Learning the Hard Way: 2080 Rule

Intro Intro:
Hey guys, I put together this blog. I spent 2 years running in circle building up my company and this product: https://www.parceltracker.com/internal-parcel-tracking, hopefully, this article will help you guys save some time!

PS if you know what the 2080 rule is, skip to the Preface.

Intro
The 20:80 rule is a fundamental principle of productivity and the key 🗝 to building a successful business. It also happens to be the concept I struggle to internalise despite understanding it. It's the lesson I never learned, and I hope that sharing this article will, in a way, help me to apply it effectively finally.

But before we jump in headfirst, let's unravel the concept and understand from where it came.

Background
The 20/80 rule is also known as the Pareto Principle, the power-law distribution, the Law of the Vital Few and the Principle of Factor Sparsity. It states that 20% of work (input) will result in 80% of the results (output).

The story has it that an economist, philosopher and academic Vilfredo Pareto noticed that 20% of pea plants produced 80% of healthy peapods. Intrigued to find out if this applied to other domains, he continued his investigation into different industries and found that 80% of production typically came from 20% of companies.

Capitalism truly embodies this concept too. In any world where people compete to produce goods: most companies lose out completely, some produce a little and a very distinct few produce most of the goods.

Preface
I've seen it repeatedly happen: Startups focus on "playing" startup and "wantrepreneuring" rather than building a business. Remember, until you are generating revenue, and someone is willing to pay for your product, you are not a business, you are a project. As a startup, your focus should be getting product-market-fit and have the product to grow explosively. Yet people try to put the cart in front of the horse; build up distribution channels, partnerships, re-brand for the 5th time before they have gotten product-market fit.

In a startup, the 20% time that will result in 80% of the output will be sales and getting users onboard. I would, however, like to also preface this by saying that my experience lies with B2B SaaS software. Depending on your industry and role within your company, your 20% might change.

The 20%
I'll take Deepfinity (my company) as an example. What we achieved in the first two years could have been done over six months if we focused had on acquiring our first users more aggressively instead of participating in pitching competitions and networking events. Those two years, however, were not a complete waste, and here are some things that I did correctly:
• Customer Research and interviews
• Leveraging my network to find clients
• Building MVPs in functional Stages
• Building a good team
• Participating in the Kings 20 accelerator
• Building Partnerships

While most of these were necessary, they were not sufficient to build a successful company and acquire clients. The turning point for the business came when I read a book called Predictable Revenue. We went from almost closing down the company to get our first clients in a period of months.

After discovering the book we were pretty desperate, it had been a year, and no-one was using the software, so I decided to go ahead and implement the central premise of the book. For consistent revenue, one required a steady stream of new qualified leads. So I went about generating leads using LinkedIn and emails around 100 property managers. This one action is how we signed on the first trial and converted them to our first paying customer. Over the period of a few months, I kept the leads generation pipeline healthy and outbound sales were generating more and more clients.

Tragedy struck once again a few months later as I slowly stopped generating leads and our pipeline dried up. Once again, I had been distracted by the business admin, product development and other fun startup stuff. It took me a while to finally get myself together and hire someone that could keep a healthy stream of leads coming my way.

Looking at it retrospectively I realised that my 20% work was sales and lead generation. The majority of my day revolves around finding ways to generate new leads and making sales. Sales, takes on many forms, I'm both a General and a Soldier at the same time:
• Finding people that have warm leads to particularly interesting clients.
• Setting up a system for my Sales Development Representative to generate new leads.
• Setting up playbooks and scripts for Account Executives
• Doing PPC and SEO based lead generation.
• Looking for companies and targeting them myself.

Conclusion
Look at your company and understand what creates the most significant results. Be honest with yourself, don't do what's fun or makes you look busy, do what gets you product-market fit and money.

I feel your the struggle, particularly when it comes to understanding what efforts yield the best results. A startup is like a sailboat, there are many parameters your can tweak in the sails, but until you need wind or you won't be able to see how effective these tweaks were increasing your speed. Similarly, unless you have a certain number of clients, you won't know what you need to focus on to grow faster.

Once you have a little momentum, it will be easier to understand what 20% of work is giving you the best results. Once you discover that, its time to ignore everything else and go full steam ahead.