As a general rule, companies grow optimally when they are focused.

For startups and new brand launches, this rule applies even more acutely — i.e. when there is no existing inertia to piggyback on.

I’m not just talking mindset (“we have focused leadership”), I’m talking strategic focus. As in, a startup or brand being focused with its Positioning, and by tactical implication, everything it does.

Put another way: startups and brands grow optimally to achieve breakout success when they have a focused direction to own a focused idea in the minds of all stakeholders: employees, investors, press, partners, evangelisers, prospects, customers, etc.

Examples:

• 🏀 FanDuel’s focussed idea was ‘daily fantasy sports’

•  🔁 Criteo’s focussed idea was ‘ad retargeting’

•  🔢 QuickBook’s foccussed idea was ‘DIY accounting software’

These ideas guided the direction of their respective companies with a concentrated, unifying perception. So prospects ‘got it’.

It’s not revolutionary. This premise is widely-known.

Many point to Apple as the ultimate example of the principle of focus successfully applied.

Before Steve’s return in the late 90s, Apple was trying to do everything and was becoming increasingly known for nothing.

The Pippin exemplifies that as a product in itself:

Launched in 1996, it was billed by Apple as “an integral part of the consumer audiovisual, stereo, and television environment”.

In other words, by trying to have as broader appeal as possible absent of a unique and mobilising differentiated idea behind it, it meant nothing.

It had no strong purpose in the mind (excluding to collectors of defunct Apple products).

With Steve back, Apple focussed. The rest is history. A wave of concentrated success ensued — iMac, iPod, iPhone, iPad, i-watering stock appreciation.

OK. Let’s wrap things up here then, and call it a day?

All you have to do is focus to see the commercial success you want.

Focus, focus, focus. With cult-like enthusiasm.

And, you know, create the next iPhone.

Hmmm. Not quite.

The Problem

Despite an appetite to focus, I often encounter companies that struggle to actually do it.

Not so much in an easily distracted ‘chase shiny new thing’ behavioural sense — which also happens — but more so in the sense of making a decision to focus in one decisive direction in the first place. To do what Apple did.

Why?

The main issue is sacrifice.

You have to sacrifice something valuable in order to build more value. Cut, cut, cut. Like you need to save weight to fly to the moon.

That can be scary: cutting products. cutting features. cutting capabilities. cutting competitive claims. cutting distribution. cutting value props.

Superficially, this doesn’t make sense — “if we offer more, we can sell more”.

The reverse is true. Offer less: do it 10X, sell it 10X. This is intuitive, practically everyone I encounter buys into this notion.

However, it is one thing to buy into a notion and another to act upon it.

How so?

Focussing can feel like niching. Like, really niching. Akin to carving out a tasty, but minuscule, slice of the pie and claiming it defensibly as your own.

Sometimes focussing is niching, of course. If that is the objective it’s not a problem. Niche away. Become the Rolls Royce or Alienware of your category.

But, many ambitious startups and brands don’t want to feel like they are niching.

They want to feel like they are building something huge and game changing. To claim a big chunk of the pie or bake an entirely new one. To be a BIG player.

So, niching doesn’t feel right.

As a result, they fail to focus. They offer too much relative to the maximally adoptable mindset of their best-fit prospects on the adoption curve.

Consequently, their idea gets diluted and becomes cloudy in the minds of prospects. No one really ‘gets it’. It doesn’t take off.

The lesson?

Because focussing can feel like it’s niching, it doesn’t mean that it empirically is or has to be.

There’s a totally distinct strategic approach to becoming Google vs. DuckDuckGo. FedEx vs. Igloo. iMac vs. Alienware.

How so?

There’s two opposite spectrum types of strategic focus:

• Niche Down — claim a small piece of a pie.

• Focus Up — claim a large piece of a pie, or, bake a new pie.

There’s a BIG difference between their outcomes in terms of stockholder value creation. Niching Down is small and Focus Up is large (relatively speaking).

Challengingly, they can appear very similar at the outset. As if they are both Niche Down strategies.

Why? They both have to be extremely focussed in the beginning.

Facebook didn’t start as a global social media service, it started in Harvard.

Amazon didn’t start as an e-commerce juggernaut, it started as an online book store.

Similarly, renting an airbed/room in someone’s house — à la Airbnb — was viewed as too niche of an idea by investors.

This type of specificity — particularly if it is unconventional — is what can scare ambitious companies against committing to really focus.

Why?

It can be difficult to have conviction in a focus wherein the ultimate expression of that focus has yet to be clearly defined into its breakout format.

This is particularly so when subtleties in perception have an outsized impact on adoption. Airbnb famously launched 3 times, then went through a rollercoaster journey to really define and refine their idea that blew up.

The benefit of hindsight makes it obvious — “of course people want to rent apartments via Airbnb and feel like a local”.

Preceding this validation, the insight is camouflaged and nuanced — “why would someone pay to stay in a pokey apartment versus staying at the Hilton? Is the Hilton sold out?”

The idea is always loose in the beginning. You have to conviction that it can be developed to truly resonate, through learning and iteration.

The trick is to:

1. Discover unique insights and craft a set of Positioning strategy theses from them

2. Be able to confidently assess the extent to which each thesis is either a Niche Down or Focus Up strategy

Today, I will break down the latter.

Niche Down vs. Focus Up

The key difference between a Niche Down and Focus Up strategy is growth potential.

The objective of Niche Down is long-term, incremental growth. The objective of Focus Up is long-term, exponential growth.

A Niche Down approach does not benefit from compounding feedback loops. Focus Up does.

In order to achieve either of these outcomes, the principles for designing each strategy differs.

⬇️ Niche Down

For a Niche Down strategy, you choose an unclaimed or underserved idea within an existing category and focus on it.

Typically, this involves serving a specific segment of customers with a specific set of needs and desires that are unlikely to be in demand outside of that segment or context.

It’s inherently defensible, but rarely scaleable relative to the total available volume of purchasing intent from prospects seeking similar solutions to their problems and desires in adjacent niches and categories.

For example:

• 👽 Alienware’s ‘gaming PC’ idea within the PC category

• 🧊 Igloo’s ‘refrigerated deliveries’ idea within the courier category

• 💵 Dianomi’s ‘financial’ idea within the native ad network category

The strategy is weighted so that the risk of the idea — in terms of its propensity to be adopted by the mind of prospects — is lower, meaning most of the risk resides in the execution of the strategy.

It’s a lower risk, lower reward option.

⬆️ Focus Up

For a Focus Up strategy, you choose an unclaimed, underserved, or new idea in an existing or newly created category and focus on it.

Typically, this involves serving a specific segment of customers with a specific set of needs and desires that are likely to be in demand outside of that segment or context.

It’s inherently defensible. And scaleable, since the idea dramatically stimulates net new purchasing intent by attracting prospects from adjacent or distant niches and categories.

Big name examples (that everyone is familiar with):

• 🔎 Google focussed on ‘search’ (Yahoo! et al were portals, with search)

• ☁️ Salesforce’s focussed on ‘cloud CRM’ (competitors were hard install)

• 👥 Facebook focussed on the ‘social’ in ‘social media’ (Myspace was more ‘media’ oriented)

All of these are laughably “obvious” in hindsight.

A Focus Up strategy is weighted so that the risk of the idea — in terms of its propensity to be adopted by the mind of prospects — is higher, meaning most of the risk resides in the idea and not the execution.

It’s a higher risk, higher reward option.

Side-by-Side

Ingredients

So, what are the ingredients of a Focus Up strategy?

Here’s a few Focus Up strategies, with examples:

🤩 Adjacent value unlock

💡 What: As a direct result of focussing value is unlocked that was previously unaccessible, attracting prospects not just from the niche in which the company operates (a Niche Down strategy) but also from adjacent niches and or categories (Focus Up strategy).

One method of doing this is to discover a super collateral benefit.

WTF is a “super collateral benefit?!?”

With every competitive claim there is a ‘core benefit’ and there are ‘collateral benefits’.

The core benefit usually mirrors what is directly communicated.

For example, if I make a competitive claim that my newsletters are “deep dives”, you would likely expect them to be in-depth and comprehensive. Whatever you perceive a “deep-dive” to be.

Collateral benefits emanate form the core benefit. They are a by-product of it.

For example, because deep-dives take longer to read, a collateral benefit could be that it helps you pass the time on a train ride to work.

A super collateral benefit is a collateral benefit on steroids.

It has two major properties:

• It becomes a major reason for purchasing

• It instils net new purchasing behaviour beyond the scope of the competitive claim (niche), attracting prospects from adjacent niches and categories (focussing up).

These two properties are coexistent; i.e. the major reason for purchasing triggers interest outside of the niche.

The fact the competitive claim is focussed upon unlocks the super collateral benefit. Usually, because the super collateral benefit was previously buried and obscured amongst an ocean of competitive claims. It couldn’t be accessed without isolating it.

👉 Example: Federal Express

In the early 1970s Federal Express was a struggling player. An underdog.

Like the category leader — Emery — it was promoting all kinds of freight services: overnight, non-priority, small packages, large packages, etc.

Then, Federal Express narrowed its focus to “overnight” small packages.

Quickly, the brand owned the competitive claim “overnight” in the mind of prospects. When a prospect wanted overnight delivery due to time sensitivity, they’d use Federal Express. “Overnight” translated to fastest, as the core benefit.

But, this move didn’t simply carve out the “overnight” niche for itself.

It stole customers away from adjacent niches within the airfreight category, and even adjacent categories.

How so?

By choosing this specific competitive claim, Federal Express instilled a new purchasing behaviour through a ‘super collateral benefit’.

That benefit? Signalling value.

“Overnight” signalled importance, status, prestige, priority, eminence.

If a prospect wanted to ship a package to a client or important associate they wanted to impress, they would use Federal Express. It gave the packages prestige.

This benefit couldn’t exist before, because “overnight” as an idea was diluted by all of the other airfreight options Federal Express was promoting.

The result? Federal Express became the category leader.

🔁 Functional feedback loop

💡 What: This one is pretty obvious. The more a company focuses on providing a focussed value proposition to a focussed customer segment, the more functionally valuable it becomes.

Most examples of this are Niche Down strategies, like the Rolls Royce and Alienware references I made before.

But, focussed functionality can also be a Focus Up strategy if there’s a functional feedback loop with compounding gains that systemically grows its appeal to a wider and or more valuable prospect segments — e.g. through leveraging network effects, data, or economics of scale, etc.

This dynamic continually levels up functional value and strengthens the Positioning idea commensurately, attracting prospects from adjacent niches and categories correspondingly with their position on the adoption curve.

👉 Example: Google

For what seems like 20 years, Google has had a monopoly on the search category in the West.

Prior to this domination Yahoo! and a bunch of other brands like Lycos, Altavista, Excite, and AOL were battling it out for search engine supremacy.

The problem? Search was one of many value propositions these companies were offering. This both weakened their brand’s perception in the mind of prospects and weakened their search value proposition development efforts.

Meanwhile, Google focussed on search. It attracted users with a crystal clear idea and strengthened its position in the mind by concentrating its value proposition development efforts on it.

The ever-increasing search result relevancy (functional value) of their product motivated people to search and use the Internet more. This motivated website owners to produce more content to be discovered. This motivated people to search more. And, so on. A functional feedback loop.

Google’s ‘search’ idea and its perceived utility grew exponentially, fuelling each other symbiotically.

🌟 Transcendence effect

💡 What: A focus can transcend out of a niche or a category through building and owning a radically differentiated perception in the mind relative to competitive alternatives.

This sucks away prospects from adjacent niches and categories, as well as redefining the competitive landscape to broaden the spectrum of purchasing intent to include new prospects to a category or niche.

There’s A LOT to unpack with this approach, so I will go in-depth in a later newsletter.

👉 Example: Dyson

Dyson completely redefined the vacuum cleaner category.

Not just functionally. It created it’s own mental category: There’s Dyson and there’s everybody else.

Time for three totally different Focus Up case studies.

Great Wall Motor

Last year I joined RIES — the global authority on Positioning strategy.

This is one of my favourite RIES case studies, demonstrating the power of focus at considerable scale.

Founded in 1986, Great Wall Motor is a major Chinese car company. Today it has 70,000+ employees and generated $17 billion revenue in 2022.

When Great Wall Motor engaged RIES for a Positioning project in 2009, their annual revenue was $1.8 billion.

At the time, the Chinese car category was commoditised with 28 undifferentiated domestic brands.

The problem?

Great Wall Motor did not own a unique position in the minds of prospects.

Their perception in the mind overlapped with all of the other Chinese car brands – offering everything, known for nothing.

They had to compete on price, product variety, and features in order to generate sales.

They were marketing 9 different car models — a full line featuring an SUV, compact, saloon, truck, etc — and losing out to competitors too frequently.

2009: What's a Great Wall Motor?

"It's a cheap or luxury... pick-up truck, sedan, mini-van, SUV, or compact car"

Prospects had no single motivating idea to seek out their products. They were perceived as a generic car brand.

Margins were thin due to:

• ⚔️ Price wars

• 🏭 Complex R&D, manufacturing, and distribution – catering to product variety

What did RIES advise Great Wall to do?

Focus the entire company on one model, Haval, the company’s SUV vehicle.

That’s 9 models, down to 1.

Why 1 model?

First, to radically sharpen Great Wall’s focus and be known for something specific in the mind.

Secondly, to focus on a direction that could scale up. What could be BIG.

Why SUVs?

Great Wall Motor's research showed Chinese consumers preferred sedans (not SUVs) because they were perceived to be more prestigious.

This data previously guided Great Wall to release a sedan. Similar customer-oriented research led to the expansion into other models.

Their strategy was customer-led. This is the intuitive approach, right?

The problem is: you end up doing the same thing as everyone else.

RIES advised Great Wall to change their Positioning strategy to be competitor-led, through the perception of prospects.

Insight: Every car company learned Chinese consumers generally preferred sedans, through their own independent research.

Therefore, the other 27 Chinese car companies would likely focus on sedans (not SUVs).

This left the ‘SUV position’ open in the mind for Great Wall Motor to claim. The idea was further refined too ‘economical SUVs’.

Why ‘economical SUVs’?

• 🤩 It unlocked adjacent value

• 📈 SUVs were growing in demand

• 🚘 ‘Economical’ sharpened the perceived focus from ‘SUVs’ without losing material buyer demand (most prospects wanted them to be economical)

Below (left) is a typical advertisement that Great Wall utilised to drive home the focussed idea in its messaging: “Haval: The leader in economical SUVs under 100,000 RMB” (about $14,000).

The results of this ‘economical SUV’ focus?

Revenue increased $8.3bn (5.2x) over five years.

• Year 1: $1.8bn revenue

• Year 5: $10.1bn revenue

By Year 5, 80% of Great Wall’s production was SUVs.

• 🥇 Great Wall became the No.1 Chinese car company by sales

• 🤑 In Year 5, profits were $1.3bn — more than the next 4 largest Chinese car companies combined

Blippi

If you’re not lowdown with Blippi… he’s the ‘Mr. Beast for toddlers’

His videos get hundreds of millions of views. One has nearly a billion.

Why? Blippi didn’t Niche Down. He Focussed Up.

His target audience by age is terrifically narrow (2-4 year olds) and his content is educational oriented.

Superficially, this looks like Niching Down — “what a tiny audience age range and narrow genre combo!”

But, the characteristics of this focus say otherwise:

• 💙 Toddlers watch their favourite videos over, OVER and OVERRR

• 👶 There’s a fresh batch of toddlers every year!

• 🎓 Toddlers are insatiably curious

• ⏰ Toddlers have a lot of free time

Blippi didn’t carve out a slice of a small YouTube-first toddler content niche, he was a driving force in establishing, defining, and exponentially growing it.

His videos connect with toddler minds in a very ‘on the level way’ that competing content options didn’t before — through verbal language, physical language, and the everyday relatable subject matter (e.g. exploring soft play centres).

This approach is a combo of an ‘adjacent value unlock’ (e.g. taking toddler eyeballs away from competing viewing options like linear TV) and a ‘functional feedback loop’ (the more views Blippi’s videos got, the more functionally valuable his videos became due to increased distribution momentum with YouTube’s algorithms, which prioritised them more).

By focusing, demand exploded for YouTube-style educational content for toddlers. The feedback loop between Blippi obsessed toddlers and YouTube’s algorithm established a focus flywheel that grew from 0 to 1 billion views per month.

The One With ‘Cups and Ice’

Here we go — a millennial pop culture case study (bare with me!)

There’s a Friends episode where Phoebe is put in charge of ‘cups and ice’ at Monica’s party. This scene regularly populates into my head when I think of an example of a Focus Up strategy.

It’s pure fiction — literally a “sitcom idea” in Paul Graham parlance — but, the fundamentals are there.

What happens?

Monica doesn’t want Phoebe to organise anything for the party. So, Phoebe gets assigned the lowest-risk and least-meaningful value-adding feature: cups and ice.

In response, Phoebe goes completely over-the-top with cups and ice. Not just in volume, but in experiential value: cup hats, cup chandeliers, cup banners, dry ice, cubed ice, shaved ice, ice displays, snow cones, etc, etc.

She has a very focussed idea that dominates the party. That is, taking something familiar and mundane — yet intrinsically appealing — and turning it into a spectacle and a novelty.

It becomes the ‘cups and ice party’. An overlooked feature is blown up and transformed into a standalone idea.

The idea taps into fragments of what ‘cups’ and ‘ice’ mean and represent in the mind and unifies them together in a contextually potent medium, becoming more than the some of the parts.

All of the other party ideas and features planned by Monica get drowned out. The focus cuts through.

It feels intuitive to the guests. Like their minds had already subconsciously considered ‘cups and ice’ could be a thing, but that it was never consciously realised until now. Proposition-mind fit.

You can imagine the ‘cups and ice’ idea growing virally and becoming its own distinctive event, at least in the Friends universe. Anchoring itself to being the opposite of an alcohol-based party.

It could be more than just a niche of house parties. It could be a seperate concept that divides the mind and grows the perceptional boundaries of what a house party is. For example, like a Tupperware party or an Anne Summer’s party (when those were things). A ‘transcendent effect’ focus.

“Enough of Friends, already!!” (I hear you).

That’s it for today. I’ll be back in your inbox soon. 🤘

Martin

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