Going all in on your only successful product is dangerous
jasonleow • 5 Feb 2023 •
What goes best with a successful product?
Another product.
Because it’s tempting to go all in when one thing works well.
But here’s a few things that can go wrong:
- Platform risk is real.
- Market conditions unexpectedly change.
- A competitor with boatloads of cash shows up.
Some real life examples I’m witnessing with my own eyes right now:
Never has the platform risk on Twitter been more real. And it’s not just those building an audience on Twitter, but even those building apps on Twitter. In the same week, Twitter nerfed organic reach by 50%, and by some accounts, 70% or more. Twitter is pretty much dead, they say. On top of that, a one week notice to all developers building on the Twitter API that it will no longer be free. This was a few weeks after they randomly shut down access to some third party Twitter apps like Tweetbot. Imagine your Twitter app is doing well, and you quit your job, went all in last year to build the business. All of a sudden that’s taken away from you. That’s how a lot of devs are feeling now. The uncertainty and fear. So confident you were that going all in was the right thing to do, until the proverbial knife came down on the turkey on Thankgiving day. You’re the turkey now. I see this happening to some of the indie hackers in my circle, and my heart goes out to them.
Same with market conditions. At the start of the pandemic, Zoom was the poster child. Everyone needed a video call app and they were at the right place at right time. But within the past 2-3 years, the rest of the tech giants caught up. Cue Google Meet, Microsoft Teams. Now video apps are commodities. With nothing unique to stand out with, and everyone back in office post-pandemic, Zoom’s stock is down so far that’s it’s doing worst than before the pandemic. Imagine you went all in and focused on Zoom lookalike 3 years ago, as the founder or as an investor. Good luck with that now.
Same with unexpected competitors. Indie bootstrapped AI profile pic apps AvatarAI.me and ProfilePicture.ai first burst onto the scene and got super viral. They were first, but first mover advantage didn’t help, because VC-funded startup Lensa came along with boatloads of cash ($6M), a bigger team, bigger distribution, and the right bet on a mobile app, and went on to win the market, doing $1M+ in daily revenue. Sure, the earnings from the indie apps aren’t shabby for solo devs. But hard to imagine they have a fighting chance against the stellar growth of the fast second. Now imagine if that AI app was your 100%. It was doing so well, you were so happy with it that you went all in on that one project. And within the span of a few short months, a competitor takes away all that from you. Thankfully @levelsio and @dannypostmaa are experienced indies who have other products to lean on…
So over and over again, the lesson is clear:
Going all in on your only successful product is dangerous.
Diversify to hedge risks.
Comments
So I’m going to be honest, I kinda disagree with this one.
The “indie hacker” movement has kind of made the “small bets” thing a huge deal, but to me, it’s about your goals. If your goal is to build enough revenue streams to set you up to be indie for a while/life, I get the small bets approach. I get not chasing VC funding or hiring employees.
However, that’s just one way to do it, and one goal. If you want to build a company that grows to any reasonable size, you simply need to put the vast majority of your effort into it. You need to hire. Hell, there’s a good chance that VC money is a good idea.
So to me, it’s a matter of what your goals are. If you’re trying to build up rev streams to support you and your family, sure, diversification and risk adverseness isn’t a bad idea, but if you’re trying to build something bigger, you’ve gotta take risk and go close to all in.
@therealbrandonwilson yeah it’s kinda weird how it’s not heeded. I guess there’s a social status and sexiness to being known for one thing.
@viking_sec My implicit assumption for this post is that it’s for indies and bootstrappers, not VC-startup founders. I generally write for that perspective.
I think we’re actually in agreement with regards to the risk. If the goal is a big company that mandates an all-in approach, it is riskier and more dangerous. Most of that kind of founders don’t succeed, and we don’t hear about them.
Diversification has always been preached in the investment space, but for some reason, the message continues to be unheeded by many people, both entrepreneurs and indies as well as people who choose one job with one source of income.