Find focus for your startup

Are you familiar with a random walk?

It’s a graph. Left to right. At each step rightward, you flip a coin.

Heads, you go up. Tails, you go down.

Our intuition tells us that it will all even out at the end, and we’ll stay basically at zero, because it’s always 50-50.

But that’s wrong.

After 100 steps, your chances of being at zero are only 8%.

92% of the time, you’ve deviated dramatically and unpredictably from expectation.

Coincidentally, that’s about the failure rate of startups, and for the same reason:

Aimlessness kills startups.

This is why advisors and investors are constantly telling founders to focus.

If what you’re working on and why is random or unpredictable from day to day, you’re not “averaging out” to productivity. You’re drifting further and further from accomplishing your dream of world domination — and you may not even notice.

Startup founders need focus.

Intense focus.

But how?

You have a bunch of items on your to-do list, and you’re being pulled every day in a thousand different directions with competing priorities and interests. How do you pick?

Here’s a very simple mental framework you can use to find the one task on your list that will have the greatest impact on traction — right now, today.

I call it the Flow Razor, but that’s just because I think it sounds cool.

It stems from this:

All businesses look fundamentally the same.

Seriously.

You can describe any business — from Walmart to your startup — with the same six metrics: awareness, acquisition, activation, revenue, retention, & referral.

While the specifics will look different business-to-business, they are still measuring the same core things:

Awareness — How do customers discover your company
before you know who they are?
Acquisition — How do they begin to engage with your company (e.g. turn into leads)?
Activation — How do they begin to get value?
Revenue — How do they become a paying customer?
Retention — How long do they continue to use your product?
Referral — How do they help you acquire more customers?

These are the so-called “pirate metrics”, because the acronym is AAARRR.

These form the engine (or funnel, factory, etc.) of the company, and describe the “flow” of business: people need to know about it (awareness), encounter it (acquisition), get value out of it (activation), pay for it (revenue), stay with it (retention), and help you acquire others (referral).

A successful startup is an engine that just hums along, eating tons of customers and not losing them along the way.

In other words: traction.

Put another way, from a growth or profitability perspective, the purpose of any business is to put the greatest volume of people into the process and keep them moving through each stage as efficiently as possible.

I call this “flow”.

(Ash Maurya calls it “throughput” in his Customer Factory metaphor.)

So, if:

Our ultimate goal is to move volume through the factory; and
Each steps builds on prior steps (e.g. awareness to acquisition to activation…)

Then: the best thing we can do for our business at any time is the one optimisation that will most improve flow.

Therefore, the Flow Razor is:

The most important thing to do right now is the one that will have the greatest immediate impact on flow.

Here’s how to put it to work.

Start by categorizing every task by which metrics they are expected to impact:

Some will help increase engagement (helps with retention)
Some will help you drive more users (acquisition)
Some will get more users to convert (activation)
Etc

Because metrics stack on top of each other, knowing which metrics any task can implement helps you prioritize things for this moment in time: earlier comes before later.

More pointedly — there’s no point working on retention if you can’t get users to sign up in the first place.

It’s obvious, but it’s a trap we all fall into.

It’s less vulnerable, less scary, less risky, to focus on slinging features than it is to engage with customers. But it’s just procrastination.

Back to the list.

Once you understand to what degree your tasks impact your metrics, you can apply the Flow Razor to your to do list:

No impact on flow?

Delete it from your to do list. It won’t get you more customers, better customers, more money, etc.

It’s a complete waste of time.

Could impact flow in the future?

Throw it in the backlog. You’ll get to it when and if it becomes necessary.

It’s not the priority right now.

Impacts flow right now?

Yes! 💥

If it could have an impact on flow right this very moment, you should consider doing it.

But you’re not done.

Now that you have a list of tasks that might help with traction, you have to rank them. You can’t tackle them all at the same time.

You need to prioritize.

Of those things you should consider doing, the one that you should do first is the one you expect to have the greatest immediate impact on flow for the least effort.

For now, nothing else matters.

So — for each of the tasks that could impact flow, rank them on two axes:

Impact on flow
Difficulty to implement

The impact on flow is simply a numbers game.

Currently, you have each metric operating at a certain value (even if said value is zero). Your hypothesis is that doing A (or implementing feature B, or changing messaging C, or whatever the task is) will result in a lift in that number of X%.

Plug those numbers into the sequence, and see what happens to your flow. Does this result in more revenue? By how much and in what time period?

Rank them by that overall impact on the entire engine.

Difficulty to implement is an estimate of how much work, time, money, resources, or risk it requires to take this task from idea to market.

It’s a matrix:

To simplify, there are four kinds of tasks:

High difficulty, low impact.

These are really hard to do, and won’t have much effect. Yikes!

These are questionable at best.

Low difficulty, low impact.

This won’t have a massive impact on your startup, but they’re also not very difficult. You shouldn’t rush out to do these, but they’re not bad.

Maybe they can serve as quick wins?

High difficulty, high impact.

On the opposite end of the spectrum, these will have a big impact on your startup, but they are also really difficult to achieve. You shouldn’t rush out to do these either, but they’re not inherently bad.

They’re amazing when you nail it, but you might not (probably won’t?).

These are the moon shots.

Low difficulty, high impact.

Wait, what? Easy to achieve AND high impact? :boom:

These are the items you should rush out to do. They belong at the top of the list, and tend to be rare.

They’re freaking gold mines.

Looking for some examples? Stay tuned.

In next week's email, I'll do a deep dive on pirate metrics, with a keen eye toward maximizing flow at each step along the way.

So what’s the one task you should do right now? What’s the task that will have the greatest impact on flow for the least relative effort?

Reply and let me know.

One last tip before you go…

I’m oversimplifying.

It’s common for something unrelated to flow to become important.

For example, sometimes, you’ll have to chase less-than-ideal sales just because your runway demands it.

Startups are complicated, and hard.

It hurts flow, but you need the money. What can you do?

In those cases, keep in mind that those actions are a means to an end, which is ok. But they can easily become the end unto themselves if you’re not careful.

You have to keep them in the “means to an end” box, and never let them out.

This requires three things:

A well-defined, narrow exception (the means)
A theory of how you’re going to stop the means (the end)
Constant re-evaluation of whether the above is working

Act with intention, follow through, and get back to finding flow as soon as possible.

Because that’s why you’re in business.

When you're ready, there are 3 ways I can help you.

Ask me a question during my weekly office hours (Thursdays at 11am pst).
Work 1:1 with me to tackle the most challenging parts of the startup journey (100+ first-time founders).
Run a design sprint with your startup team to find traction fast (dozens of startups).