Will They Make It? Part Two - Focus

Developing a focus is hard for any organization, but it is probably the most important thing tothe emerging technology company. As I stated in the first part of thisseries, determining if the emerging technology company you're lookingto partner with is going to make it is never an exact science. Thereare many variables to consider, but one of the most important is theirability to focus.

Focus can come in several forms but one that I look for is how manyproblems is the company trying to solve? In my experience the fewerproblems they try to solve the better. In fact solving one problem withone product family (based on scale) seems to be the best ingredient forsuccess.

Companies that take a multi-tool approach seem to have a greater challenge. While a case can be madethat these companies have an advantage because the potential targetmarket is larger, it seemsthese companies have a harder time explaining what they do and for whom theydo it. It is much easier to say we solve a specific problem and here is how.

Beyond the first product and how focused it is, there is also thechallenge of staying focused on that market and not expanding tooquickly into other markets. While larger, more resource rich companiescan get away with solving a host of problems (although they struggle as well), smaller companies don't have that luxury.It is the classic case of getting stretched too thin.

It is especially tempting for smaller companies to try to takeadvantage of an adjacent market opportunity. They are often cash-strapped, and that one-off project could help pay some bills. Reality isthat in most cases, this adjacent market becomes a time waster and coststhe emerging company valuable time and development resources that neverleads to significant revenue.There are times, of course, where a change of direction is needed.Continuing to get clobbered in market A when there may be lesscompetition in market B certainly makes sense, but that switch has tobe done in a very focused fashion and almost always should leave theold market behind. It is dangerous for an emerging company to keep itstoes in one market while it heads to another.

From the buyer's perspective, look for companies that have solutionswhich solve a finite number of problems and that the company is focusedsquarely on one market at a time. If it is a legitimate jack of alltrades type of company, you need to be aware of that upfront and makethat part of your risk assessment.