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If you’re a business person with an idea you better have a go-to-market strategy

2012 March 10
by stefann

“Sure, I’ll build your product idea! But then what!?”
- myself

For the past two years I’ve been attending a variety of networking events that bring together those with an entrepreneurial mindset in technology and design. Whether it was Ignite NYC, DukeGEN at Dogpatch Labs, Lean Startup Seattle, or Founder Dating events have a networking component during which people either naturally or explicitly label themselves as business types or technology types.

Of course, that’s a gross generalization and there are many variations in between. FWIW, I believe there should also be a designer label and I don’t mean visual or interactive design, rather overall design as in “Steve Jobs the designer”. I, myself, am the tech type (aka hacker, per the original meaning) having spent just over 20 years of my life, since I was 11, in front of a computer for an average of six hours a day, learning and building  things.

In preparation for my second startup (I failed for multitude of reasons in my first one) my top priority is to assemble a good team of founders. After all, if I’m gonna suffer, I might as well commiserate with worthwhile individuals that I respect and have fun working with :-). So when I attend networking events I have an open mind and an open heart and I really do wish to make connections with cool peeps.

The general consensus is that there’s a shortage of dev talent who could fill the role of a technical cofounder. But the way I see it there’s just as much of a shortage of business talent. Everyone is so mesmerized about building a product they forget about any kind of business planning all-together. It’s true, traditional business plans are worthless, but that doesn’t mean you don’t need any business strategy at all.

In a  typical interaction, I get talking with someone who wears a business label and we exchange ideas and interests. When I probe further on their idea and ask what the next step is and where they need help, invariably the answer is “I need a good dev to build this thing”. Which leads me to believe their mental model of a business is

Good business = idea + dev
- or a slightly better version -
Good business = idea + dev + visual/interaction designer
- both of which are wrong -

If you haven’t heard it from Yoda, let me recount it for you:

“Ideas make not a good business person! Ideas make an idea person (whatever that is).”
- maybe that was Fake Grimlock, not Yoda :-)

So allow me to dispense this plea/advice: if you solicit (unpaid) help from a technical person to build your idea please please recite some sort of business strategy along with it. Otherwise, you don’t come across as an equal contributor. You might be willing to give away 25% or even 50% of your company, but there’s not much value to a business without go-to-market strategy so it’s effectively worthless. I’m not referring just to the strict marketing definition of the term, but to how you acquire customers for less that their lifetime value addressing the peculiar early adopter stage of the startup during which customers have zero lifetime value because you’re effectively running a giant experiment. You have to bring to the table either the go-to-market insight or the design insight. If the tech cofounder is providing those insights they can just raise the money and hire you as the bizdev manager.

Of course, I don’t expect the business person to have a perfectly laid out multi-year strategy and that would probably be the wrong approach anyway. As Mr. PG says:

[...] the way to use these big ideas is not to try to identify a precise point in the future and then ask yourself how to get from here to there, like the popular image of a visionary. You’ll be better off if you operate like Columbus and just head in a general westerly direction.
- Paul Graham, Ambitious Startup Ideas

I also don’t expect the proposer to disclose all details of their strategy to the dot. It very well may involve aspects they consider confidential. All that can come later, but please, offer something!

If your idea is for a consumer  product tell me about your contacts with influential connectors and how a writer with a newspaper or a blog owes you a favor. Or how you host the equivalent of today’s Tupperware Parties and you can use that to seed early adopters until we have a marketing budget. If your idea is in healthcare tell me about the administrative costs of a small medical practice or a hospital and how pitching the product as a cost saving will open those doors.

If you want to build something with music, talk to me about licensing challenges and how your connections with indie band managers will allow you to feature good music before you get licensed by the big labels. If you want to build something with fashion or retailing talk to me about how you know how to pitch to a department store buyer. Those skills and that knowledge is what makes you a good business partner, not the product idea by itself. The fact that you lack coding skills does not make you a business person and neither does having a product idea.

I’ll be honest: I don’t know off the top of my head how to build a database that scales at the size of today’s Facebook nor a video distribution service at the scale of today’s YouTube. But I can show you and talk to how I’ve been able to incrementally improve products I built over time to match business needs and how not only I can build your product idea, but I can scale it as we grow.

Similarly, I’m not expecting you to be a rainmaker and close enterprise accounts in a week or be invited on Oprah, but at least tell me a nice story that shows me you have some thoughts on what to do with my work after I’ve put so much blood, sweat, and tears into building it, so we can make money!

Thank you!

P.S. It goes without saying that I’ve also met some kick ass folks who just dominate when it comes to understanding their industry. Kudos to you ladies and gents!

4 Responses leave one →
  1. March 13, 2012

    Amen.

    I would only add that a basic understanding of code is a fundamental literacy if you’re going to build a web businesses. If the biz guy can’t use unbounce to throw up a landing page and test some marketing channels, it’s a non-starter.

  2. March 15, 2012

    Great post. Completely agree. In many cases it could even go a step further. I believe the business person can begin to prove their go-to-market strategy without developer parters. If its a consumer web app — does the person have access to a pool of users in the target audience willing to give feedback. If its a b2b product have you tried to build a list of organizations with interest (who may still say — i need to see it to tell you if I’d try it).

  3. April 26, 2012

    Such a great article – I like your style! It looks like that you’ve burned yourself once or twice … :-) I wish all “developers” saw the world this way. I truly believe that real entrepreneurs could do all (3/4/5?) roles and build the business up to success if they could scale or clone themselves. Nice post & thanks for sharing.

  4. Ghardin permalink
    May 7, 2012

    I see the point you are making but it seems a bit, “let’s bash the biz guy because he doesn’t understand code” to me. I see the two as two sides of the same coin. I’m the biz type with passion to sell and build as you do for coding and building. Just because we can’t code doesn’t mean we can’t interpret what you are doing that results into a round of investment. Most of the time, as I have seen, people buy the vision of what is to be because they want to be in the early stage. Yes, almost all VC’s greatly understand what a coder is “trying” to say/sell but the dumb ole biz guy knows how to put the needed hook in to set the deal.

    I’m sad to hear the biz guy vs. the code guy attitude. We both need each other to bring the whole thing together. If you overlook a co-founder because he doesn’t understand code then don’t expect him to explain market cap or business functions 101 to you. You could be just as lost in financial prospectus’ as he is with coding… But, I bet because he knows he needs you as much as you do him, he will gladly take the time to make sure you know the basics so you don’t get raped. After all, that would just be bad business and detrimental for the entire start up. Wouldn’t you agree?

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