Every Startup Reaches This Fork in the Road — Here’s How to Choose Your Path
Every founder eventually faces a strategic question that’s harder than it looks on a pitch deck: Should you build a lightweight offering that serves many types of customers, or go deep into one vertical and build a full-stack product that locks in loyalty from a single group?
The Case for Diversification
In the early days, diversification often feels like the safer bet. Serving a range of customer types gets revenue in the door faster, helps test different personas, and creates the illusion of momentum.
This was the playbook Stripe used in its early years — building a developer-first payments platform that quietly powered everything from marketplaces to SaaS tools to on-demand services.
The Power of Going Deep
Going deep is the opposite strategy. Build for one customer type, become irreplaceable, then expand from a position of strength.
It’s what Toast did when it focused exclusively on restaurants. Instead of trying to be a generic POS system for every small business, they built an end-to-end operating system for food and beverage businesses: ordering, payments, payroll, and more.
You Don’t Always Get to Choose
The reality? Most early-stage companies don’t make this decision from a clean slate.
Sometimes your first few deals pull you into a vertical you hadn’t intended. Other times, inbound demand from adjacent industries is too tempting to ignore.
Key Takeaways
One of the most defining decisions a company makes is whether to diversify or go deep into one specific vertical.
Diversification brings faster revenue and gives you more flexibility. However, that flexibility often comes with a cost.
Focusing on one niche has its own risks, but it’s often the better long-term play.
that diversify too early can dilute their core advantage. You might please everyone a little, but no one a lot.
Going deep is often the better long-term play. You get richer data, tighter feedback loops, and a community of users who evangelize your product because it actually works for them.
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