Friday, February 15, 2008

It's About the Process

Will Price over at Hummer Winblad writes a great post (Will Price: Embracing Uncertainty) about "design thinking" and how it applies to a start-up and even investing.

The bottom line is, it's about the PROCESS and NOT the product (in the early stages at least). Rapid prototyping, A/B testing, constant iteration and improvement! That's the only product road map that truly makes sense.

It really sucks that if entrepreneurs want to raise money from an investor, they have to show these multi-year product road maps and financial projections.

There's no way any of that will come to fruition, and the messed up part is, EVERYBODY KNOWS IT! So why do it?

My only conclusion: Conventional Wisdom is convenient.

I'd love to see a business plan that had no financials and a product road map that read like:

1. Launch bare bones prototype - get feedback.
2. Improve, relaunch.
3. Get more feedback.
4. Do it all over again.

Anybody that thinks they can create a "silver bullet" product right out of the gate is kidding themselves.

My gut tells me that the consistently successful founders are the ones who focus on their process for developing the product - as opposed to coming up with a concrete vision for what the product will be and sticking to it no matter what.

I really liked Fred Wilson's series of posts on his venture capital investing history and how many of his successful portfolio companies actually stuck to their original business models. It turns out that the vast majority of them (17 out of 25, I believe) ended up with entirely different business models in the end.

So again, it's the intellectual framework for making these business model changing decisions that differentiates most successful companies for the unsuccessful ones. Please note that this hypothesis is predicated on the assumption that any entrepreneur worth his salt is smart enough to at least be playing in the right ball park - for instance, somebody who wants to create an everlasting gobstopper that can also be used as a hat is not only out of their mind, but won't succeed no matter how many times they prototype and iterate.

Obviously if you just happen to catch the right wave, at the right time and have the right board (read: product/application) under your feet, then you'll do very, very well!

But I'd put my money on getting the process right than luck any day of the week :)

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