The list of companies that have failed by waiting too long to launch is a long one, and their founders tend to learn the lesson that you should launch early and iterate. But a related problem, which is less well understood, is launching too early.
If you have a good idea, the temptation is to spend years refining it until it’s perfect. You can spend months designing the logo, choosing colors for the website, and figuring out how to fit the name on business cards. Or you can start getting feedback from real users as soon as possible.
The former approach seems safer; it’s what everyone does in management consulting and investment banking. But users don’t care about your product design or your business plan or how much money you’ve raised. They just want something that works.
A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.
If you want to start one it’s important to understand that. Startups are so hard that you can’t be pointed off to the side and hope to succeed. You have to know that growth is what you’re after.
The good news is, if you get growth, everything else tends to fall into place. Which means you can use growth like a compass to make almost every decision you face.
Startups generally go through several rounds of funding, and at each round you want to take just enough money to reach the speed where you can shift into the next gear. That last number will be different for different companies, but let’s say it’s about three times your current revenue. And when you get that far, investors are willing to supply enough money that there’s no point saving up for a rainy day: you should always be running at peak capacity.
What’s a startup?
A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.
If you want to start one it’s important to understand that. Startups are so hard that you can’t be pointed off to the side and hope to succeed. You have to know that growth is what you’re after. If you can figure out how to build something great and also get a lot of customers, you don’t need anyone’s help. But if you can’t do both, you’re in trouble no matter how good your idea is, or how good your team is, or how much money you raise.
We wanted flying cars, instead we got 140 characters.
The above is a version of a joke that has become something of a cliche in the tech startup world. But sadly, it’s not really true. For one thing, according to the Pew Research Center, 44% of Americans don’t use Twitter, so they’re not really missing out. If there were one thing everyone wanted but no one had yet built, it would be an obvious opportunity.
But more importantly, what people want are improvements in their lives. And most of these improvements have little to do with technology. New transportation systems are indeed a big deal, but they have nothing to do with computers. The Industrial Revolution used railways to create wealth and modern medicine to extend life spans; it did these things using steam engines, not silicon chips.
If you ask someone why they want flying cars, they’ll usually say something like “so I can get from San Francisco to Los Angeles in an hour.” But this answer is misleading. What they want is to get from San Francisco to Los Angeles in an hour; how that happens does not matter much. They’d take a flying car if it were available; if it’s not they take an airplane or drive or take a bus or stay home and watch
Every new product development process begins with a list of high-level product requirements. These requirements are translated into a set of more detailed engineering specifications, which are in turn used to generate a series of design documents. The design documents describe the various software and hardware components that will be built as well as how they will interact with one another. Detailed designs are required because it is difficult to make changes in the specifications once the development process has begun.
Design documents tend to be very detailed because they must communicate to engineers who are not part of the original team. They should therefore include sufficient information that an engineer not on the team can implement them. Because engineers tend to focus on the technical details of their designs, even small decisions tend to be documented and communicated. As a result, relatively small changes or clarifications can require significant effort and expense.
In contrast, agile methodologies focus on incremental and iterative development rather than upfront planning; they emphasize rapid releases and customer feedback over elaborate design documentation; and they encourage face-to-face conversation over written documents as the primary form of communication between developers and customers.
What do you want to learn?