Pareto’s Law 🧠
Most things in life are disproportionate. Vilfredo Pareto - the economist who coined the 80:20 rule - popularised this idea:
“For many events, roughly 80% of the effects come from 20% of the causes”
The ratio can change, but the principle remains intact. Learning to focus our efforts on the right tasks can make us over 4x more effective. Whilst startups can aim to disrupt huge markets, the key to effectiveness is beginning with narrow verticals.
Vector Theory 💭
Subject to things outside our control, vector theory argues that our impact in the world is ultimately a function of two things:
Direction - what we choose to do; and
Magnitude - how hard we push.
To quote Sam Altman:
👎 The Problem Of Clutter
Clutter = any new venture that doesn’t exclusively contribute to our desired outcome.
With each new course we embark upon simultaneously, we reduce our ability to be as impactful elsewhere. With our time and energy being finite - clutter prevents progress because it distributes magnitude.
Most people never truly push as hard they should. It could be because they’re not persistent, they get consumed by people’s opinions, or they lack effort. However, one of the most common problems is a lack of focus. Our inability to focus exclusively on a single target is a big reason why we fail to achieve our desired long-term impact.
The same concept applies to startups - hence the importance of an MVP. Otherwise, doing too much will remove our focus and the emphasis from the elements providing the most value.
🤝 The Benefits Of Focus
Improved momentum - Focus eliminates the overhead of reorientation, caused by oscillating between targets.
Improved clarity - You have a single, narrower focal point.
Compounded benefits - The Matthew Effect suggests that early advantages compound and eventually become significant advantages. The sooner you focus your efforts, the sooner your marginal progress begins to compound.
The importance of focus is underrated. The narrower the scope of your end goal, the more achievable it is. Specificity aids clarity and breadth introduces confusion. We fail to narrow down our objective because we’ve not sufficiently considered what we want to achieve.
Increasing the breadth of your end goal:
Increases difficulty; and
Potentially introduces conflicts.
📚 Book - Built To Sell:
Don’t generalise; specialise. If you focus on doing one thing well and hire specialists in that area, the quality of your work will improve, and you will stand out among your competitors.
Failing to do this as a small company means you’ll need generalists because the scope of work is broader. They will repeatedly leave you disappointed because your generalists won’t be able to keep up with the specialists hired by competitors - and rightly so.
Don’t be afraid to say no to projects. Prove that you’re serious about specialisation by turning down work that falls outside your area of expertise. The more people you say no to, the more referrals you’ll get to people who need your product or service.
Initially, it seems counter-intuitive to turn down business. However, ventures outside of your business model and trajectory is a distraction that steals your focus. The short term benefits will cost you in the long term.
📚 Book - The Lean Startup:
When in doubt, simplify.
Especially true if the assumptions you’re validating seem unclear, or you have no clue what you should be doing.
The only way to win is to learn faster than anyone else.
Niels Bohr - "An expert is a man who has made all the mistakes which can be made, in a narrow field."
Mastering a narrow field is much easier than dominating a large one. Restricting your scope will allow you to outlearn and iterate faster than large, established competitors. Once you’ve conquered a specific vertical, you can move onto the next.
🗣 Additional Quotes:
Richard Awoyemi - “Product focus is more important than product features”
Jack Butcher - "Complexity seduces builders. Simplicity seduces buyers."
Arvid Kahl - "By knowing what you can ignore, your focus will be on the things that matter most to the most substantial part of your niche."
Bruce Lee - “One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity.”
Useful References 🔗
Pareto’s Principle - the majority of the effects come from a fraction of the causes.
Matthew Effect - “the rich get richer, and the poor get poorer.”