all Ivy League schools? For large firms, that’s not a market – it’s a rounding error.

But it’s not just about size. Sometimes, large companies overlook segments that are even larger than the ones they’re serving. When Chip Wilson started doing yoga in the late nineties, he noticed that a lot of the women in his class were wearing workout clothes that didn’t fit well or have any performance benefits. At the time, Nike still treated women as a niche market. (I know, I know…) Yoga wasn’t considered a real sport. So Chip’s company Lululemon targeted that “niche”: the 51% of the population who were doing a “non-sport” activity. In doing so, they helped create the athleisure category. And it all started because the company leaned into the habits and tastes of a few female yoginis in the Pacific Northwest.

The lesson isn’t to find any niche – it’s to find customers with clear, unusual needs that aren’t being well addressed today and who might represent future growth.

Curate Your Offerings Ruthlessly

Large companies are great at developing robust, comprehensive solutions. They often have trouble saying no to additional features. That can make a new business concept unviable. There’s a point at which there are too many ornaments on the Christmas tree and the whole thing is in danger of tipping over. Startups don’t have that luxury. Limited development budgets force them to strip away nice-to-haves and devise a minimum viable product that they can ship today.

Steve Jobs was the master of this. He was a brilliant curator who could look at a new product concept and ruthlessly edit it down to the one or two things that mattered most. The first iPhone didn’t have an app store, and it only came with a small number of apps. You could use it to do a few simple things: make calls, listen to music, and browse the internet. 

This is where corporate innovation teams often trip up. They’re so used to feature-rich, comprehensive products that they can’t imagine launching something that does just one or two things perfectly. But that’s precisely what creates breakthrough success.

Get rid of everything that doesn’t matter to your target customers. Focus on fewer features, fewer variations, and make sure your execution is right for the people who matter most. If a feature doesn’t serve your most interesting customers, get rid of it.

Give Yourself a Growth Path

Of course, it’s important to give yourself room to scale. Uber founder Travis Kalanick insisted early on that he was building a global logistics platform. After San Francisco, the company quickly expanded to other cities. And Uber eventually moved beyond limousines, first to ordinary cars with UberX, and then restaurant delivery, grocery shopping, and even shipping packages. And while Steve Jobs was loathe to open up the iPhone, Apple’s leadership team was able to eventually convince him that the iPhone would be more powerful if Apple allowed other people to make apps for it as well.

Ensuring a growth path can be tricky. While striving to identify a niche and strip down a solution to serve them, you also need to design the business in a way that gives you room to scale. This ensures you don’t lock yourself into a dead-end.

Take Abbott Labs’ long-running protein shake, Ensure. It’s become well established as an excellent choice for elderly people with nutrition problems or swallowing difficulties. But that strong association with hospitals and hospice care carries negative baggage. When your family starts feeding you Ensure, it’s time to get your affairs in order. That’s not an appealing or aspirational image for most people – a fact that’s slowed down Abbott’s efforts to take Ensure to the mainstream.

Abbott didn’t make the same mistake with continuous glucose monitors. While competitor Dexcom focused on Type 1 diabetics who need perfect accuracy, Abbott targeted Type 2 diabetics – a larger, growing market with less stringent requirements. This has allowed them to optimize for smaller, lighter sensors that last longer, and to expand into the growing, mainstream market for general metabolic health. The company’s diabetes care sales surged nearly 20% in the second quarter of this year, fueled in part by demand for its over-the-counter monitors that don’t need a prescription. 

It helps to start with an aspirational customer base that gives you room to expand. When Facebook expanded beyond Harvard, it was moving from elite to mainstream – a much easier journey than going from medical necessity to lifestyle.

Take on a Venture Mindset 

We need to acknowledge that experience gained from years of managing large businesses can betray us when evaluating new businesses. Enterprise execs are trained to dismiss opportunities because they’re “only” worth a few hundred million dollars. Cisco famously underfunded WebEx after acquiring it because the market seemed too small. That prompted a frustrated Webex engineer, Eric Yuan, to quit and start Zoom, which is why WebEx looks like a crude prototype of what Zoom became.

To be sure, some exceptions prove the rule. ChatGPT has gone from zero to a hundred since its public launch at the end of 2022. Everyone is using it for everything. But that’s because we’re in the early days of a fundamentally new technology. Many of the most successful businesses coming out of generative AI are developing tailored solutions for niche customers – whether that’s in healthcare, the legal industry, or media. 

A few questions can help shift a corporate mindset to one suited for new ventures. When your teams propose new business concepts, ask:

1. Who is this for? If the answer is “everybody,” send them back to the drawing board. Ask them to identify their most interesting customer segment – people with unmet needs in a growing market.
2. What is this uniquely designed to do? Force ruthless curation. What are you cutting out? What features are you saying no to? If they haven’t made painful choices about what not to include, they haven’t thought hard enough.
3. What’s the growth path? How do you expand beyond this initial segment and offering without being trapped by early design decisions? What opportunities does success in this narrow area give you?

If your teams say their innovation is for anybody, can do anything, and will quickly take over the world, then it’s likely for nobody, can do nothing, and will never get there. Prize curation over being comprehensive.

Remember that constraint creates possibility. By being ruthlessly specific about who you serve and what you do, you create the conditions for strong growth. A new business should focus on doing one thing, perfectly, for people who really want it. Everything else is a distraction.