What really counts as a diversification strategy?
“The hardest problems to solve are the easiest ones to motivate yourself and others to work on.” —Patrick Collison, Co-founder of Stripe
As a founder, your job isn’t just to build – it’s to choose the right problems to build around. Diversification raises those stakes, because it multiplies the bets you’re placing on what truly matters.
Expanding your product line or entering new markets can feel bold and visionary. But without anchoring that expansion in a validated, meaningful problem, it becomes noise, not strategy. Diversification can strengthen your business, or it can just as easily dilute your focus, confuse your narrative, and bloat your roadmap.
At Pitchwits, we’ve seen a range of founder diversification strategies, driven by various motivations – sometimes emotional, sometimes reactive, sometimes legacy-driven.
Below, we break down the most common founder mindsets behind diversification, what they tend to produce, and how to course-correct before momentum leads you off-track.
Tailwind Confidence
“We’re in a good position and have capacity to double down – let’s make hay while the sun shines.”
You might feel:
Energised and optimistic
Keen to reinvest profits or capital to keep building
Driven by curiosity and momentum
Your strategy might look like:
Expanding your feature set into adjacent use cases
Adding new verticals or customer segments
Releasing complementary tools
Example: Notion expanded from a simple notes app to an all-in-one workspace during a growth spurt, leveraging its user base to experiment with new templates, community features, and AI integrations – all adjacent to the company’s core mission.
Watch-outs:
Are you solving a real user problem, or just keeping busy?
Could new features dilute your core product’s usability or brand clarity?
Is your team really aligned on what success looks like for these new efforts?
Plateau Panic
“Growth is slowing… Maybe a new product will rescue me.”
You might feel:
Anxious about stagnating KPIs and metrics
Pressured by investors or internal team expectations
Impatient for a breakout solution – we’re barking up the right tree
Your strategy might look like:
Launching a new product with a difficult-to-explain strategic fit
Targeting a new market without well-known user insights or customer overlap
Overcorrecting by pursuing bold risks in the name of experimentation
Example: Quibi launched in response to stagnating traditional media models, attempting a revolutionary (but unproven) new format for mobile video. Despite a lot of funding and hype, the market wasn’t ready or interested.
Watch-outs:
Is the new initiative solving your current company’s problems or distracting from them?
Are you skipping foundational validation steps that you would have taken starting a new business (e.g. early users, MVPs)?
Are you misreading internal decline as a market opportunity?
Founder Boredom
“I’m tired of doing the same thing – I’m a natural entrepreneur, I need a new challenge.”
You might feel:
Restless or disconnected from the original mission, whether it’s succeeding or not
More excited by ideas outside your current space
Drawn to novelty for novelty’s sake, and quickly forgetful
Your strategy might look like:
Building products that have no clear link to your core brand
Dedicating founder energy to side bets that drain focus
Creating spin-offs that split team bandwidth
Example: Jawbone, originally an audio company, veered heavily into wearables and health data. It ultimately lost focus and failed in both categories.
Watch-outs:
Is this new direction still serving your company’s original mission?
Are you unintentionally undermining team morale by splitting your attention?
Would it be better to hire for innovation, rather than innovate yourself?
Fear-based Diversification
“We need to hedge our bets in case our core market collapses.”
You might feel:
Insecure and demoralised by macro trends or competitive threats
Preoccupied by “what if” scenarios, and challenging your team’s naive optimism
Triggered or distracted by news cycles or investor chatter
Your strategy might look like:
Preemptively pivoting based on your “instincts” before robust, satisfying data justifies it
Entering unfamiliar markets defensively
Launching resource-intensive hedging initiatives with unclear ROI potential
Example: Yahoo famously diversified into content, email, search, ads and more… Ultimately, it lost its niche and struggled to grow in the same patch as more focused competitors like Google.
Watch-outs:
Are you diversifying instead of improving your core product?
Is this strategy fear-led or opportunity-led?
Are you stretching beyond your organisational competence?
Mission-led Expansion
“Our users trust us – we’re growing into their unmet needs.”
You might feel:
Connected to your users’ evolving challenges
Confident in your core vision, but ready to stretch
Committed to building an ecosystem rather than just a single product
Your strategy might look like:
Adding new offerings based on real user feedback
Bundling complementary tools or features
Launching modular add-ons or pricing tiers
Example: Shopify diversified carefully from an e-commerce storefront tool into payments, shipping, POS and even funding. Its entire product suite was born from the core mission to empower merchants.
Watch-outs:
Have you validated that these needs are worth building for rather than nice-to-have?
Are you growing in a way that retains your product’s elegance and usability?
Do you have the operational maturity to support this breadth now?
Your diversification deserves a strategy, not just a mood
Your mindset as a founder shapes your product roadmap — for better or worse. Self-awareness is a competitive advantage. Before you diversify, check in with yourself and your team: What’s driving this? Does it serve our mission? Can we validate it without overcommitting?
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