Will Barbell Economics Crush Your Business?

Here at After Nines Inc., we've been wrestling with potential business models and product launches for about seven months now. The recent Gigaom implosion certainly provided a reality check for our own long-term strategy. But we're not panicking. Why? Because we think we can avoid getting crushed by a certain barbell that destroys so many other startups.

The barbell metaphor for tech startups goes something like this.

  • At one end of the barbell, sell-funded startups keep costs low and focus on extreme niches.
  • At the other end of the barbell, venture-backed startups focus on growth, growth and more growth.
  • If you occupy the middle ground -- the thin bar that puts extreme weight on your back -- your business will likely collapse.

While no two businesses are exactly alike, you absolutely don't want to get caught on the middle ground.

  • At self-funded startups, you can get caught under the thin bar by focusing on the wrong niche -- forcing you to burn valuable cash (your own money) while you pivot into a new market. 
  • At venture-backed startups, you can get caught under the thin bar by burning too much cash without achieving the scale you need to eventually turn a profit. In theory, that's what doomed GigaOm.

You Didn't Go to Extremes

In other words: You'll die if you're in the middle and didn't get the self-funded niche just right (extreme left) or you'll die if you're in the middle and didn't achieve venture-backed scale (extreme right). 

So which end of the barbell will After Nines pursue? Certainly the self-funded end. And that means we have to focus on the exact right niches while using our own dollars to build out the business. We're feeling good about the strategy. But there's more to come. Far more.

Got experience at either end of the barbell -- or both ends? I'm all ears. Drop me an email with details: Joe@AfterNines.com.

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