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Process – How to Build a Startup

Process – How to Build a Startup


What did we use to believe on how you physically build a startup? What was the process we used? We used to build startups by managing processes. We said, “Well hey, we understand how to build products.” We built them exactly like we built them in large companies. We hire product managers, and we do something called waterfall engineering, which I’ll explain in a second which basically are step by step by step. In fact, what we used to do is we used to draw this diagram on napkins. We used to say, “Well you come up on a concept then you raise some seed funding and then you go into product development, and then you have alpha test, beta test, and first customership. What could be wrong with that? In fact for 30-40 years this was the canonical model for how to build startups and we’d say marketing, well, we understand. While engineering is developing the product, marketing is creating all the marketing communications material, hiring a PR agency, and creating early buzz and then from marketing the world’s most fun job was have the party. You get to create demand by having a launch event and you think about branding and your job really was to create end-user demand and derive it into the potential sales channel. For sales, what that meant is unless the VP of Sales was the founder you tended to hire them around the time engineering were saying, “We’re in alpha and beta test.” And they we’re going out and starting to hire their first sale staff and they were looking at your 5-year revenue plan and since it obviously came from a burning bush and it was the word of God they were just going to execute that plan. Why? Because it’s said so and you said so and if you had investors they said so. There might not be any facts behind it but there it was. It was the spreadsheet. And so they were building the sales organization so again and at first customership, if marketing was going to drive demand they were jut going to have a sales curve that took off because the revenue plan said so. The next piece was the Bus Dev. In business development used to mean the group that put together all the deals to create the whole product. The whole product meant startups just because of their size are incapable of creating all the features and services, etc., that a mainstream customer might need. So why don’t we hire business development people to do partnerships. So at first customership we could look like a large company for mainstream customers. The only fallacy in this is that you assume that your first customers are going to be in the mainstream. It turns up for most startups your first customers are actually crazy people like you and so therefore creating this entire cloud of deals are actually useful a year after first customership but in fact just get in your way on day one. The other piece is engineering, and engineering–how simple could that be? It was understood. We did exactly what we did in the large corporations. You wrote a market requirements document then engineering shut their doors, rolled up their sleeves, and went into waterfall engineering, which we’ll describe a little later. You hired a QA department then at the end finally when it was all done you hired a tech pubs department and all the products were ready to go in version 1.0. All the features at one time at first customership. And this for 30 or 40 years was the way we thought about startups. There can be no other way. This is how we manage the process. We now know these are just simply wrong and I’ll explain to you what we’re going to do instead.

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