Build Your Product, Then Your Business
blog.mojotech.comDo we not have exactly the opposite problem within this community?
We know coding so we spend our time hacking away in dark rooms on product stuff such as frameworks, features, deployments, websites etc.
We leave considerations about marketing, distribution, customer research till later, and end up building something that we have no way to effectively market.
The order should probably be to develop the business model, then develop the product, and only add this kind of administravia in as absolutely necessary.
Building the product is the easy part of the work. First we have to sell. Here is the summary of my experiences:
[http://www.drdacademy.com/?id=first-solve-the-selling-proble...]
Figuring out what to do after you build a product is only hard if you don't plan to sell the product. For example, if you build a consumer-oriented service that you plan to offer for free, then, yes, developing the business model is hard. And by looking at lots of "pageview-successful" startups who are still trying to make their first dime of revenue, it may take years to graft a successful business model to a free service. Hell, I think Twitter is still working on this.
But if you build a product that you want because it fits a need that you have, then it'll probably fit other people's needs as well. And then you attach a price to it, and then people pay for it, just like any other types of goods that people purchase. Examples of products with simple business models? SaaS apps with monthly subscriptions. Build a good product, charge a fee to use it. Yes, you still have to figure out how to market it, but since the big hurdle is getting people to hand over money for the thing you built, you're well on your way.
(And, just one more clarification, talking to potential customers and integrating their feedback while you build the product and making sure that at each step you're building something people want is a good way to make your marketing/distribution problems a lot simpler.)
I think that's a bit of an oversimplification. Scratching your own itch might not solve a need for a market big enough for a viable business. You end up "pivoting" till you figure that out.
If there's a way to find that out early then you save yourself valuable time. Time which could determine if you're able to stay alive long enough to succeed or not.
Not at all advocating spending a year on market research but don't go straight from idea to your basement to start coding. Not if you're trying to build a business out if it.
I think the community is too diverse to be able to say that. I have a background in Supply Chain Management, and while I can code well enough to be an engineer, I have never been the same type of hacker that you imply.
My conversations with others in this community confirm that I am not alone. I have read many comments from Marketers/Product Managers, TPMs, SEOs, CEOs, Designers, Stock Traders, Financial Analysts, Ops Researchers, Executive Assistants, etc.
This is more geared towards the administrative stuff that adds no value and is an excuse to doing actual work.
In the past, no one ever seemed interested in the ideas I'd come up with. I gave up on finding someone to pair up with from the start and spent most of my free time working on a prototype for http://www.socialocale.com . I posted about it in a FB status and the next day a coworker came in and said "let's make this happen!" We've been working on just that ever since.
It really helps persuade people that your idea is worth it when they see that you were driven enough to spend your free time to bring it into existence. It actually probably tells them that 'you' are worth their time moreso than your current idea.
What if formally incorporating your business is a prerequisite for getting real user feedback (i.e. feedback that's not from friends and family)?
Like accepting credit card payments to a merchant bank account from real customers, or setting up an iOS developer account for a premium app to accept payments from Apple?
One of the pieces of advice YC gives to startups struggling to find direction is to "charge users for something". Surely you can't do this unless you're properly setup to accept payments. I suppose you could accept payments into a personal bank account and incorporate later, but most tax authorities would frown heavily on that.
> I suppose you could accept payments into a personal bank account and incorporate later, but most tax authorities would frown heavily on that.
In my country many online retailers accept payments on personal bank accounts, but being a total novice to receive payments i have some questions : is there an amount of monthly flow of money where tax authorities start checking your transactions in your bank account? also, how is the process? does your bank notify your government that you are receiving an extra-ordinary amount of money?
In the US -- there is no "minimum amount when authorities check bank accounts" -- they can't legally do that. You are required to report all income to the IRS regardless of source and it's generally not a good idea to mix personal and business accounts. An LLC, EIN and bank account take about 1 hours worth of paperwork and you're generally set to start exploring the business side of an idea.
Then that's just a necessary step towards getting your product in the hands of people then. However, do you really need to charge customers until you've validated your ideas? I see a lot of projects offering their product for free while in beta, perhaps that's more in line with what the article is trying to argue.
How about this?
Build an experiment, then your product.
Isn't the product the experiment?
Not necessarily. You could build a smoke test (experiment) for a SaaS solution for dog owners (product)
You have your vision, but before you go into building a product, you test your target market.
He has it right about many companies who are more interested in building a organization rather than build a company. I've seen it many times. I think it is tied to economic strength. When the economy is strong, you see more "culture based" companies who just want to hire their buddies and go through the motions. When the economy is strong, you see more companies putting effort into building a product and really trying to go after a market. Right now we're in a market slump, so most startups you come across are mainly looking to hire for cultural fit.
I disagree. Just as many startups fail because they don't have an actual business to be the foundation for their product. It's important to have someone on your team (founder, advisor, investor, or whoever) thinking about how to build a business, as well as someone thinking about the product. If you do, then you're more likely to succeed than if you're just focused on product. IMO.
Or you pick a market with a lot of customers and competition and build a product knowing that there is demand...
Wow, what a transparent strawman. Every 'how to do a startup' guide stresses that getting your product in front of users is the key priority of every new company.
Nothing I've ever read has ever advocated getting an NDA or figuring out pricing strategy before you have interested users.
Yes and no: some of that 'busywork' is pretty important if there's more than one founder and you don't want to deal with a major shitstorm when someone bows out and still wants a share, or some such similar situation.
This is exactly backwards. But I think the author was trying to say something else and just messed up the title.
Should be taken with a grain of salt since the author is in the business of building web/mobile apps (products).
...and businesses