Hick’s Law – Why Fortune Favors the Focused

Follow the discussion on x.com

Throughout my life, I’ve been focused on making the most of what I had. At our dinner table, we finished our plates clean every night to not waste food – my Irish grandmother’s sensibility at its best. When I was in high school, I became fascinated with economics based on the notion of maximizing the value of scarce resources.

For the last 15 years, the economy (and venture world) has been a world of excess, not scarcity. This has created a whole host of challenges, but we often say something that brings us back to center at Equal, “Fortune favors the focused”.

As a startup, resources are deliberately scarce. Your role as a founder is to maximize the reach of those resources and make your company as valuable as possible on those before you need to raise additional capital. To do this, you need to be incredibly surgical, concentrating your resources behind a concise plan to maximize its chance of success.

While some would question why focus is so important, its merit is proven in something known as Hick’s Law. Hick’s Law asserts the more options available to a person, the longer it will take (and the more costly it will be) to decide which option is best. When deciding between more choices, the response time required to come to the right decision is longer given not only the time processing each option (b) and the time between decision making. Simply by paring the playbook down and reducing the number of decisions you have to make; you can improve both the speed and efficacy of making critical choices for your business.

This not only applies to decision making, but to the innumerable strategic pathways you have as a founder. Paradoxically, the more options you leave open for your business, the less likely you are to achieve them. Optionality isn’t about establishing a breadth of infinite options, but rather best positioning yourself for the right potential downstream pathways. Diffusing resources across multiple different options reduces the process power you have in achieving critical mass for any of them.

We frequently see this as startups pursue multiple business models or too broad of an ICP in their early days. Resources diffused across these diverse needs inhibits their efficacy in achieving product market fit in any core demographic or model. They are often better off coming to a quick conclusion on where/how to concentrate their resources in any of the attractive market segments they are considering (especially if it doesn’t close the doors to others downstream), then pursuing a multi-prong strategy or succumbing to analysis paralysis.

This is especially true when there are low consequences to action or what Jeff Bezos would refer to as “reversible decisions”. Rather than getting lost in analysis paralysis, you are better off make an educated bet of the most advisable path and letting the data guide you. While “irreversible decisions” require greater collaboration and consensus, many of the decisions a business has to make can be made with minimal consequence, letting the data guide your ultimate long-term direction - more startups die from parking tickets than speeding tickets. 

Building a great company requires countless tough decisions. Scoping down that array of choices to make those decisions a bit easier can go a long way in honing focus for the company and alleviating the cognitive exhaustion you might otherwise from deciding and pursuing so many options.

Like many of the best things in life – startup strategies are best when craftly planned, swiftly executed and remarkably simple. Focus isn’t going to guarantee your success, but it’s certainly going to increase your odds.