As the owner of a software development company, I have the opportunity to speak with a lot of entrepreneurs about their product ideas. More often than not, they have grand ambitions – ideas for features and enhanced user experiences, and a list of reasons why their product idea is so much better than anything out there that currently exists.
As an entrepreneur myself, I always appreciate this enthusiasm.
But when I ask some variation of, “how will it make money?” or, “Who will pay, how much, for it?”, it becomes clear to me that there’s far less clarity about the business than there seems to be about the product.
Find the Customer First
My advice to these entrepreneurs is often to stop looking for developers and, instead, focus on figuring out who will buy the product and how much they’ll pay for it. Free is not a business model.
Finding customers is hard. In many ways, it’s harder than building the product. Markets are crowded, people are busy, and other things are more important to them than your idea.
But without customers, there is no cash. No cash, no business. And if there’s no business, there’s no need for a product. The product is a means to an end (a viable business), not an end in and of itself.
No Product, No Problem
Products – especially early stage products – should solve a specific problem for a specific customer, who has the means and ability to pay. This seems to present a chicken/egg problem – if I have no product, how do I get customers? If I have no customers, how do I fund a product?
The answer is to find the right customer for an early stage startup. To do this, concentrate on identifying the right problem and selling the vision for how you can solve it.
Ideally, you get some early stage commitments or contracts that provide some revenue. Less ideal, but still good, is you get laser-clear focus on the specific problem that needs to be solved for a specific customer. In this case, you can bring clear direction to your development team and they can start working on the product while you focus on selling it.
In either case, you gain more confidence in the answer to the question, “how will you make money?” , more confidence in the appropriate features your product needs, and will be on the first step towards building a business, not just a product.