OnStartups

Startup Business Strategy For The Simple-Minded

Posted by Dharmesh Shah on June 20, 2008 in strategy 14 Comments

Here are the six simple steps for building a startup (in this case, a software startup).

1.  Figure out what to build.  You can do this by being brilliantly insightful (which you might be), or by just talking to some people.  Ask them questions.  Would you use this?  Does this solve a problem?  Would you pay for this?  Do you know anyone that would pay for this?  Are you going to roll your eyes and laugh out loud once I leave the room?  Are you going to tell you spouse this idea over dinner this evening to demonstrate that you indeed do have a sense of humor?

2.  Build something.  It doesn't have to be the world-changing thing you devised in step 1, but a close enough approximation.  It should do at least one useful thing from the list of game-changing things that's on the feature-list from #1.   Oh, and it should sort of work (even if requiring the assistance of some chanting, prayer and promises to recycle more).

3. (Option A)  Release!  Get your product out there.  Even if it's buggy (which it will be).  It is possible that everyone that sees it runs screaming in the other direction.  Mothers protect their children in its presence.  But, get it out there and work like heck to deal with the aftermath of the steaming pile of elephant doo-doo you've unleashed upon the world.

3. (Option B) Make Perfect, Wait, Release!  This avoids the problems with Option A because people will no longer run screaming.  But, nobody cares about your product now because everyone is flying around with jet-packs on their back and 16-core processors are embedded in people's brain as an outpatient procedure.  Your market changed and your doohickey (however "perfect") is irrelevant.

4.  Sell.  Sell.  Sell.  The law of large numbers says that the larger the number of people exposed to the product (see Step 3a), the more people you'll encounter with average coordination who will trip and fall when trying to run away from your product demo.  Some of these people will buy while still in a semi-dazed state.  Voila!  You have customers.

5.  Refine.  Armed with a few paying customers, see what you can learn from them.  What are they like?  How do they use the product?  What do they say between the screams of frustration?  Figure out how to lower the pain quickly and treat them gently.  During these brief spites of happiness that you customers have, other customers will come into contact with them think "Hey, Joe seems to be happy -- even though he's got this far-away look in his eyes", maybe the software isn't too bad.  Let me try it out..."  Bing!  You have another customer.

And the story goes on. 

For the really, really simple minded here's the summary:

Decide what to build, launch an imperfect version, sell unsuspecting customers, keep improving, sell more unsuspecting customers.  Lather, rinse, repeat.  SUCCESS!

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By the way, if you haven't joined the OnStartups Group on LinkedIn, you're not missing much.  There's not much functionality there yet (but the group is big).  The hope is that someday soon, we'll have more functionality so you can collaborate more meaningfully with other startup folks.  Until then, if you'd like to request access, please do so. That way, you can say you joined the group when it was just 11,692 members.  Come on in and join.  It's quick, painless and free.  Request access to the group.