Two technology industry experts explain the fundamentals of turning your great idea into a product, who to hire, and when to monetize.
Great ideas fail all the time. Often startup success seems tantalizing attainable, but transitioning a solid idea into a successful business is a profoundly challenging task. "If you only have an idea," said Bob Petrie, startup veteran and President of Imagine Easy Solutions, "go home. You don't build companies on ideas. You build companies on visions."
Executing on vision requires building efficient and cohesive teams, a fundamental understanding of markets and customer expectations, and a deep understanding of how technology can help fast-growing, early-stage companies.
READ: Launching a startup: A primer for new entrepreneurs (Tech Pro Research Download)
Petrie and his former colleague Catherine Gluckstein have launched a number of companies, both successful and not. They're experienced in product and market development, team management, and growth strategies and tactics.
This interview is a conversation about their top tips for transitioning your vision into a successful startup.
Building a company is different from having a good idea. How do you test your idea, and test the market to make sure it's viable?
An idea is just that, an idea. A company needs to build a product that is marketable, finds a customer need, and a channel to be profitably sold. The easiest way to test is whether people will actually pay for a product. People may talk about how much they love a product ... but it's different when they have to decide to spend their hard earned cash on the product.
If you only have an idea. Go home. You don't build companies on ideas. You build companies on visions. An idea is a party trick. A punch line. A one trick pony. A vision is a living, breathing, multidimensional thing. Successful entrepreneurs have this vision all worked out in their head. Every angle considered. They are simply working towards a tangible world that already exists, that just needs time with which to become visible.
Talk to potential paying customers. Many of them. Only them. If you have limited access to potential paying customers then guess what? You have a serious problem.
What's the first step in testing the product?
Really bright companies pre-sell the product. [They] get someone to pay for it before it's even ready. This can be great for cashflow to fund the initial product development. Even if you don't sell, find your initial customers and be really clear who [the customer] is. Don't build for your ego.
Do. Just do. No amount of planning or ideation is going to ensure success. You only succeed by doing. So, build your product. Start your service. Hang your shingle. Waiting for someone to give you money so you can start? Go home. That's so 1998.
What steps keep the team and product on track?
Take a look at my blog post on emotions. Controlling your emotions for you and the team is absolutely key. Belief is also key. It's all you have at the beginning, the belief that your product, team, and company can make a big impact. Then set one goal. Focus and deliver.
Iterate. You need to be flexible, curious, adaptable and modest as your ride the build-measure-learn process. Your goal ... is to ensure the process continues and is pointed in a direction that yields the highest probability of success.
Making money matters. When do you turn on revenue?
In the tech world there has been a view of, 'growth at all costs.' Heck, it has worked for some of the most successful companies. But reality is it doesn't work for most companies. Raising enough capital to fund this type of growth is hard and turning [users] from free to paid is equally as hard. I'm a proponent of selling [the product] from Day One. This keeps you honest about your product.
There are so many variables that affect when to monetize. However, there are generally two schools of thought. On the one end of the spectrum, are speculators and visionaries. They are looking for disruption and world change. To them, monetization is a likely outcome to the victors of disruption. Why waste time on the administration of revenue and profit if you haven't figured how to disrupt yet?
On the other side of the spectrum ... [those] who think it's important to have an eye on profit and revenue from the beginning. I will never again build a company without an eye towards profit from the beginning. I have frankly never met an entrepreneur who sold her or his vision short by focusing too soon on revenue.
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What qualities do you look for in a founding team?
Think of your founding team like a marriage, without the love. You're going to go through many ups and downs. Is this a partner you'd choose to experience these things with? Are they up to it? Also then think about skillset. Do they cover the key areas you need? Is there relevant expertise on the team?
Not everyone should do a startup. It is simply and truly not for everyone. In addition to the characteristics I listed above--flexible, curious, adaptable and modest--I think startup candidates most certainly cannot have a 'big company' mindset. Candidates have to have a crazy work ethic. They have to be able to grind it out over very long periods of time. I look for people with a low emotional bandwidth. I look for people that focus on contribution not effort. They eschew optics and vanity metrics. People who would feel spiritually oppressed by being a cog in the machine.
Many early stage companies fail. How do you learn and rebound from failure?
Be honest and take stock about when it's time to cut your losses.
My advice to those that are considering walking away is to walk away when it feels good, not bad. When you gave it your all and didn't work, simply give up. It feels liberating, not regretful.
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Notes: Some quotes have been edited for clarity. From 2012-2013 the author worked with the subjects of this interview.