Has this ever happened to you?
Scrolling through your feed, you notice someone raising a trillion dollars for her company. You realize that this huge and inspiring business is the exact same idea you thought of years ago and almost started working on.
Not only did this happen to you. It also made you jealous.
What differentiates you from this person who “stole” your idea and brought it to life? The answer is Execution
Old news: success is 1% inspiration and 99% percent execution. Anything great that has ever been built required lots of great execution.
But execution is elusive. What does it even mean for a startup? What are the most important aspects of it? How can execution go wrong or systematically be improved? I was surprised to find no good answers.
In fact, every material I was able to find was long and un-focused. That is ironic given that execution is simply:
Execution = Speed * Focus * Prioritization (or SFP)
Speed — learn as fast as possible by iterating as fast as possible
Focus — do one hard thing at a time
Prioritization — work on what’s most important right now
Need some convincing? Read on.
A logical explanation
What’s the explanation for Execution = SFP?
The startup playing field is such that you:
Have a small amount of time to make big progress
Have limited resources
Are working under extreme uncertainty. Most of your efforts will fail and few will be big winners
Rely on compounding returns. That is, as you accrue more assets, getting something right has higher returns. (think of investing when you have $100 or $1M)
In this playing field, there’s one winning strategy. Your goal is to get as many things right as possible in the shortest amount of time.
Speed — Due to extreme uncertainty, you get more things right by taking more shots at the target
Focus — Every effort is hard and complex and you have limited resources. To quickly realize and learn the potential of an effort, you need to focus just on that
Prioritization — With a small amount of time to make a lot of progress, you need to always be working on the most promising effort first
My personal experiences
Speed — One day, we decided to call our sprints mini-sprints and make them half as long. A lot of things got worse: bugs, UX, and other embarrassments. But to our surprise, the things that matter, impact and learning, did not suffer at all and were now happening at twice the rate
Focus — One other day, we made a bad decision to embark on two complex and unrelated efforts simultaneously. It took us a WHOLE YEAR 😥 to finally admit failure on both. Sadly, we could have done this in 2 months if we focused on one effort at a time
Prioritization — Every product has a handful of killer features that are responsible for 80% of the product value. I recall one time when we prioritized what turned out to be a killer feature. It wasn’t harder and didn’t take longer than usual to build, but the impact was off the roof. Point being, no one can prioritize perfectly, but any improvement to prioritization means that you’ll hit a few more of those critical leaps forward
Too hand-wavy for you? Read on.
A quantitative explanation
How can we quantitatively show that Execution = SFP
I’m going to simplify things quite a bit. If you play with the numbers you will see that the essence stays correct.
Take this scenario
Your startup has 1 year of runway and is worth $1 today
You prioritize well. Given the nature of startup uncertainty, each effort that you prioritize has a 50/50 chance to increase the value of your startup by 20% or otherwise do nothing
You move quickly. Each effort takes you one week to test and implement
You’re focused, you can conclude if an effort is successful or not within one week
If all of the above is true. In 52 weeks, you will run 26 successful efforts and 26 failed ones. This means that the value of your startup in a year will be 1*1.2²⁶ = $114. An impressive 114x growth!
But what happens if any one of the ingredients is missing?
If you move slowly, let’s say that each effort takes you two weeks. You will only get 13 things right over the course of a year. The value of your company in one year will only be 1*1.2¹³=$10 compared to the $114 when you moved twice as fast! 👎🏻
What happens if you’re not focused? I’d argue that if you do twice as many things, they would each take you twice as long to complete and each effort will be at least 30% less likely to succeed. This means that you’ll make just as many efforts, but now they are not 50/50 likely to succeed but rather 35/65 likely to succeed which means that you’ll get it right 52*0.35=18.2 times. The numbers are now $1*1.20¹⁸=$27. Also quite a hit compared to the $114 outcome of well-focused execution 👎🏻
Finally, what If you prioritize badly? Say that each effort will still have a 50/50 chance but now the impact is 10% instead of the 20% when you prioritized well. The value of your company in one year will be 1*1.1²⁶=$11 compared to the $114 when you prioritized well 👎🏻
There are dramatic differences in outcomes when any one of the execution ingredients is missing. In our example, the value of your startup in one year diminished by 4 to 11 fold. That’s more than enough to separate the rare huge success from the typical startup failure.
So how does one executes with lightning-speed, laser-focus, and ruthless-prioritization? I’m not sure, but I’ll write about it soon anyway!
Thanks to Jessica Roque for reading drafts of this post and for keeping me accountable
I used an AI to summarize this post and this is the impressive result: Execution is speed * focus * prioritization. If you execute well, you will grow 10x. If you don’t, you will not
How do you define startup execution? I'd love to hear from you