Core Versus Context

I was talking with the founder of a very early stage company we recently invested in about the wide set of customer opportunities they have. His biggest question was about where he should spend his time. My answer borrowed from MDV partner and author of Crossing The Chasm, Geoffrey Moore, was core or context?

What^‘s Core? In the early stages of a company, core is hiring, product, and customers. Context is all that other stuff you have to do to support those three things, such as benefits, office space, fund raising, and so on. The real challenge arises in determining where to focus your product efforts. Focus too narrowly and you risk building the wrong product, a product no one actually wants to buy or use. Fail to focus and you risk never putting anything in the market.

Your Customers. As the entrepreneur pointed out to me, perhaps the most important question you can ask in answering this question is whether your product (or a particular feature) is core or context for your customers/users. If it’s core for them, you may be wasting your time. If what you^‘re building is one of the top activities your customer is doing to differentiate themselves from the competition, it’s unlikely they^‘re going to outsource that activity to you. But if it’s a must-have for your customer but not something they see as separating them from the competition, there^‘s a good chance you^‘re onto something valuable.

Fail Fast. How do you avoid getting too far afield from your vision as you^‘re out talking to a whole lot of customers? When you^‘re very early, I would argue that building the right product is about failing at a lot of mini-products as fast as possible. As you work on each mini-product, you have to be 100% focused on that effort — design it, build it, ship it, market test it, and then repeat. It^‘s about 100% focus but very quickly shifting from one effort to another. In fact, you may be working with the same core product, but going through the process of positioning it differently to different markets; iterating certain key features, or just testing out a whole new concept. In some cases — especially in hardware — a lot more underlying investment may be required before you can market test the actual product — but certainly you can test the product concept and feature concepts with potential customers.

Focus wins. Last fall, I was fortunate enough to participate in a session Geoff Moore did with the management team of a later stage portfolio company we invested in. In addition to helping the company focus their strategic direction, the discussion also emphasized the long-term value of core versus context. As companies grow, the core versus context choice becomes even more important. Companies can^‘t afford to do as many product based mini-tests (on a per feature basis they can, but on an overall product basis, they have to both develop new versions and maintain the existing code base — even for the most nimble consumer Internet companies). So it becomes even more important to figure out what’s core and what^‘s context.

Trust your gut. You know if your company is hitting its stride or not. Not your advisors, not your board, only you. If it is, go 100% core. If it^‘s not, it may be time to go back to the drawing board and into fail fast mode. Context always looks appealing because as the old saying goes, the grass is always greener…

Obviously, startups have limited time and money to work with. Some of the best products come about as a result of getting distracted early on. Focus on what’s core for you but context for your customers, and you^‘ll win too.