- We are going to create software that people need and want.
- We are going to roll this software into a stand-alone business or we are going to sell the technology and/or company.
- Our primary customer contact is through the internet. This is also our primary distribution channel.
Focusing on these things allows us to leave out a lot of issues about manufacturing, distribution and sale.
A key part of our process is the continuous validation of our assumptions. We are continually trying to replace uncertainty and risk with knowledge and experience.
Parts of a software startup
There are three main parts to a software business:
Each of these needs attention and needs to be continuously expanded as we develop our startup.
Of these three the market is the most important. For people coming from a software background this is frequently the weakest point. If there is no market for our product, there is no business. Done, over, go home. The most elegant technology in the world will not make money if there is no market.
The search for markets and the understanding of markets can be a guide to opportunity. Understanding a set of customers can reveal pains that they will pay to have relieved. Understanding customer pain can reveal an opportunity to apply technology.
Too many startup books treat the market as if it were the whole problem. This may be true if you want to start a flower shop. In the software business, technology is very important. Because software can flow so rapidly into almost any useful niche, your technology is your key strategic advantage. If you do not have a technology advantage, many market opportunities do not reveal themselves. Until the iPod and iTunes technologies were created, there was no serious market for downloaded music. The need was there but it required the technology to open the opportunity.
Opportunity = Market + Technology
In many cases opportunity comes from an innovative technology applied to a market. A technical innovation accompanied by an insightful market search can lead to opportunity.
Operations are the nuts and bolts of running a business. There are contracts, facilities, computers, personnel, payroll and a variety of other things. A great opportunity can be squandered by ignoring the operations of the business. Many start-ups are crippled by early inattention to how stock is allocated or realistic budgeting. If the trains are going to run on time, somebody must be watching.