Building an Online Startup in 3 Easy Steps

Topline: A business plan is internally useful to coordinate / project manage, but it should be a living (cloud) document, your wiki detailing product development and sales methodology.

ONE – Do you have a product?

If no, build an MVP.

If yes, get customers.

TWO – Do you have customers?

If no, get potential customers.

If yes, develop against their feedback.

THREE – Do you have potential customers?

If no, get at least 5.

If yes, develop against their feedback.

CUSTOMERS ARE YOUR GOAL, GET THEM AS EARLY AS POSSIBLE, DO NOT “BUILD IT AND THEY WILL COME” (Yes, you have to build “something” it’s called an MVP, but it needs to be as limited as possible, what can you do with a powerpoint deck and some excel macros? Validate the pain point and your solution before you invest or scale).

YOU ARE THE RULE, NOT THE EXCEPTION — You will not raise $8MM against an unproven idea with no customers and no business model because you are not Evan Williams, Biz Stone, a Facebook founder, etc.

You (yes YOU, non-facebook founder) need:

  1. PRODUCT-MARKET FIT – aka a Solution someone will actually pay for
  2. CUSTOMERS – aka Sales aka Revenue
  3. SALES PROCESS – Not discussed above, a SCALABLE methodology (documented in as much detail as possible) for generating new sales

Obsess over these goals and nothing else, and you won’t need a business plan, because instead you’ll be building a business, and then you can raise money at much more attractive valuations (or just raise it, period), after you’ve proved out product-market fit and sales.

Bottom Line: There is NOTHING worth working on besides product-market fit.

What(son) Happened to Google

IBMs Watson computer wins Jeopardy tournament of champions.
IBM Watson\’s final score on Jeopardy.

Last year, Paul Graham wrote an essay about What Happened to Yahoo.

In summary, Yahoo was getting paid so much by their legacy business, enough that when technology moved on (faster than the market, as usual), they were incapable of changing (because they were getting paid too much not to change), and so they got left behind.

On February 16th, we saw that IBM’s Watson computer had defeated the two greatest human contestants to ever play the trivia/wordplay television game show Jeopardy!

Last night, it occurred to me that Google’s getting paid SO much by a market where humans do all the search. Will it recognize that technology has just (potentially) moved on?

The end of Google may not come through social networks (Facebook). We do plenty of stuff online that, for multiple reasons (not least to avoid boring our friends to death), we are not going to want/need to share with our friends.

But I do see a clear path from where we are now to a future where search robots are researching and organizing information for us. Our “virtual assistants” become truly virtual.

A lot has been written, including the Paul Graham article above, about Facebook’s “hacker culture.” Another way of looking at this, from an outcomes perspective, is to say that Facebook rewards people who build things even more than Google (and their vaunted “20% time,” which we never hear about anymore), and so for the moment, Facebook is winning.

Aside:
This “corporate cambrian explosion” will likely be come to seen, or has already been seen, by someone on the HBS faculty, as a distinct and repeatable phase in the creation of incipient monopolies. There is a “golden age,” after exponential growth begins, but before the primary business model solidifies, when engineers are maximally rewarded for creative output. This is celebrated in Silicon Valley from Fairchild Semiconductor on down, but I bet you can find it in airlines, autos, oil, trains, every major non-military technology back to the dawn of the industrial revolution. This would be a great read…

I think it’s a fair generalization to say hackers have a low tolerance for things that bore them, they are intrinsically motivated. I had a co-worker once who needed to move, and he wrote a program to monitor all of the NYC property management websites for new no-fee listings. He reduced the time needed to research housing opportunities by a factor of 5-10 (at least compared to a non-coder like me).

Internet search is incredibly useful at the moment, but when the tools to automate information retrieval get good enough, we will move on to even more interesting things, just like my friend did, thanks to his apartment search robot.

A robot-optimized search engine might become a true competitor for Google. It might even be able to monetize the traffic through ads, exactly as Google does, if the ad seems like the best solution in a Watson-style analysis, the machines might be happy to explore sponsored links, just like we do.

Aside:
There is no API for Google’s index. Google is researching machine learning to improve search results, which is conceptually similar to Watson’s information-retrieval AI, but the Google project, code-named “Seti” is trade-secret, you won’t find it hosted on code.google.com.

UPDATE 10/5/2013: Oh, look the punditry caught up with me, 2 years, 7 months, 14 days, 18 hours, and 50 minutes later. lol

Publishing is a tough biz…

Circulation exceeded five hundred thousand in every issue in 1954, rose to six hundred thousand the following year, and climbed steadily through most of its history (to more than three million a week in 2009). It quickly established itself as by far the most famous and influential sports magazine ever published in the United States. … Not until 1964, however, ten years after its first issue, did Sports Illustrated produce its first profit.

Author: Alan Brinkley
Title: The Publisher
Publisher: Knopf
Date: Copyright 2010 by Alan Brinkley
Pages: 397-405