How (Not) to Launch a Startup
Coverage vs Crushies
It took my startup 5 years to eclipse $1 Million of annual revenue.
The first two years were so bad, I didn’t even include them when showing our growth curve in investor decks like this one:
Two years after hitting seven figures, we were awarded spot #777 on the Inc 5000 list for achieving 758% three-year growth.
I'm going to explain what unlocked that growth, but first walk back in time with me to a few years earlier.
The Crushies
I once had a really cool startup job in New York. The work was interesting and I was learning, but what I really loved was staying to play video games with coworkers after hours (and at lunch, and whenever else we could get away with it). It just seemed like everyone liked spending time with each other; exactly the culture you hope for as a young employee.
That company hosted a big team offsite in a remote city to bring together employees from multiple offices. Besides some dinners, presentations, and team-building exercises, one of the company leaders stood up in front of the company to announce the winners of the inaugural "Crushy" awards. These were meant to recognize exemplary employees and regale their accomplishments. The recipient would get to crush a soda can as a symbol. Seeing those awards handed out evoked two emotions, at least for me. I was simultaneously:
1. Stoked for the employees that earned them and,
2. Motivated to earn that recognition myself in the next round.
High performing employees don't just identify problems or imagine potential solutions, they deliver results. They "crush it". As an employee, I knew the importance of delivering something that crushes the goal, and I strove for that type of performance.
Then, as a startup founder, I lost that edge in the early days of building out our product and messaging.
The Top-down Temptation
We've heard it said that focus is a superpower. A little bit of effort spread across many directions lowers our chances of succeeding at any of them. But it's easy to drift out of the powerful focus that crushes the demands of a valuable project.
Early on in my journey as a first time founder , I would often try to "cover" many parts of my startup vision in terms of messaging and product development. I felt that if I was pitching a grand vision to investors, I had to back that up as a current offering to clients. Part of what nudged me to feel this way was dealing with objections. "Oh, so and so says that X strategy won't work? I'll show them this is a valuable piece of the vision." Followed by: "Oh, now a different so and so says that Y product feature in my roadmap isn't the most amazing thing? Let's see about that."
Here's an example: my vision for StackSource was to build the real estate investment industry's go-to lending portal. Borrowers (real estate investors) would use the platform to find the right loan for their property and go through the application process, and commercial mortgage lenders would all adopt the platform as an easy to use application portal. So the ultimate version of the platform would have lots of different functionality: lender profiles, matching algorithms, underwriting automation, offer negotiation tracking... I think you get the idea. Instead of selecting one solvable pain point and building a really narrow solution that works REALLY WELL for just that one thing, we instead built the equivalent of a minimum viable set of features for several of these areas at once. There was a minimum viable product ("MVP”) version of the lender matching algorithm, MVP communication stream, MVP offering memorandum, MVP offer negotiation module, and a bunch of other features, all at a minimum viable level.
What building out a wide but shallow product allowed me to do was walk through a demo of our platform as the founder, maybe to a potential user or maybe to an investor, and verbally talk up how each screen or set of features was set to become really awesome as we continued development. The problem with this approach was two-fold:
Nothing in the product was remarkable yet. No single piece was a must-have.
By talking such a big game about all this functionality that would be added, we were dooming our actual user experience to failure when users *did* give our platform a shot. They were usually interested in tracking our product, but churn was too high.
It's the broad-stroke approach—trying to showcase the scope of what you're building, the full potential, the vast coverage that illustrates where you could be heading. But the lack of a killer feature and the churn kills more early stage startups than just about anything. When you try to do too much too soon, you end up building features that are half-baked, solutions that are spread too thin, and none of them truly hit home.
It's fine to talk about these things. It's fine to pitch these things with investors. It's fine to motivate your team with the hope of a brighter future.
But I've learned not to manage a product pipeline this way. It wastes time, it wastes money, and it drains morale when our launches were failing to meet customer needs and drive revenue.
Customer Crushies
On the other hand, bottoms-up product planning starts with customers' pain points. It's about finding one burning problem and crushing it with your solution—with precision and passion. Instead of trying to cover everything, you're focused on truly fulfilling a need, creating an impact so profound that your early customers can't help but talk about it. You earn your first "Crushies" from customers and become their hero.
If you can reach that point, you’ll be in a better spot to evaluate which part of your vision to build next, or whether other pieces have become irrelevant in light of how your product is really received by live customers.
This benefit compounds from Product into Marketing through clear messaging. A company crushing SOMETHING for SOME customers can be really clear on its messaging, not spouting off features it hopes will resonate with random ears and eyeballs. A focused product offering and a clear message to the market work hand in hand to enable efficient growth.
For StackSource, when we finally started to let go of the idea of "coverage" to simply further execute on a few core areas of competency for the types of customers that were within our reach, growth increased dramatically. For us, that was having the best lender matching algorithm in our industry, a tight borrower experience, and the tools for our own Capital Advisors to succeed in guiding that borrower process. That's it - no fancy negotiation history tracking, no trying to handle every client communication within the portal, and ruthlessly saying No to literally hundreds of ideas that wouldn't be a win for our customers in the near term.
Crushing Product Lets You Crush Marketing
It's easier to describe your value to a customer when you are really good at a narrower set of things.
In a two sided marketplace, we built the bare minimum for our supply side (lenders), and focused on delivering a clearer process for the demand (borrowers). Our messaging followed the same theme, stating clearly our benefits for borrowers (notice I didn’t say Features, I said Benefits). Our messaging to lenders was minimal: there’s demand for your specific here.
Maybe you are a startup founder and you've had an advisor that has been drilling this idea of a narrow, simple value proposition into your head and you've been fighting off that advice. I was in the same place early on, wanting to prove just how cohesive my larger vision was. If you’re also coming from that place, I encourage you to just take a second to express some gratitude toward that advisor. They are probably trying to save you some heartbreak (and money).
Here's to final crush—it's easier to genuinely care about your customers when you are crushing some problem they face, they are happy, and you are growing. The growth process becomes a virtuous cycle of customer empathy and results. This approach not only helps you succeed but also makes the journey more enjoyable. You end up building a product—and a company—that you feel proud of, rather than one that drains you.