« Why I Like Our Tremor Investment | Main | Only A Million Dollars? »
October 2, 2006
It Usually Doesn't Work the First Time
In the many startups that I’ve worked in/with or got to know in my experiences, there is one thing that almost always rings true: the initial idea and incarnation of the company isn’t the one that results in the end. In other words, whatever the early notion of the business, it just doesn’t work as planned.
Instead, startups after they’re first formed go through a stage of shifting and weaving, as they find the road which is the right path. Customers react differently than anticipated, revenue streams morph as the value proposition becomes defined, and costs (in time and money) of development and product vary.
Early stage startups are about experimentation. Good entrepreneurs know that.
But do the other constituents of a startup (employees, investors, advisors, customers, etc.) know it? Entrepreneurs should set appropriate expectations with others about how much experimentation is needed given their current stage. This process is difficult given that it must be weighed with confidence in the current plan.
When the experimentation works, it becomes innovation. When it doesn’t, the experimentation can become frustration. But those early frustrating experiences provide learning and market information which couldn’t have been gathered via any other means. Without the experience of small failures, a startup will not experience big successes.
Take a straw poll for yourself, and ask a successful entrepreneur if the business he set out to create is the one today s/he finds him/herself in charge of (or recently exited from). Somehow along the way s/he kept everyone involved excited about the endeavor during the riskiest stage of the company – the beginning.
Trackback Pings
TrackBack URL for this entry:
http://www.genuinevc.com/cgi-bin/mt/mt-t.cgi/219
Comments (6)
Amen.
This strikes me as the true core of why you hear so many VCs say it's all about the team -- at least in early-stage investing it really comes down to betting on a certain group of people to "figure it out" given a story about a vector they are heading in within an attractive market context.
Posted by Nathan Dintenfass | October 2, 2006 2:50 PM
Posted on October 2, 2006 14:50
Amen!
Posted by Peter Caputa | October 2, 2006 3:19 PM
Posted on October 2, 2006 15:19
Damn straight...
Posted by Erik | October 2, 2006 6:04 PM
Posted on October 2, 2006 18:04
The flip side is that when a company's initial core proposition is too far off the mark or the team lacks the skills or demeanor to tack back to a solid course, iterative innovation sometimes isn't enough. But the majority of early-stage startups I've been involved with or am very familiar with definitely have all gone thru an iterative process en route to success.
Posted by Lee | October 3, 2006 10:00 AM
Posted on October 3, 2006 10:00
So true!
Posted by Mazen | October 3, 2006 6:43 PM
Posted on October 3, 2006 18:43
David, Are you suggesting the client should pay for experimentation? Or better yet, if the client's expecations are managed honestly do you believe they will step up and pay for it?
Posted by Kilmur | October 8, 2006 9:16 PM
Posted on October 8, 2006 21:16