The Diversification Timing Test
Know whether it's too early to diversify growth channels or dangerously overdue
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 3
- Confidence
- 88%
Growth companies pass through three phases: kickstart (trying things), discovering the first main engine, and layering on additional engines to diversify. Timen's insight is that timing diversification is largely gut feel and errors run both directions — early-stage teams diversify too early while one small engine is still working, and scaled companies stay one-trick-ponies far too long, carrying hidden concentration risk.
Origin
Yuriy Timen's observation across early and late-stage advisory clients, echoing Casey Winters' 'money's in the banana stand' principle.
Core principles
- 01Growth follows three phases: kickstart, first engine, layered diversification
- 02One engine usually drives 80%+ of growth — this holds even for later-stage companies
- 03Premature diversification distracts from compounding a still-small winning channel
- 04Unexamined single-channel reliance at scale is a major concealed risk
How to run it
- 1
Locate the company in the three phases
Determine whether the company is kickstarting (throwing things at the wall), has just found its first dominant engine, or is mature enough to layer additional engines.
- 2
For early stage: resist diversifying too early
If one tactic drives 80%+ of acquisition but total acquisition is still small, talk the team OUT of diversifying. Direct their energy into compounding the working channel into a real strategic advantage first.
Pro tip Praise the forward-thinking instinct, then redirect it — 'we'll get there, lean into this hit first.'
Watch out Diversifying while your winning channel is still small trades compounding growth for premature spread.
- 3
For scaled stage: force diversification onto the agenda
If a company at scale (e.g. $50M+) is 90%+ reliant on a single acquisition channel, name the concentration risk explicitly and carve out bandwidth and resources to explore other channels.
Watch out A single-channel dependency at scale is 'mired with risk' and is often a blind spot the team doesn't see.
In the wild
Canva's long-tail programmatic SEO worked exceptionally well and was more defensible than paid, but it left them susceptible to Google algorithm updates — a concentration risk to hedge against.
→ Even a defensible dominant engine carries risk that warrants eventual diversification.
During part of its lifecycle Grammarly was over-reliant on efficient performance marketing. The team kept pouring fuel on what worked while scrambling to find the next growth horizon to reduce reliance.
→ Successfully navigated the shift by planning the next engine while still exploiting the current one.
Common mistakes
Diversifying while the winning channel is still small
Early teams get distracted worrying about over-reliance when their one working tactic drives 80% of a still-tiny acquisition base; they should be compounding it into a strategic advantage instead.
Assuming only early companies are one-trick-ponies
Later-stage companies at $50M+ scale can be 90%+ reliant on a single channel, carrying enormous unmanaged risk because diversification has become a blind spot.
Is it for you?
Best for
Founders and growth leaders judging whether to double down on or diversify away from their primary channel
Not ideal for
Companies that haven't yet found any working growth engine and are still in pure kickstart mode
From the transcript
“there's kind of these three phases to growth there's the kickstart phase where you're just doing a bunch of stuff trying to get things moving…”
“i call this no no too early”
“some later stage companies as well”
“are 90 plus percent reliant on a single acquisition channel which is just you know mired with risk and diversification is a blind spot for…”
From the episode
How to grow a subscription business
Yuriy Timen (Grammarly, Canva, Airtable)