Emergic: Rajesh Jain's Blog

Emergic: Rajesh Jain's Blog header image 2

TECH TALK: The Best of 2005: Entrepreneurship and Management

December 22nd, 2005 · No Comments

15. Paul Graham on Startups

Paul Graham had an excellent essay on How to Start a Startup in March. He began: You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.

This is what Paul wrote on customer needs:

In nearly every failed startup, the real problem was that customers didn’t want the product. For most, the cause of death is listed as “ran out of funding,” but that’s only the immediate cause. Why couldn’t they get more funding? Probably because the product was a dog, or never seemed likely to be done, or both.

When I was trying to think of the things every startup needed to do, I almost included a fourth: get a version 1 out as soon as you can. But I decided not to, because that’s implicit in making something customers want. The only way to make something customers want is to get a prototype in front of them and refine it based on their reactions.

The other approach is what I call the “Hail Mary” strategy. You make elaborate plans for a product, hire a team of engineers to develop it (people who do this tend to use the term “engineer” for hackers), and then find after a year that you’ve spent two million dollars to develop something no one wants. This was not uncommon during the Bubble, especially in companies run by business types, who thought of software development as something terrifying that therefore had to be carefully planned.

How do you figure out what customers want? Watch them. One of the best places to do this was at trade shows. Trade shows didn’t pay as a way of getting new customers, but they were worth it as market research. We didn’t just give canned presentations at trade shows. We used to show people how to build real, working stores. Which meant we got to watch as they used our software, and talk to them about what they needed.

16. Andy Grove Story

Intels Andy Grove is one of the best CEO role models we will ever find. In a November issue, Fortune had a story by Harvard historian Richard Tedlow on the education of Andy Grove.

Normally, our society observes a division of labor. Musicians don’t critique, and critics don’t compose. Quarterbacks decide on Sunday, and fans deride on Monday. It is the singular ability to inhabit both roles at oncesubject and object, actor and audience, master and studentthat sets Grove apart. And it’s why, for everything that has been written by and about him, we have yet to appreciate his biggest legacy. Andy Grove is America’s greatest student and teacher of business.

By analyzing the decisions he made on the road to becoming a great leader, you can learn to hone your own leadership skills. Because there’s no gain in being able to recruit great employees, handle a board, dazzle Wall Street, or rally your cavalry for a glorious charge at dawn’s early light if you haven’t figured out which way to point the horses.

What can others learn from Grove’s odyssey? As we face a future where change is not only constant but accelerating, reality will transform itself more swiftly than most humansor most companiesare hard-wired to handle. Even startups that overturn one reality are easily overturned by the next big change. Grove has escaped natural selection by doing the evolving himself. Forcibly adapting himself to a succession of new realities, he has left a trail of discarded assumptions in his wake. When reality has changed, he has found the will to let go and embrace the new.

Tomorrow: Moreover


TECH TALK The Best of 2005+T

Tags: Tech Talk

0 responses so far ↓

  • There are no comments yet...Kick things off by filling out the form below.

Leave a Comment