Given the fast-growing app economy and the sexiness associated with the building phase, it’s not surprising that most founders rush to develop their technology. They think the startup is the technology. I have a different view. I think of startups rather as business models and the technology is to a certain degree irrelevant.
Let me back this up. Several years ago I worked with a first-time startup founder. He was an expert in his particular field but had never before built a technology product or a startup. Nevertheless, he raised about $1 million in funding — then spent all that money on building his product. He had used an outsourced developer who had essentially responded to every change he made — not an uncommon scenario. At the end of that process the product was terrible, because it didn’t meet the needs of the customer.
After building a product that no one wanted, he had blown all his seed money and he came to me looking for more. I had to confront him with why he was in this situation: ‘Your product is terrible; it doesn’t meet the market need. You won’t get any more funding.’
Basically, his startup went out of business the very next day, which of course had a huge personal impact on him.
His mistake was that he’d spent all his time and money on building an app without any blueprint, without a value proposition, without a business model, and certainly without a prototype. He’d spent hundreds of thousands of dollars on outsourced developers, ...