The product-centric startup approach reigns as the startup model. Yet I have witnessed it derail first-time founders. First, a snapshot of the approach and its appeal.
The product-centric approach has evolved into its current incarnation, by which new founders aim to achieve success as follows:
1. Come up with a business idea (whether it’s a physical product, a service, or a software) and build the prototype quickly—by self-financing and/or calling on family and friends.
2. Demonstrate proof of concept: build and launch it quickly to get traction. Note that traction means different things to different founders (and investors). Some define it as the number of physical products or services sold. Some use the number of paid customers. Others focus on the number of unpaid users or monthly active users.
3. Raise more money and use proceeds to hire more staff, buy more materials, add product features, and/or services to keep the venture moving.
4. Build a company, then take it public. For founders who want to flip, increase company value to attract a buyer who’ll acquire and absorb it, or pay to shut it down.
At first glance, the product-centric approach appears to be the most efficient route to success. Most first-time founders embrace it unreservedly because it resonates with their instinct to seek the fastest route. They’re also encouraged by the media, the investment community, and tech industries, which embrace this mindset. Success stories such as Instagram and WhatsApp dominate the startup billboards.
When you attend startup forums, people you meet want to hear about your product idea. It’s energizing to be in a room full of individuals who are passionate about turning an idea into a reality. You find inspiration in serial founders who talk about their products’ successes. It feels natural for you to return home and immerse yourself in product development: researching, building, testing, and finding users or customers. The approach seems straightforward: build your product first, then build your business. After all, if there’s no product, there’s no business.
HOW IT CAN DERAIL NEW FOUNDERS
First-time founders spend most of their initial budget on product development; when funds are needed for brand development, marketing strategy, new hires, business development and/or customer support, they have little to spare and start to lose momentum or run aground.
When inexperienced entrepreneurs focus on building their product instead of building a company first, they’re not seeing the entire venture. They fail to recognize their responsibilities as founder—one who is responsible for the entire operation and not just product. Consequently, they don’t prepare for their founder role.
Picture the entrepreneurial journey as a sea voyage and the founder as the captain of his/her ship. It’s common sense to expect a competent skipper at the helm before you embark. After all, you wouldn’t get on a ship or a plane if you were not assured that a qualified captain is in charge.
Yet this is precisely what most first-time product-centric founders do: set sail—and rush to get their product to market—without researching and developing qualifications they need to enable them to take charge of the helm competently: leading their team, launching their product, and building their operation. The result is startup chaos, and worse, failure.
What most aspiring founders also don’t realize is that seasoned founders embrace the product-centric model with some facility because they already have the benefit of trial-and-error experience. And while overnight success is a storied narrative that the media likes to spin; it’s a reality that happens to too few while untold failures litter the startup wasteland.
HOW FIRST-TIME FOUNDERS CAN AVOID DERAILMENT
First-time founders need to embrace the wider view in order to avoid derailing their venture.
First, invest in yourself: develop founder competency. Assess what qualifications you’re bringing to the table, what you need to lead your team, build a product, and run a business. Then start developing and/or refining needed skills and qualities before immersing yourself in product development. Assuming the best-case scenario, once your product starts selling, you won’t be in a position to take a break and build your skippering skills.
Second, build a product and a company. Allocate time for research, study, and training so you know how to build—or at least develop a blueprint to build—an infrastructure that will support both product and operation, from development to growth. This includes establishing your culture norms, work standards and processes so that every new team member you bring on board is on the same page. Treat integral components of a successful operation (branding, marketing, sales, team management, resource allocation, and customer service) as high priorities and incorporate them into the product development phase. Avoid building your product in a bubble and then backtracking to incorporate brand strategy, distribution channels, or customer support.
No first-time captain can steer the ship flawlessly. He/she will learn with experience at the helm. That said, a new founder can avoid common mistakes and startup chaos if she is willing to invest time and energy in her own founder development first, instead of skipping ahead to product development. Proper planning prevents poor performance, and derailment.
This essay first appeared in Medium on 18 April 2017.
Copyright – April 2017 – My-Tien Vo