Design and Development

The recent trend of new businesses moving towards software or, more specifically, the web, seems to lead more and more would-be entrepreneurs into falling victim to the myth that building a solid product is necessary and sufficient for success. Some would go so far as to believe that cool technology alone does the trick. Many from-thesis-to-market product failures demonstrate the naiveté of current entrepreneurial thinking. All to often, we are led to believe that awesome products sell themselves.

Conversely, the other end of the spectrum finds no shortage of MBA’s looking for “code-monkeys” to implement their visions. The mode of thought here centers around the million-dollar idea, from which execution supposedly willingly falls into place. Here we are led to the believe that awesome ideas lead to awesome products that sell themselves.

The code-monkey and MBA both fall prey to the instant-noodle brand of business development: “1) idea 2) build 3) ??? 4) profit.” Battles are fought over whose position is more important, the tech guy or the biz guy. Techies are all too-often devoted to proving themselves to be in no need of the MBA types, while the business minded are just a lost looking for hired guns to prototype a lost cause. Lost in all this back and forth is the unerring truth that none of it matters.

For centuries on end, entrepreneurship as been defined outside the lines of technology. Look up “define: entrepreneur” on Google and the common theme that arises in each definition is the word “risk”. Not “new hot technology”. Not “brand new business idea”. While it can never hurt to have new hot technology that powers a brand new business idea, it is neither necessary nor sufficient to get a business off the ground.

The age old fact of entrepreneurship is that there is so much more to “risk” than the product and its development costs. Establishing or building your market, generating or growing revenue, finding distribution channels, building a sales pipeline, hiring the best talent, and all the other caveats that come with building a business are just as important as product development. A true entrepreneur must wear all these hats, not just the product one. A recent blog entry by Tony Wright talks about the product guy vs. business guy with the conclusion that a good product entrepreneur should grow into a business role. While I agree, I would have to say a great entrepreneur can never take off either hat.

Be a business that sells a product, not a product that happens to be a business. Be an entrepreneur that builds business, not a product person that happens to be an entrepreneur.

I came across a great article by Cameron Herold guest blogging at Tim Ferriss’s fourdayworkweek.com blog. He writes:

Regardless of whether or not you believe you will ride an emotional rollercoaster running a business, you will. You have two fundamental choices: you can hold on and scream, or you can wave your hands in the air and have some fun.

Also, you’ll find Marc Andresson’s precious nugget of wisdom being quoted as well:

First and foremost, a start-up puts you on an emotional rollercoaster unlike anything you have ever experienced. You flip rapidly from day-to-day – one where you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again. Over and over and over. And I’m talking about what happens to stable entrepreneurs. There is so much uncertainty and so much risk around practically everything you are doing. The level of stress that you’re under generally will magnify things incredible highs and unbelievable lows at whiplash speed and huge magnitude. Sound like fun?

I can’t stress enough how important it is to recognize and respect the awesome force that is human psychology as it comes into play during the hectic start-up phase of a company. More often than not, however, setting the right expectations and being informed about your particular industry means you can flatten the so-called “Transition Curve”.

The problem I find with today’s entrepreneurs is that the optimism is often too overbearing. Perhaps it’s the romanticism with which we surround the notion of a “start-up”. Perhaps it’s because people are starting their own companies at younger and younger ages. Perhaps it’s because a lot of tech start-ups are headed by folks who know more about cool technologies than running actual businesses. More likely, it could be because VC money is (or at least was) too readily invested. Whatever it is, the right expectations are not being set to counter-act what Cameron refers to as the “Uninformed Optimism” phase of start ups.

My advice, for what it’s worth, is that you should find something you’re passionate about, persist at it, and do your research.

I ran into this little gem today: Golden Rules for Making Money by P. T. Barnum (1880). It just proves nothing changes when it comes to the fundamentals of making money. However, these days, there’s an extra word, instead of “Making Money”, it’s now “Making Money Online”. Just ask David Heinemeier Hansson, he was even compelled to give a talk on the subject.

Well let’s see what the new-age twists are on these Golden Rules. What changes to P.T. Barnum’s rules when we apply web 2.0 logic to it? Half-seriously, I call it Golden Rules for Making Money 2.0 (web entrepreneur edition).

1. Don’t mistake your vocation -> Hackers should code, designers should draw stuff in Photoshop, and Businessmen should sell and give VC pitches.
2. Select the right location -> Move to the valley. Or at least be in India or China.
3. Avoid Debt -> Splurge on someone else’s dime. Get VC money.
4. Persevere -> “Startups rarely die in mid keystroke. So keep typing!”
5. Whatever you do, do it with all your might -> Stick with Ruby.
6. Depend on your own personal exertions -> Take as few partners as possible. More sweat equity.
7. Use the best tools -> Stick with Rails.
8. Don’t get above your business -> Release early, iterate often.
9. Learn something useful -> Learn Scala or Erlang on the side.
10. Let hope predominate but be not too visionary -> Do something small …
11. Do not scatter your powers -> … and do it well.
12. Be systematic -> Switch to 4 day work weeks.
13. Read the newspapers -> Read Blogs.
14. Beware of “outside operations” -> Don’t blow your exit money on another venture. See rule 3.
15. Don’t endorse without security -> VCs: invest in people with previous exits.
16. Advertise your business -> Use Google Adwords.
17. Be polite and kind to your customers -> Offer email and phone support.
18. Be charitable -> Open source parts of your code.
19. Don’t blab -> Get IP. Enforce it.
20. Preserve your integrity -> Don’t comment spam or SEO spam to get traffic.

See? It’s basically the same thing nearly 130 years later.