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The 3 Stages Of A CEO/Founders Focus

The 3 Stages Of A CEO/Founders Focus

Summary


What should you focus on as the CEO/Founder of a brand new company?

Most entrepreneurs have no idea and they waste their time focusing on the trivial many instead of the vital few things that move the needle.

The truth is, the role of a CEO/Founder changes with time and theres different priorities depending on the stage of the business:

Stage One: Product market fit.

Stage Two: Distribution.

Stage Three: Talent and culture.

If you want to start and grow a profitable business for the long-term, you need to master the three stages and keep your eye on all three balls at all times.

This video shows you how! Check it out and let me know what you think in the comments below?


Here's what we cover:

1. Why entrepreneurs waste most of their time doing doing things that relate to perception instead of reality and why their businesses fail as a result. 

2. The three stages of business growth: Product market fit, distribution and talent/culture. 

3. Why CEO's/Founders must progress through the three stages in sequential order and not progress to the next stage until the previous one is done. (doing otherwise will cause terminal failure).

4. What product market fit is and how to know when you've achieved it. 

5. Why distribution is as important as product/market fit and why most entrepreneurs neglect it and wonder why they fail. 

6. Why the jump from stage 2 to stage 3 is the hardest transition for CEO's/Founders. A massive graveyard of bones exists here and only a few talented people progress beyond this void.


To Your Success!

Sam Ovens & the team at Consulting.com.

Transcript / MP3

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Hey, everyone. Sam Ovens here. And today, I want to talk about the three stages of a CEOs focus. And why I want to talk about this is because I often notice that startup founders and entrepreneurs that are just getting started, they're really confused about what they should be focused on, and the CEO specifically. And when I say the word CEO, it can mean lots of different things. You could be the CEO of a one person business that's being started today with zero dollars in revenue, zero customers, zero product, right? You're still a CEO technically, so I mean it could be that person. More so like the CEO of a small business than a CEO of like American Airlines or something with thousands of people. So that's what I mean by that. So knowing what the CEO should focus on is extremely important, because this is really the most important thing in a business, getting started. Like, "What should I be focused on and what am I trying to achieve?" And I see some CEOs, they don't have product market fit in the beginning, and they don't have customers, and yet their focus is on trying to get press, or trying to do all of these other things, or trying to raise money, trying to do all sorts of things. And it's really messed up. And then I see some later stage CEOs still trying to do all of the marketing and all of these things, and still trying to get into the weeds of everything, and that's messed up too, because at different stages, you have to evolve and you have to make a change. And I've learned these things the hard way myself by basically doing everything wrong and then learning in hindsight when I eventually iterated towards the right answer and learning in hindsight. So these are the three stages. And the first one is product market fit. The second one is distribution. And the third one is culture and talent. All right? Those are the three, and we're going to go into each one of these three and I'm going to explain them right now. So the first one is product market fit. And if you're not selling a product, this still applies to you because it's just service market fit. And what product market fit means is that you have the market, which is your niche, and then you have ... They have a problem. And the solution to that problem is, or should be, your product or service. And when you first get started, that is basically the premise on which you should start your business. If you want to start a business, you should first of all, number one, find a market. What is this cluster of people and how do they group together? And then what is their problem? What do they wake up in the morning sighing about and dreading? What is that thing? And then, what could be a possible solution to that thing? What is the best possible solution to that thing? And is it a product or a service? It could be either or a combination of the two. That's what you should be selling as a business. And if you're running a business and you don't know who your market is and you don't know what their problem is and you don't see how your product or service fits in as a solution to that, then you really should sort that out. That is the most important thing that an entire business is built on. An entire business is built upon those connections there. The better you get that, the better you'll be at everything else. The better your marketing will be, the sales, the better your profits will be, the better everything will be if you get that stuff right. If that stuff's wrong, no amount of good marketing or anything can mask that problem. It's like trying to put a bandaid on a broken femur with the bone sticking out of the skin. It's just not going to work. You need to fix it. So in the beginning, product market fit, service market fit, you're trying to make sure that you iterate and you get your product or your service better or as close to a perfect fit for that problem that the market has. Now, when we first start, we've loosely tied our solution or our product or service to the problem, but it's not perfect. It's like if you get a cleaner for the first time for your house, and you get them to do a clean, and then you look around afterwords, and you're irritated because there's some things that the cleaner missed. When you do the cleaning job yourself, there's a way you like it to be done, and there's a certain way you like everything to be completed. And then when you get a cleaner first time, you might brief them, but they slightly miss a few pieces. Now that doesn't mean the cleaner's bad, it just means that you need to communicate that with them and then the cleaner needs to iterate and adapt so that they can get to that perfect product market fit, service market fit. So to use a really simple, dumbed-down analogy, just imagine the cleaner one. It's a classical thing that I see all the time. Someone hires a cleaner for the first time, they get them to do a job, then they look and there was some dirt behind the couch, or this thing that they missed, and they think, "Oh this cleaner's bad. I'm going to just go back to doing it myself." That's stupid. You want to communicate with the cleaner, and then they will adapt. And the same is true, the same thing is going on with product market fit in the early stages of a company. You have to, like that cleaner, ask for feedback and keep iterating until you match perfectly with what the market wants. Because you will not have perfect product market fit when you first start. And actually, perfection you never actually achieve. There is always more to go. So even if you think you have perfect product market fit, you don't, there is way more to go, and if you're not thinking about it, one of your competitors is, and they will overtake you. So you have to be forever thinking about it. And you have to be forever asking for feedback, collecting that feedback, crunching it, thinking, "How can we make it better?" And that is the first stage of a CEOs focus. It is the most important thing, more important than anything else. And it's the only thing that you should be doing and thinking about when you're starting your business. You shouldn't be worried about press. You shouldn't be worried about marketing. You shouldn't be worried about sales. You shouldn't be worried about raising money. You shouldn't be worried about any of that stuff. Even hiring people, you shouldn't even be worried about that. You should just be worried about achieving product market fit, because unless you do that, nothing else is going to happen. Now, how do you know when you have achieved it? Well, you'll know you've achieved it when things just click. All of a sudden, things get a lot easier, people start telling you that they love your thing, people start telling other people about it. And it's just like a whole bunch of friction kind of gets removed. It's a big battle when you're first getting started in business. I refer to it sometimes as trying to push a stationary train. It's a lot of effort, and you don't get much action out of the train. But once that thing starts to gain momentum, it starts to be hard to slow down. And so you'll know when you've achieved product market fit. People will start coming a lot faster to your product or your service. People will start raving about it. You'll be getting good reviews. If you're selling a course or a coaching or a training, people will start getting amazing results and they'll be telling their friends about it too. That's when you know you've got it. That doesn't mean you should stop looking at it or making it better, but it means that you've got it and you're ready to go to really stage two. Now, it's important that I tell you that you still don't take your eye off the ball with number one. Number one is your sole focus, which is product market fit. That's your sole focus as the CEO and founder until you've achieved that click, and that fit. But then, when you go to stage two, you still have to keep your eye on the ball over here. You can never take your eye off the ball in this part. It's so important. CEOs that do fail. But now we can move most of our time ... Back here, probably I would say like 90% of your time is going to be on the product market fit. Once you go to stage two, I'd say about 80% of your time's going to be on stage two, 20% still on stage one. Now, stage two is distribution. And distribution is vital because even if you do achieve like perfect product market fit, and you've got something really good that the market wants and they love it to bits and they're happy to pay for it and they're migrating to you in masses, it still doesn't mean that you don't need to do any marketing or sales. And this is a massive mistake that a lot of technology companies make. A lot of technology companies think that it's just the technology that is what makes people come. But really, if you look back through history, distribution is probably more important than the technology itself. Now, when you're getting started, that doesn't mean that you should focus on distribution first. You want to focus on product market fit first, because you have to create some sort of value. And then, you focus on distribution. But if you forever stay focused on the product and don't think at all about distribution, you will still have issues. This is the hard part about being a CEO of a small company. It's like you really do have to do multiple things and be talented and exceptional at multiple things. So what do I mean by distribution? Well I mean basically the pipelines that you lay so that you can get your product or service to your market. So you imagine back in the old days when you had Rockefeller of Standard Oil Company. Rockefeller was like the wealthiest man in the world back then. He basically owned like the global oil monopoly. And his main thing that he was trying to do is get oil distributed everywhere. So he needed ships. He needed ships to carry the oil. He needed trains to carry the oil. And he also needed pipes, pipelines all over the country to pump this oil around, because he needed to get this oil distributed. And what he noticed quite early on is that the distribution was of huge importance, so he actually turned his focus there. And he made sure that he owned the distribution as well as the oil, because if he just owned the oil, and then he had to rely on other people for distribution, then he could get in a lot of trouble, and that's what they did. The railroads, the people that owned the railroads, they started, and I remember this was like Vanderbilt and stuff, they started charging higher prices to Rockefeller, because they knew that he needed to put his oil on their trains. And Rockefeller was really smart and so he started not using their railroads and making losses short to him because he knew that that would tank that railroad. It would make them lose a lot of money. And then they would start losing money, and then he would come around, buy their stock while the company was worth nothing, then he would come back around, and then he would start using them again now that he owned the company. And he was so smart that he even started laying pipes all over America so that he could avoid using the railroads all together because distribution was so important to him. Now, we're not selling oil, and chances are we're probably not even selling physical things. But the same is true. Distribution is of extreme importance. Once you've got a good product, you need a way to get it to people. And if it's an intangible service or product, like if it's software, or if you're providing consulting or services or something like that, then you still need distribution, because people need to find out about you. Like they need to be aware that you exist and know that you can help them. And then, you need to be able to sell them, convert them from a stranger to a client. Then you need to be able to service them. All of this requires distribution. And while it might not be physical, it's still virtual on the internet. And you still need to put a lot of focus and energy into building this distribution system. And if you look at Amazon and the modern world, their biggest advantage is distribution. They've got all the distribution centers, delivery things, they've got a network all over the world so that they can get products to people really fast and really efficiently. Now, when you're building distribution, you want to look for the most efficient way to inform people that you exist and get them to come to you. And you need to figure out what that is. And chances are, it's going to be online. So you want to work on having a website, you want to work on having a funnel that's going to convert strangers into customers, and it's going to educate them. And then you need to make sure that you've got traffic coming to this funnel. And that traffic, you're going to need to buy it. What channels? Well, you need to try the different channels. It's probably going to be Facebook and YouTube ads and then probably some Google ads, and then you're probably going to have some organic social media content as well, and then you're also probably going to send some email broadcasts out to people. Those are the channels that we've got in our company. Basically organic, Google, YouTube ads, Facebook ads, Google AdWords, and then organic social content, and then also we send email broadcasts and that's basically our distribution network on the internet. That's how people become aware of us, find their way to us, buy from us, and then get the product from us. It's all mapped out like that. And I would say that I've probably spent equal time on product as I have distribution. If you want to know like a rough sort of guide of how my time's being split, I've probably spent equal amounts of time. I've made sure I have a really good product, but I've also made sure I've got really good distribution. And that's given me a really big advantage, because there's people out there that I meet that have good products but not good distribution, and then a lot of marketers I meet, and this is typical of marketers, they've got really good distribution, but not a good product. You need both. That's the truth of it. Because if you've got something shitty, it doesn't matter how efficiently you can get it to someone. And if you've got something awesome, but you have a shitty way of distributing it, it still doesn't work. You need both. You need distribution and a great product. Product comes first, or your service, having product market fit, service market fit comes first, then distribution. And you want to get these two things really going. And you want to make sure that you have really a lever in your business that you can pull on to get more customers. One of my early mentors told me, "Sam, if you don't have a way to pay money to acquire a customer, you don't have a business." And I really internalized that, took it to heart, and made sure that I could create a way so that I could make that possible. And that's what we have now. I have now a way to pay money to acquire a customer. So in order to get a Consulting Accelerator customer, that's my main program that we sell a lot of, it's a $2 thousand product. In order to get those customers, I pay about a thousand dollars to acquire one of those. So put a grand in a machine, two grand comes back, and it comes back fast, it comes back reliably, and I can do it at quite an insane scale, a scale that a lot of other people have thought you couldn't really do. But it's because of solid distribution. And the combination of those two things has given me a huge advantage and if you get those two things nailed too, you'll have the same. Now let's talk about the third stage. And this is the stage where most entrepreneurs break down. If you get to the second stage, we've got fit, product market fit, and distribution, you're going well. Really well. But most people can't make this final jump to stage three. And the third stage is focusing on talent and culture. And what do I mean by that? Well, I mean hiring great people, training great people, managing great people, forming really good teams, and building a culture at your company so that people all act and think and behave in one way that is supporting the overall business goal. I'm not saying all of these people are just carbon copies of each other, you don't want that. They're all free-thinking individuals, but they're all optimizing for the same thing. You know what I mean? They're not going in all these different directions. That's what a really good culture is. They know what they're here to do and they're trying to figure out how to do it better, every day, relentlessly. Now, the reason why most entrepreneurs can't jump from the second stage to the third stage is because it requires a massive paradigm shift. And the paradigm shift I've just been through myself, and it was probably the hardest one that I've ever made compared to all the other things. And you come to a realization. For a long time I was tracking my time. Like, "Where am I putting my time? How efficient is this task? How efficient is that task?" I'd measure everything and I would try to be as efficient as humanly possible with my time and where I put it so I could get the maximum output from every input I put in. And I took that to the nth degree to try and get as much leverage as I could. But then, you come to a point where you're like ... You have this realization where you're like, "If I spend my time trying to hire really good people, or actually people that are way better than me, then if they're working, and then hiring other people that are really good, then I'm getting way more leverage on my time by hiring those people and building a great culture than I am doing a task myself." And as a start up CEO and entrepreneur, you start off doing everything yourself. And you actually need to be good at doing that to build a business. You don't want to be a people manager person who doesn't do stuff, because then you'll be a lousy founder of a company. So you get really good at doing, and you really fall in love with doing. Building the thing, doing the work, being in the trenches. That's what you're in love with and you actually enjoy doing and you're extremely good at it. But then you get to this point where you still are really good at it, but you have to spend your time hiring other people, teaching them to do it, so that then that can happen without you. And you're spending your time finding those people, managing those people, and then they're doing the work instead of you doing it yourself all the time. I mean, you can still get in, and I still recommend getting in the trenches, but most of your time is spent trying to bring on additional people, because unless you do that, you'll never really grow big. Jeff Bezos with Amazon, they've got like 600 thousand staff. Now, do you think Bezos really built everything himself? He couldn't have built Amazon doing everything himself without hiring people. So at a certain point, he had to make that shift. And I've read a lot of books and talked to a lot of entrepreneurs and successful people, and they all say that this is where most entrepreneurs fail. They can't make this final jump. They can't let go of doing it themselves and they can't trust and find other talented people. And if you're at the stage where your business is successful, it's making money, you've got product market fit, you've got really good distribution, then to get to that next level, you really need to make this shift. And I'm just going through it now myself, we grew our business to like 25, 30 million a year before I really started to think a lot about the shift. Up until that point, I was pretty much still spending most of my time doing. I had already hired a lot of people. Let me make this clear for you. So growing to about 3 million a year I could do pretty much by myself. I probably wouldn't recommend that. I'd recommend as soon as you get to like a million a year, hire some other people. But then, you don't need to have exceptionally good people when you're making 3 to 5 million a year, 10 million a year. But when you start to go above 10 million a year, you need people that you can just let have the thing. So if they're doing Facebook ads or Google ads, or if they're building a software product or if they're doing the marketing or if they're doing customer support, if they're doing accounting, all of these different functions, right? Typically, when a founder starts a business and hires his first few people, they just do what the person tells them to do. And then that breaks down at a point, and those people now can't ask you what to do, they've got to think for themselves. And most people don't hire people that are ... Well, I wouldn't say hire people. I'd say they don't hire, train, and build a culture where people are supposed to free think for themselves and make decisions for themselves. And so they build themself a business where it looks like they've got employees, and it looks like they've got a team, but really, it's just a whole bunch of people that are all just still tied by the umbilical cord to the CEO. And this means that is a team, it's better than one person, but you're not going to be able to go to that next level. To go to that next level, where you're making 30 million a year or more, you need people to free think on their own and you need to trust them and you need to give them everything that they need so that they can do that. And then, to go above that, which is kind of the waters that I'm venturing into now, you really need people that are smarter than you. Because as you get more people, like all around the business, and you're not able to put your attention and focus into these different spots and fact check things and all of that, you need to know that these people are capable of making really good decisions and innovating and doing all of this without you. And so that's when you have this realization that you need extremely good people. And that's kind of the thing that I'm going through now. So the three stages, number one is product market fit, service market fit. It's your sole focus as a founder until you get it perfect. And then you go to stage two, distribution. Laying pipes all over the internet so that people can come to you efficiently and that you can pay money to acquire a customer and you can scale up and grow your business by just pulling on lever and you know all of the math, you know how it all works. That's distribution. And when you're working on ... You don't move to distribution until you've nailed product market fit. And when you get to distribution you're spending 80% of your time here, 20% of your time there. And then, once you've got that nailed, distribution and product market fit, now you go on to the culture and the talent. And then you pretty much stat at that stage three for forever, but you're still keeping an eye on distribution. You're still keeping an eye on product market fit, and you're making all three work together in harmony. You never leave one of those stages. You're still always thinking about it and working on it, but you're spending most of your time up here, putting good people into the system so that they can really make this thing grow. So that's my advice for you. If you're getting started, you know what to do. If you've already got product market fit, you know what to do, distribution. And if you're already quite successful in business, you got product market fit and distribution, you know what to do. It's going to be hiring talented people. And if you're stuck at any one of those stages, chances are that you're mostly stuck at stage two going to stage three. Most people really get stuck there. I was stuck there for years until I really figured out how to make that jump. And life in business is so much better when you do make that jump, I can tell you that. So if you liked this video, just click that like button. Also let me know what you think in the comment section below. If you've got any questions for me, any feedback, advice, if you like this video, just let me know in the comments. And also, if you like this video, just click that subscribe button on YouTube. I release a video like this every week, and I also release customer interviews, Q&A calls, and things like that. So that's it for this video. Thanks for watching, and I'll see you in the next one, which will be next week. Thanks.

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