Yesterday I finished reading That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea by Marc Randolph, the founder of Netflix. Told through the format of a live narrative, Marc does a great job capturing the ups and downs of the first five years of the Netflix journey. One of the recurring themes throughout the book is the importance of the Canada Rule.
The Canada Rule was originally introduced by Marc when they debated at Netflix whether or not to expand to Canada. Netflix was small, but growing fast domestically. Canada, at roughly 10% of the size of the United States, was obvious for geographic expansion, but would add significant complexity. The Canada Rule, simply, is to focus on the core business and not get distracted by expansion ideas. Do one thing, and do it well.
The old adage still rings true: many more startups died of indigestion than starvation.
The next time someone brings up a great expansion idea, but takes away from continuing to improve and optimize the core business, invoke the Canada Rule. Focus, focus, focus.
David Cummings on Startups 