I must have heard the story about the tortoise and the hare a few million times and you'd think I'd be sick of it by now. But-- and this is amazing to me in today's everything-in-a-hurry world-- the basic lesson that slow and steady progress wins the race in the long run is still remarkably relevant and applicable, especially to new businesses. It sounds a little old fashioned and even a bit boring and it's rarely something that you'll hear any VC say-- especially when the topic on the table is how quickly to scale a business-- but it's something that the very best entrepreneurs always take to heart and keep top of mind. Rushing to roll out your business nationwide may make the boys and girls in the boardroom happy, but it's bad for your business if you aren't ready.
One of our recent Chicago success stories is SpotHero, which helps drivers find off-street parking spaces while helping parking lot owners fill their slots and garages. There couldn't be a better example of the "go slow until you get it right" approach. While competitors, copycats and other knock-offs attempted rapid geographic expansion across the country, SpotHero hunkered down in Chicago for the first two years of its existence. SpotHero figured out that you've got to nail it before you scale it.
Today, five years on, they're still only in about 20 cities (with five major cities contributing about 98% of the firm's revenue), while one competitor that is still standing is "doing business" in more than 150 cities. I say "doing business" because SpotHero earns more parking revenue in one of its cities than those guys do in all 150 of their locations combined. SpotHero is larger and growing faster than its remaining competitors (notwithstanding having raised less capital) because the company continues to focus on deeper and better connections to its markets and customers rather than trying to be everywhere at once. Doing a lot of things is not the same as getting things done, and done right.
Adding marginal inventory (or any other kinds of commitments) in new markets without assuring the presence of matching demand is a quick trip to the toilet for any new business -; like the busted-out guy who takes an Uber to Bankruptcy Court and then invites the Uber driver into the proceedings as a creditor. Similarly, the kind of parking you're identifying and booking for the consumers who are using your services matters as well. Event parking is relatively easy, but it's also infrequent and a relatively small part of the overall market. SpotHero targeted the biggest and best parking concerns and locations in the country (with massive numbers of consistent, often daily, users) from the get-go and now works with 9 of the top 11 players including all five of the largest parking companies in the U.S.
It's never easy pursuing and trying to sign the big guys. They're tougher and smarter and more demanding, but they're also the best business people. What you can learn from them and what they can help you accomplish is priceless. (See A Big Customer Wants Exclusivity. Now What?.) If you can lock these folks in and deliver the right results for them, there's no better place to be and no easier way to scale. Let the other guys drive themselves crazy chasing Mom-and-Pop lots all over the place. What they're missing is that every new lot they add reduces the yield to the guys who came before and that Ponzi-ish approach can't make anyone very happy over time.
There are almost always at least two economic sides to any marketplace (not counting regulators, legislators, etc.). When you're growing your new business, you need to be very careful that you don't leave the early adopters and boosters behind. They were there for you when the whole thing got started and they're critical references, foundational supporters, and concrete demonstrations that your product or service is sticky. Tracking and driving improvements in same store sales is the best and easiest way to measure stickiness and the best way to keep score as well, especially when those critical numbers keep ticking up year over year in your oldest markets. This is because, if the older customers lose interest and they're leaking out of the back door, it doesn't matter how you're doing in terms of growing or buying new customers at the front end of the funnel. (See Why Your Best New Customers Are Your Old Customers).
Good business isn't usually about beating the other guys - there will always be new and different competitors - and there will always be people pitching cheaper and even better solutions. Chasing someone else or trying to quickly copy their plans and trying to outdo them assumes that they know what they're doing and are a lot smarter than you. There's no good reason to believe that. Sustainable businesses create real, demonstrable value for their clients and customers and they keep upping the ante.
No one new gets to rest on their laurels, their past performance, or their track record. Otherwise, we'd still all be carrying BlackBerrys. Customers' expectations are progressive. It's NOT about how fast you're going (but never slow down), it's about how fast you're getting faster and better. It's all about acceleration, not simply velocity. And it's about innovative techniques and technologies rather than tonnage. Precision trumps sheer volume. Your pitches, programs and proposals must be better, not just longer or louder.
Growing a business isn't always a discussion or a conversation about a specific contest, feature, function or challenge. As often as not, it's about making this discipline of "always trying to be a better you" a part of your company's culture and embedding it in the ways that you do business whether you're selling products or services.
Having a great product isn't enough. Creating a business that will last is about building long-term relationships and compounding customer trust. Connection and continuing engagement coupled with constant improvement and innovation are what keeps you in the game. I wouldn't be surprised to see SpotHero developing some new tools soon that will let their lot owners dynamically price parking based on all the same variables that so many other services are now using.
Startups don't have an established following or a brand to rely on as shorthand for their promise to deliver and/or as a way to overcome the decision fatigue that plagues us all in a world of infinite choices. Startups make a future promise and then it's directly on them to deliver on their commitments and to keep raising the bar. It's your business's job to earn and retain my loyalty. Loyalty today means nothing more than the absence of a better alternative.
Over-promising and under-delivering are obviously fatal over time. And even the coolest technology available may not get the job done. SpotHero stuck with old-fashioned paper documentation until it precisely figured out the needs, comfort levels and the concerns of its customers; and only then did the company build a killer mobile app that now handles more than 80% of the reservations. The other players are still using websites.
Bottom line: People don't long remember who was first; they only know who's best. SpotHero's the best in the biz.