making startup bets

August 2024

Startup strategy is about making bets. Bets create focus. And focus is the magic ingredient for growth.

Bets are about judgement. You take a view on the future. Skate where the puck’s going. It starts with thinking about your space. What are the variables? The different paths it can take? And the likelihood of each one? Build conviction. Then decide where to position yourself.

It should feel painful. Like you’re ignoring great opportunities. All good bets make tradeoffs.

You can’t execute well without focus. You need time and brainpower to understand your users and do unscalable stuff to make them happy. That’s impossible when you’re dabbling in loads of different things.

But don’t take my word for it. Listen to Frank Slootman. He’s a beast operator who’s taken 3 companies public.

And he has this mantra - narrow the focus, raise the quality, and increase the speed. In other words, invest all your time, energy, and money behind a few priorities. A narrow plane of attack. This creates intensity, intensity creates speed, speed creates momentum, and momentum creates growth.

But what if you make the wrong bets? Isn’t it safer to hedge?

Problem is, if you’re tryna do everything, you’re not deep enough on anything to move the needle.

Startups win by home runs. And you don’t get home runs by hedging. You’ve gotta commit and go all in.

Same as investing. You have to be right… with size.

Doesn’t matter if you find a 100-bagger if you only put 10 bucks in. You need enough in the game to win big. There’s this goated Stanley Druckenmiller line - put all your eggs in one basket and watch it like a hawk.

Now, I’m not saying it’s a one-way decision. Don’t make your bets, then bury your head in the sand. Commit to them long enough so you can prove or disprove them. Once you’ve got enough feedback from the market, you can decide to double down or make a new bet.