By Manu Rekhi for Forbes
How many times has someone told you that the “grass is always greener on the other side”? That what someone else has or what someone else is doing is always better than your situation? Well those others are constantly chasing YAFOs, (Yet Another Freaking Opportunity) and YAFOs are an entrepreneur’s worst nightmare.
As we all know, every opportunity has an associated cost and every potential upside is balanced by a potential downside. But despite knowing these risks, we are prone to chase YAFO, constantly trying to diversify. We assume that putting all our eggs into one basket is irresponsible, hoping that by spreading the eggs out, we have a better chance of success. But the lessons we’ve been taught all these years turn out to be wrong, especially when it comes to startups.
Startups are new, volatile, and constantly incurring loss. By definition, they are under-resourced, facing years of trial and loss before they even begin to see profit. Relying on investment angels and hoping to hit the market at the right time, startups are risky.
Companies need to groom the resources they already have and focus on a single task at a time. “In 2011 when we decided to go not only mobile-first, but mobile-only when building our community marketplace for fashion, we were met with all sorts of reactions from blank stares to strong recommendations from advisors that people would not buy and sell fashion from their phones. Our laser sharp focus from the beginning has helped us build one of the largest fashion marketplaces in the world, where 95% of our sales comes via the mobile phone,” said Manish Chandra, founder and CEO of Poshmark.
By working on multiple goals at once, they may spread themselves too thin, preventing any goal or task from ever being met. Staying focused and zoomed-in to the target at hand takes practice, but will result in success.
Learning to master a market takes time and effort, but is worthwhile in the long-run. Mastering market success means not resting till ones vision is realized in every nook and corner of the world that needs it. Not stopping till everyone has heard your idea.
Imagine the first time you learned to ride a bike. It was time-consuming, frustrating, and it seemed as though you’d never get the perfect balance to keep the bike in motion. But, with a little perseverance and determination, you finally made the last push, riding the bike all on your own. And, once you learn to ride, you never forget. Markets are the same way. They have a mind of their own, but with a little perseverance and determination, you can understand what makes a market tick. Trying to tackle multiple markets simultaneously is like trying to ride three bikes at once – it simply can’t be done, unless you’re Elon Musk himself.
Mastering the market includes identifying potential risks, scaling the severity of the risk, and working to prevent risk. Potential risks include:
- Market Risk: whether or not there is sufficient demand for what you have to offer.
- Competitive Risk: is there a pressing need for your product? Are others after the same goals as you?
- Financial Risk: securing outside funding and generating enough revenue to cover costs.
- Systematic Risk: threatens the viability of the entire market.
By distinguishing between these four risk factors and how they relate to your startup, a company can take preventative measures and move towards the path to success.
Each startup, growing and fostering into a market, has its own economics. Mastering those specific economics is one of the primary objectives for an entrepreneur. By taking the time and ingenuity to first understand this market, startups can zero-in on the goal they wish to pursue, focusing on what truly matters.
Startups need to stay focused on their core market and one objective, being an expert in their industry. This mindset allows one to effectively compete with much larger players because they remain the best at what they do.
Everyone is always in search of YAFO. But it’s time to take a step back, take the road less traveled and put all your eggs in one basket. You may think it’s risky, but in fact, it’s the safest move you’ll ever make.