Reality Check on the Idea, the Product, and the Market
According to Michael Dearing, Silicon Valley investor and entrepreneur, these three components needs to be aligned in order for a start-up to become a company. But before we get to Michael I went back in time a bit more to explore these factors…
From an idea to the product, and towards market innovation, there is a gap that can be huge. This gap is beautifully depicted by historian Maury Klein in the passage of John Fitch, an American known for successfully inventing the passenger’s boat; when he finally achieves the milestone of launching Perseverance, a 60-foot steam boat put at service in the Delaware river in the summer of 1790.
“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
The good news is that Finch have impacted history and was successfully credited as one of the inventors of the steamboat. However, he aimed to develop the commercially successful steamboat, a service credited to another entrepreneur, Robert Fulton.
In case you are interested in this history, you will see that Robert Fulton was a bit less inventor and more assembler. Working with his cofounders, his goal seemed more towards launching the service and not inventing a boat. You will also notice the difference in age, about two decades and range of about 15 years from the launch of Fitch in contrast with the launch of Fulton.
While productizing an idea is driven by certain elements, such as feasibility, insight, vision, and more; it won’t necessarily mean your target customer is ready to accept the proposed version. And even if they are, it does not necessarily 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, for the modes of operations needed at all stages, and the rules for moving among 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)
For Brian Chesky, Airbnb cofounder, “every six months is a totally different job”. Combining Brian and Michael is like saying that the story needs an arc: From idea, to the product, then to the market; at the same time the protagonists need to be aware of the rules of engagement amidst the battles going on.
Indeed these are opinions that applies “when you are onto something” as noted by Michael Dearing. However, the same arc-story can be also a metric for validating the heartbeat for your story: Do you see your team constantly looking at these different battles? And even more, as you create friction into the world, do others stop what they are doing or react to the tiny little movements from your business?
Klein Maury. (2008). The Power Makers: Steam, Electricity, and the Men Who Invented Modern America. Bloomsbury Press.
I hope this writing can give you an opportunity for reflection, about entrepreneurship and learning. In case you like or dislike, please support via smiling, subscribing, claps, commenting, visiting the Startup Check-in Home, or writing to me at mgalli at mgalli dot com.