When you are building a company, it is easy to be overwhelmed by the number of things that have to be done just to keep your company running. Between accounting, paying bills, signing contracts, financial planning and payroll you might find yourself spending half of your time just on operations. If you have never done these kinds of things before you might spend all of your time learning and doing them until you get proficient. It can be fun to learn and makes your new business seem like a real business.
The problem is that none of it matters.
At all.
Not even a little.
No company has ever been acquired because it paid all its bills on time, had flawlessly accounting ledger, perfect financial planning or impeccable contracts. Those are just the table stakes to play the game.
Absolutely the only thing that matters to your new company is whatever makes you different. That difference is what separates you from the competition and makes you stand out as a better solution. That difference makes you better. It is your competitive advantage (See Never Play Fair) and it underlies everything from your sales pitch to your strategy. If you do raise investment or get acquired, it will be because of that difference.
You should spend 100% of your time investing in your differentiation. Make it better. Make it obvious how you are different. Think of it like a wedge that you are using to split the market wide open and keep hitting it. Be relentless and focused on winning through your differentiation.
This extends to “feature parity” as well. If you look across all your competition and create a feature comparison matrix (See Only the Paranoid Survive), there will be a lot of features everyone else has that you lack. You could spend your time adding those features to get even with the competition, but what does that get you? If you look exactly like them why would anyone choose you? You should understand those gaps but invest in your differentiation.
What about all those operations that your company needs to run? Outsource. Pay people to do them for you. Don’t think of it as a cost, think of it as an investment. Every hour you pay for them to review contracts, pay your bills or run payrolls is an hour you can invest in your company’s differentiation. You are buying time, which is a rare commodity for start up companies, and investing it in the only thing that matters.
If you succeed, your differentiation will be so clear that it will be easy to create marketing materials, sales pitches and investor presentations. That differentiation will be how you recruit employees, close partnerships and build value. The message of your company will be told through your differentiation because that will be the story of why you are the best in the market.
Even if you pay your bills late.
Sean on Startups 
Great post, and a very interesting perspective. I agree that feature parity shouldn’t be a goal, but how do you feel about table stakes features (that is, the minimum viable feature set that makes you usable to customers)? Do you think that should be outsourced or done in-house?
It’s a good question. The main motivation for this post is that I see “table stakes” being used as a crutch to justify more and more features that are not critical to the business. In theory you could classify almost any feature as “table stakes” to some customer somewhere. Having a relentless focus on differentiation makes everything else seem like a distraction, forcing you to avoid using the crutch.
This is was a great morning read. I working with some guys on a start up called blonk (www.blonk.co). Our app is a Tinder but for jobs. We have competition so I am definitely going to use the comparison matrix.
AWESOME post. Regarding table stakes – I think this is a trap. A very high percentage of features in most products never get used, so most things that are ‘table stakes’ aren’t really that. I’d agree that some specific minority of features are probably required in addition to ‘the only thing that matters’, but it’s less than you think. Regarding the ‘only thing that matters’ – halleluja. My favorite example of this is Google Docs. They lacked so many features that were standard in word processors and spreadsheets it was almost laughable. And yet, the magic of collaboration trumped that shortcoming many times over. Now they can slowly backfill things, hopefully they do so wisely:)
Thanks John – great example with Google Docs.
As a vendor I don’t recommend paying your bills late 🙂
But I do agree with all of this. Spot on. Hunter & bard even outsources the bookkeeping and accounting for the agency. We do that so we can focus on pleasing our customers – instead of focusing on, well, bookkeeping.
Awesome information! Sean, do you think that differentiation should extend to the website? What I mean specifically is, should I make a chart on our website that shows how different we are from our competitors? Should I list the differences with each specific competitor? Thank you in advance.
I don’t think that differentiation needs to be limited to the website or the product. Differentiation can exist in your business model, pricing, location or technology. Wherever you find your differentiation, you should definitely make it a prominent part of your story.
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