[Founder’s Real Talk #2] The puzzle of choosing general-purpose vs specialized software for early-stage startups
Thanks to the SaaS boom over the past 10 years, entrepreneurs nowadays have a wide selection of software to choose from, for every single part of their workflow.
How to make a choice? It takes a lot of time to understand the pros and cons of the alternatives, and it sometimes also depends on what discount deals your banking partners or investors have. If you ask around, everyone will give you a different answer, based on what they are more familiar with, what their specific situations and needs are, or simply what they have an emotional attachment to.
If only the trade-off was just A vs B, it would have been much easier. For early-stage teams, the worse part is the general-purpose tools vs the specialized tools.
General-purpose tools make a lot of sense because you can unify the workflows and thus flatten the stacked learning curves. It’s operationally much easier to use only one tool to solve multiple problems than to use multiple different tools. Plus, a single integrated tool — and thus connected data — helps break info silos across multiple functions. For example, you can build your CRM, product management system, knowledge base, hiring pages, and blogs all in Notion. It’s super easy to link tickets and contents across different spaces, and thus connect the dots of all info across the company.
However, as your startup grows and scales quickly, it’s hard to realize if and when you need to “graduate” from this to a more specialized tool for every single function.
If: Take payments, for example, many startups begin with Stripe because it’s easy to spin up. Even if it’s widely understood that once the startup matures, it makes economic sense to migrate to an enterprise solution, such as Adyen. But, many late-stage companies still use Stripe only, or use multiple payment processors concurrently, including Stripe. So you don’t necessarily need to “graduate” from any specific tooling at all.
When: the boundary of early-stage vs late-stage is easier to see when you zoom out, but it is hard to tell when you are living it day by day. How do you know when you wake up one day and the situations changed so drastically overnight that you have to switch to more advanced software? It’s impossible, and there’s never the right answer to the “when” question.
Maybe it was because of my educational and professional background — even though I’m always trying to tell myself, as an entrepreneur, that there’s not necessarily the right answer for every question, subconsciously I was still trying to anchor for one.
While walking around the farmlands in Sonoma this weekend, the open valley view suddenly gave me an inspiration. You can grow grapes, apricots, plums, or any kind of fruit or vegetable, based on the slope, the soil type, the sunlight, and the wind — there is no “best” fit.
It depends on your and your team’s goals and values. For the farmers in Sonoma, it often comes down to family tradition and current economic trends, but you sometimes run into unconventional decisions that showcase individual characters. And that’s important because it brings (bio)diversity to the ecosystem which is vitally important to the sustainability of the environment.
What that means to the decision-making process for your startup, is to assess the situation with your team from the point of what is the overall objective function your company is optimizing for as a whole (instead of for each individual team).
If the top priority of your company is product development and engineering, then make that decision based on what brings the best productivity to that function. If the top priority is sales and business development, internal collaboration, or something else, then anchor your answer accordingly and do it together with your core team.
Integrated architecture and connected data shouldn’t be your top principle, if upholding it would hurt your team’s performance and thus your growth. Of course you shouldn’t totally ignore it, because that would give you a lot of tech and operational debt later on, but it should be negotiable.
As entrepreneurs, we tend to have strong opinions, which is great because you have to have strong convictions to take that leap of faith to build a startup. But don’t let that strong opinion hold you back from being nimble and flexible when you realize you are going to make a sub-optimal decision.
