[Startup] Iterative Entrepreneurship
While browsing through the VentureWiki archives, I came across this article by Ross Mayfield about successful startups. The article sites a study by DarwinMag, which in turns refers to a report by Crescendo Ventures.
Notably, the one thing, they all emphasize is iterative business - in other words, tweaking the business as you go along...something I could'nt understand. What to tweak and how ???
Actually the Crescendo Ventures report was quite interesting. The report refers to a study on storage device manufacturers (read hard drives), in particular 456 storage vendors formed over 30 years. It was interesting since the Innovator's Dilemma focuses on the very same thing. As Clayton Christensen notes, storage devices are the fruitflies of the technology world - their short lifecycles make them ideal study subjects.
However, while Christensen focuses on the disruptiveness of innovation, this study focuses on the fact that most storage ventures are not disruptive at all. This is interesting to me, with all due respect to Mr. Christensen, because while this may not bode well for a long-term sustainable enterprise, it does offer value to the entrepreneur in terms of a short term exit strategy. Table 20 of the Crescendo study does list several of these companies and rather than appeal to several customers, I fail to see how they could have disrupted the storage business itself.
But then, what about iteration? As far as I can make out, it means to continually showing potential customers your solution and iterating towards the golden solution. As I read somewhere, this may be risky (as in loss of the cool idea), but it is an acceptable risk. Customer is God. Listen carefully.
This also means, that tracking risks carefully and closely. For example, on launch of a bluesky project in a company - the expenditure, behavior and trends of target market, customers, etc. should be tracked very carefully. Weekly business estimates should be recalculated and matched with expenditure to re-evaluate viability.
Two other interesting things that I learned from the report were that
early stage startups need not be handicapped for lack of a complete executive team. Focus should be on technical prowess rather than marketing wizardry. Secondly, involvement of a proven business development executive is a necessary ingredient for success. This is interesting, for VC's are likely to look for this.
Notably, the one thing, they all emphasize is iterative business - in other words, tweaking the business as you go along...something I could'nt understand. What to tweak and how ???
Actually the Crescendo Ventures report was quite interesting. The report refers to a study on storage device manufacturers (read hard drives), in particular 456 storage vendors formed over 30 years. It was interesting since the Innovator's Dilemma focuses on the very same thing. As Clayton Christensen notes, storage devices are the fruitflies of the technology world - their short lifecycles make them ideal study subjects.
However, while Christensen focuses on the disruptiveness of innovation, this study focuses on the fact that most storage ventures are not disruptive at all. This is interesting to me, with all due respect to Mr. Christensen, because while this may not bode well for a long-term sustainable enterprise, it does offer value to the entrepreneur in terms of a short term exit strategy. Table 20 of the Crescendo study does list several of these companies and rather than appeal to several customers, I fail to see how they could have disrupted the storage business itself.
But then, what about iteration? As far as I can make out, it means to continually showing potential customers your solution and iterating towards the golden solution. As I read somewhere, this may be risky (as in loss of the cool idea), but it is an acceptable risk. Customer is God. Listen carefully.
This also means, that tracking risks carefully and closely. For example, on launch of a bluesky project in a company - the expenditure, behavior and trends of target market, customers, etc. should be tracked very carefully. Weekly business estimates should be recalculated and matched with expenditure to re-evaluate viability.
Two other interesting things that I learned from the report were that
early stage startups need not be handicapped for lack of a complete executive team. Focus should be on technical prowess rather than marketing wizardry. Secondly, involvement of a proven business development executive is a necessary ingredient for success. This is interesting, for VC's are likely to look for this.
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This entry was posted
on 2/01/2005 at 2/01/2005 11:56:00 AM.
