I have worked with various startup  and upstart  companies and provided the help they needed when it came to building products that satisfied the consumers. Some of the products would barely make it through to launch, while others simply fell into an abyss. After years of observing the rise and fall of these startups, I decided it was time for me to share my two cents on how things could possibly go wrong and how one could avoid some of these pitfalls.

 

First things first, technology is everyone’s business. Everyone involved should have ownership and think that technology is their business, not just their vendor’s or IT department’s.

 

Being a technologist myself, I have seen enough bloodshed (in boardrooms and corner offices) of stakeholders battling through their stakes. Don’t get me wrong, we all advocate agile and lean development and most definitely love the startup culture! However,  large enterprises are increasingly becoming more sensible and goal-oriented. They ensure that only the best ideas and people make it through to the top.They also make sure that these people have the needed ‘muscle’ to perform well and stay at the top. I agree that venture capitalism has turned the tables in the startup landscape. We have people everywhere who have millions in funding, bloated egos, spreadsheets and some kinda eternal, almost delusional, optimism.

 

My point here is, building a company or product requires one thing above all else: Commitment. Not just personal or organizational commitment, but most importantly financial commitment. Here’s the catch: Other industries seem to have this correct already, but the tech industry is still lagging behind. It failed to put the label in the packaging, so to say. Technology (hardware and software), like any other thing in the world apart from Tom Cruise and Angelina Jolie, is perishable. Software and products are something that you “produce” like a car, or fruits and vegetables; no matter how well you build or produce it, it will wear and tear. The hard part is, a fruit rotting is a normal sight for people. Same goes for a car creaking and needing an oil change, but software? Once it reaches its critical level of ‘perishability’ it goes unnoticed. Software is not a tangible asset. You can’t see it wear and tear over time. Well! It does. And not just that, it expires! If software does not get the care that it needs, its shelf life is shortened. Larger "Software companies" have a good understanding of this process. This is the very reason why they have an army of developers ready to fix, patch, and constantly work on bugs for their projects. Its pretty much the same as how there’s bunch of workers running a steel plant. Imagine spending all your money in building a massive steel plant, and then running out of money before you can even start production. Or maybe you had just enough to start production, but ran out of money before figuring out your supply chain, distribution channel and maintenance costs. Many startups and products find themselves in the later situation.

 

So, before you set out on building your next billion dollar idea, take a pause and do this math. Below is a simple homegrown formula that can help you ‘make your cake and eat it too.’

 

Assuming some values:

 TechBusinessCharts-2TechBusinessChart2

Disclaimer: This is just a sample computation. The prices indicated here are fictional and do not reflect actual pricing.

 

In the sixth month, assuming you have 10,000 to 12,000 paying customers, each spending at least $5 to $8 on your product every month (netflix makes $8 a month, so you better build something freakin’ awesome!),  you would be making enough to support the product.

 

But if you need to get there, you need 6 more months of runway, apart from the development cost. So, your cost to reach a state where the product can support itself is not the cost of building the MVP, but the cost to build, support and market the MVP till that time comes. Many companies factor in the cost of marketing the product and acquiring customers, but what they miss is the crucial delta amount required to support the product until the time comes where  it has the ability to support itself.

 

Based on the above computation you can determine how much money you need apart from just the development cost to get your business going online. In short, “For keeping it real!”

 

These are the very reasons why startups (corporations and enterprises too) should look for a technology partner that understands this thoroughly. Your technology partner should help you gather this data, process it, and then figure out the product roadmaps in order to create a rollout strategy. They should take into account the extra runway you need to make sure your idea takes off. The good thing is, you’re right where you need to be! Webonise has a team of highly experienced consultants and execution experts that can help you get this right. Your success is our ulterior motive! Feel free to reach out to us, here at Webonise, if you have any further questions about this topic!