I have asked some successful entrepreneurs to tell me about "the best strategic decision they ever made."
Pat Matthews is the Senior Vice President of Cloud Computing at Rackspace. Here's his story.
I had co-founded a dot-com that we turned into a tech company, offering a wide range of services—from software services to email hosting. We wanted to solve every problem and make every customer happy, so we tried to do everything. The only problem was, we weren’t good at anything.
Eventually we came to realize that, in order to really grow and succeed, we needed to get focused. We needed to do one thing - and do it better than anyone else. Our customers guided us in the right direction: again and again, they were asking us to host their email. They were tired of other email service providers, who had terrible customer service and unreliable uptime, and who couldn’t keep spam and viruses out of their inboxes. Not surprisingly, none of our competitors were focused.
Right there, we had our answer: we needed to focus on email hosting.
It wasn’t sexy or glamorous, but there was a void in the market and we were committed to filling it. So, one by one, we got rid of our other product lines and helped our customers find better “homes.” And we started building our email hosting business.
By 2005, we were hosting 100,000 mailboxes, and we were making a name for ourselves in the email hosting industry. We became known for our commitment to customer support, reliable service, and spam and virus protection - and more than anything, our focus. (We marketed the heck out of being a specialist).
Make no mistake about it—temptation was around every corner. We were always tempted to do more in order to drive more “ARPU,” (Average Revenue Per User) by adding web hosting or email marketing or some other “incremental” service. But, for the most part, we resisted. We stayed focused, and we grew... a lot. In 2007 we were recognized by Inc. Magazine as the 217th fastest growing company in America. Later that year we were acquired by Rackspace, the world’s leader in hosting and cloud computing. Shortly after the acquisition we crossed the million mailbox mark. Today, albeit as part of Rackspace, we host more than 2 million mailboxes for businesses all over the world.
My advice is simple: get focused and stay focused. It was the most difficult yet rewarding strategic decision I’ve ever made.