Startups face an abundance of opportunities and directions they could pursue. I'm still new to the startup space but one of the most common mistakes I've noticed is trying to solve too many problems simultaneously. This approach, while tempting, often leads to mediocre execution across multiple fronts rather than excellence in one area.

The temptation of multiple opportunities

I work at Liquidium, a Bitcoin lending startup. When I joined, we had a clear, concise goal to be the first to provide lending for Bitcoin-based assets in a space where no one else was doing it. Our mission was straightforward: "solve lending and give people access to liquidity for their assets on Bitcoin"

What tends to happen, especially in emerging spaces like Bitcoin DeFi where the ecosystem isn't fully developed yet, is that you spot countless other opportunities along the way. For Bitcoin, not even all the basic primitive services and protocols that exist on chains like Ethereum and Solana have been built yet. The market potential is enormous across multiple product categories.

As we progressed with our lending platform, we identified some areas with significant market potential like cross-chain swaps. The allure of these opportunities is strong, particularly when you have a talented team that could technically execute them.

The resource reality check

Here's the problem. Even if you could technically do it all, you shouldn't. Let's say Liquidium ventured into swaps alongside our lending platform. There's simply no way we could solve both lending and swaps to the same degree as if we focused on just one. The constraints are real:

• Limited team capacity
• Ongoing projects requiring maintenance and improvement
• Mental bandwidth to solve complex problems

Attention and resources would inevitably be split, resulting in two mediocre products instead of one exceptional one. This is true regardless of how talented your team is or how much funding you have. Excellence requires focus.

Don't forget the size of your initial problem

Another trap is underestimating the magnitude of the opportunity you're already pursuing. With Liquidium, it's clear to me that the potential lending markets on Bitcoin are massive and we have the perfect timing with a lack of competition. Bitcoin is a larger asset than Ethereum or Solana, and lending protocols on those chains already handle tens of billions of dollars.

Capturing even a reasonable percentage of this market would be a tremendous success. Even a derivative bitcoin asset sitting on another chain (Wrapped Bitcoin) has $3 Billion TVL on Aave.

Aave wBTC market

This goal alone is more than enough to work toward. Why dilute our efforts when the opportunity in front of us is already so substantial?

Clarity starts at the top

When your end goal becomes fuzzy, it trickles down to every aspect of your organization. This is particularly evident in project management. You have high-level strategic decisions, medium-term planning, and day-to-day implementation tasks. If your core mission isn't crystal clear, how do you prioritise your current tasks?

Whenever you reassess tasks, whether small or large, you need to evaluate them based on how they'll help you reach your end goal. That should always be the main question: "How does this get us closer to solving our one problem exceptionally well?" Without clarity at the top, these decisions become arbitrary or based on what seems most interesting rather than what serves your mission.

The one-problem-at-a-time approach

As Y-combinator puts it: "Startups can only solve one problem well at any given time". Look at successful startups like Uniswap. They did one thing, decentralized swapping, very simply but extremely well. This allowed them to solidify their position as the leading company in that space. Only after establishing that foundation did they expand into adjacent areas like creating their own hot wallets.

This expansion was relatively easy because they already had a massive user base. The lesson is clear. There are significant benefits to waiting until you're established in one area before venturing into others. Solve one problem at a time, excel at it, build your user base, and then leverage that foundation for expansion.

Y-combinator essential startup advice

Liquidium's journey

Recently, we had to acknowledge that our end goal was becoming somewhat fuzzy. We were contemplating taking on too many ambitious ideas at once, diluting our focus. This required a conscious effort to realign : "Hey team, we need to focus again and lock in on solving this one problem exceptionally well."

I believe it's healthy for startups to have these reflective sessions periodically to ensure they remain on track. It's easy to get distracted by shiny new opportunities, especially when you're ambitious and capable. Regular recalibration is necessary.

Balance ideation and execution

This doesn't mean you should be completely closed off to exploring and ideating new ideas outside your defined market category. That would be too restrictive and could blind you to important innovations or pivots. The key is having a process to filter these visionary ideas.

Startups need a system that takes high-level, ambitious concepts and filters them down to what can realistically be implemented, what will drive growth, and what will get you closer to solving your core problem. This process should involve the whole team and be embedded in your company culture.

The goal is to keep innovating while keeping it within the bounds of what can be executed effectively given your constraints. Without this filtering process, you risk chasing too many opportunities simultaneously and excelling at none.

Practical steps for maintaining focus

Here are some practical approaches I've think can be helpful:

• Regular mission alignment sessions - Schedule monthly or quarterly sessions where the team revisits the company's core mission and evaluates whether current projects align with it.

• Opportunity cost analysis - For every new idea, calculate not just its potential benefit but also what you'd have to give up to pursue it.

• Clear prioritisation framework - Develop a simple scoring system for evaluating new ideas based on how directly they contribute to solving your core problem.

• "Not now" list - Keep a backlog of promising ideas that don't align with your current focus. This acknowledges their value while deferring them to a more appropriate time.

Conclusion

At Liquidium, we are learning that our success hinges not on how many different problems we can solve, but on how exceptionally we can solve our core problem of Bitcoin lending. Everything else, no matter how tempting, is a distraction until we've dominated that space.

The next time you're tempted by a new opportunity, ask yourself: "Have we truly solved our first problem yet?" If not, perhaps that shiny new idea should be added to the "not now" list while you double down on becoming the undisputed best at what you already do.