Focus Kills Companies

April 22, 2008 – 10:22 pm by RM Crill

ThinGap MotorsOne of the more common words overheard at board meetings is “focus”. It always seems like the right thing to say and it’s a basic tenet of marketing strategy. Heck, even the military covets it as one of the fundamentals of warfare.
But, for start-ups, focus can be deadly.

In the mid-late 90’s, I co-founded a company named ThinGap motors. The technical founders met with me over breakfast at a Santa Barbara beach restaurant and displayed their medical drill that featured a new motor design. The motor had an exceptional power-to-weight ratio, emitted less heat, operated in high ambient temperatures, and would operate longer from a given batter charge. After we talked for a bit, I offered what would prove to be a piece of good advice that was followed by a series of missed opportunities for the same. “Why not just build the motors?” I asked. And so the three of us set out to build ThinGap Motors, Inc., a start-up with, frankly, some of the coolest technology in the industry.

And our first market? Well, medical devices, of course. Using the $1.5MM or so we raised in our series A, we set out on sales calls and developed commercial prototypes. But after several unsatisfying months, we discovered that a match between our motors and medical devices was not to be. FDA approvals, long buying cycles, the need to design the motor into a product with acute footprint constraints crushed our hopes for quick sales. It would be many years before such sales could be considered and ThinGap would have to grow from its “start-up” demeanor to be taken seriously.

Time to focus on a new market.

The ThinGap motor had no cogging (the stuttering feel you have with conventional motors when you slowly spin the axis); it responded quickly to commands and these qualities made it ideal for pick-and-place machines (the robotic machines that place components on circuit boards). The team made trips to Japan where the motor was met with justified enthusiasm. More sales trips, prototypes. But the enthusiasm proved naïve for a development that required firmware changes, design-in and resulted in a 10% improvement*.
Time to focus on a new market.

Over the following years, there were many. To our (limited) credit, two or, occasionally, three at a time: Hand-held power tools where the ThinGap motor would offer more torque or longer battery life (long buying cycles, design-in was significant, lack of trust in a start-up); the automotive industry would benefit from the lighter weight and smoother controls our motors would offer (difficult market to penetrate, long design-in cycles); even windmills which need to keep spinning in low winds and, thus, need an efficient motor lest the power providing continuous movement negate the power generated (needed to scale the motors well beyond their then-current fractional horsepower size); and others.

By 2002, ThinGap had exhausted the patience of its investors. The promise was still present but market adoption always seemed just out of reach.

Then we discovered oxygen concentrators. Or, rather, that market discovered us. For a person needing supplemental oxygen, the battery life of the portable device is the governor on leisure time. The efficiency of the ThinGap motor would increase the time between charges from about two to four hours. Now a movie is possible and dinner isn’t just “usually in the safe zone”. Sales began slowly but then soared to bring the company to break-even.

If, instead of focusing on one market, we had cast a wide net – considered any opportunity, attended more trade shows, engaged any interested party with a nominal budget to vet their interest – we may have found traction much earlier and with far less expended capital and fewer earned frequent flier miles.
The point is that we thought we were selling when we were actually marketing. Selling is an activity that occurs when you have a defined customer type, a product or service that you know that customer will buy, and a price at which they’ll buy it. Sure, there’s business development where some of these factors might be in a range but they’re present.

Start-ups usually have a product or service with enough novelty that the customer, pricing, and other requirements are unknown or at least unsure. Initial market outreach might look like selling (more on this below) but it’s marketing. It’s information gathering. Cast a wide net and have an open mind.
This market research can best be called market validation. But a salesperson is the right tool for the job, not someone who calls himself a marketing expert. The desired outcome is that salesperson’s enthusiasm: “I can sell to this market at this price. This is the decision maker. These are the objections and here’s how I effectively resolve them. This is the sales cycle. I’ve closed a few deals and here’s my pipeline”. You won’t get that from marketing.

So, when your product or service is ready to demo, get it out there. Go broad and feel free to try markets and approaches that might seem unusual. And remember the Operations Excellence credo – you don’t know what you don’t know.

* Technology improvements are often thought of in two categories – significant and the 10% improvement. The latter offer inadequate change to justify the disruption cost of their adoption. And it’s not just technology; many in business have little patience for such innovations. I recall hearing Larry Bossidy (CEO of AlliedSignal) say: “Incrementalism is the sign of a mediocre mind”.

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