Founder’s awareness about the idea, product, and the market
All founders agree that significant innovations begin with great ideas delivered to a substantial market with a great product. On the other hand, it’s not easy for founders to have these elements aligned before their startup die. According to Michael Dearing, lecturer-investor at Harrison Metal, founders need to be screaming across these three stages.
Before we dive into these ideas, let’s visit an entrepreneurial story from the end of the 1800s:
According to historian Maury Klein, John Fitch invented the steamboat as a service — the product and the concept. But he didn’t have time to see the transformation happening to everyone because his invention didn’t develop as a business. Nevertheless, his product was launched in the summer of 1790, when prospect passengers met a 60-foot steamboat named Perseverance.
“Fitch advertised the service heavily and the boat performed admirably — going five hundred miles before suffering mechanical problems — but the passengers did not come. In desperation, the partners offered free food and drinks on board, but every voyage continued to lose money. What had proven to be technological triumph turned out to be a commercial failure, and the service was abandoned after that first summer. His investors backed away, and Fitch eventually found himself nearly penniless once again. “ — Maury Klein, The Power Makers, Steam, Electricity, and the Men Who Invented Modern America
Fitch impacted history and was credited as one of the inventors of the steamboat. But the story shows that he wanted a commercially successful steamboat, a successfully implemented solution by another entrepreneur, Robert Fulton, about 15 years later.
Robert Fulton, on the other hand, was a bit less inventor and more of an assembler. Working with his co-founders, he was able to focus on the service — not inventing a steamboat.
Productizing an idea depends on many factors such as vision and engineering capacity. But it won’t necessarily mean your target customer is ready to accept the proposed version. And even if they are, it does not mean that all the forces in the future will favor your product to enter and sustain itself in the market.
For Michael Dearing, lecturer and investor at Harrison Metal, founders should evaluate themselves and understand the differences between coming up with an insight, developing a product, and developing a whole business:
First you have to have an insight, a technical insight. Second you have to turn that insight into a product, and third you have to, hopefully God willing, turn that product into a business.
Those are about as different sets of pursuits with very little in common with each other. And so if you energized by the idea of coming up with a technical insight and then moving to productization and then moving to the business building phase, that journey will be satisfying and exciting to you.
The reality check is difficult, specifically for highly passionate entrepreneurs, as they can well be in love with their own stories or if they are in the middle of the battle:
If you find yourself totally in love with the technical insight manufacturing process, that is a real problem. And then you end up having science projects, not companies. If you find yourself endlessly prototyping and tinkering with the product without regard to the business economics, then that’s a warning flag as well. (Michael Dearing, Greylock Partners, October 2015, 47:47)
Entrepreneurs need to improve awareness of how they operate to be able to navigate these stages:
I think you have to be energized. In today’s market where the expectation is that if you’re onto something, you’re not just moving from these stages, you are screaming across those stages.
You have to be willing, in the earliest days, to see yourself as — okay we’re in technical insight mode, in a month we’re gonna be productizing, we’re gonna be worried about business economics shortly thereafter. (Michael Dearing, Greylock Partners, October 2015, 47:08)
I hope this article can serve as an opportunity for you to reflect, especially if you are a founder. Keep in mind that each of these dimensions of thinking may not be exactly in sequence.
References
Michael Dearing. Greylock. (2015, October 8). Blitzscaling 03: Michael Dearing on Capitalism, Creativity, and Creative Destruction [video]. Retrieved from https://www.youtube.com/watch?v=3vCdfa_aeI8
Klein Maury. (2008). The Power Makers: Steam, Electricity, and the Men Who Invented Modern America. Bloomsbury Press.
