Robert Saric

Silicon Valley super-VCs, Fred Wilson and Ben Horowitz, both agreed that, “entrepreneurs should build the product that everybody wants, then raise enough money to build the company.” This may seem like yet another over-simplification but I believe the point to note is that “building a business” should be recognized as a separate, distinct challenge.   I asked this question on LinkedIn and 22 well thought out answers later resulted in some very powerful points.  I would like to share a few of them with you. Here are 5 of the more notable answers below (sorry, some of them are a bit longer).

1.  If you have good people with good skill you can build the business

Veronika Gultom, Business Intelligence Consultant & IT Software Specialist

Agree,  if you can expose the capability of that product to customer and if you have people with good skill and knowledge to implement that product.

Sometimes good product that everyone wants cannot be implemented because of no one can show the capability and proof that it is a good product everyone needed.

2. You need both a great product and a good way of getting it out there

Heather Vitaglione, Tutor, Translator, Editor and Writer

Is this the 21st century version of Ralph Waldo Emerson’s technique of building the better mousetrap and having folks beat a path to your door?

I think that you need both a great product and a good way of getting it out there. Let’s see. I worked in a branch of IT that made a good product but the bells and whistles version wasn’t necessary or user friendly enough to be adopted. I think that even though everyone might want a product, they have to be willing to pay a good price for it. You have to consider the competition as several others have commented on.

If you create a fuel efficient car and think that everyone’s going to want it, you haven’t contended with the mentality of many people who figure that freedom means buying the biggest flashiest gas guzzler on the market.

I say both views must be considered.

3. Often the bold visionaries shape the future to make the potential customers see the need

David Saintloth, Chief Software Architect, Apriority

This can work but recall that revolutionary services often spring whole cloth out of no where to create solutions between technological bridges that no one ever saw. Twitter is a perfect example of this, it was a solution looking for a problem…and found that “problem” in the form of an easy way for entertainers, sports stars and media figures to interact with their fans, to feed and receive late breaking information…to shape the conversation of their brand in a way that was not possible, barely imagined before micro blogging services came along.

Many businesses today are built on ideas and theory that were mere curiosities in the past and now are the foundations of entire lines of business. Could Fourier and Laplace have forseen the use of their mathematical tools inside communication devices and art creation programs (photoshop). Could Einstein see the light emitting diode and the modern digital camera photo sensor that came out of his explanation of quantized light via the photo electric effect 105 years ago? Those are distant examples but it just goes to show that an idea without a need today doesn’t mean a huge one will be satisfied by that idea in the future. Often the bold visionaries shape the future to make the potential customers see the need and the ones that succeed are the businesses that tend to have extreme success.

4. Building a business around one product is a very risky idea

Andrei Kolodovski, Entrepreneur, Investor

1) Product and company building are closely related and iterative processes, impossible to separate;
2) Product always evolves as new information comes in from the interaction with the customers and markets;
3) Many products require venture capital to build, even to the working prototype stage;
4) Building a business around one product is a very risky idea. I would rather build it on an intellectual platform allowing multiple products and markets.

5. Without this evidence, nobody will invest

Mike Van Horn, Author of “Grow Your Business without Driving Yourself Crazy”

If you don’t have a workable product, then you cannot demonstrate that everybody wants it. Without this evidence, nobody will invest in you.

Creativity and innovation are hard; building a business around these is much easier (though still difficult). Creativity and innovation are rare, business skills are much more common, investment capital is plentiful. But investors want strong evidence that you can give them a 5x return.

Thus most businesses are initially self-funded, or rely on “3F funding”: family, friends, and fools. You go into hock to build your prototype and see if you can generate some market buzz. Then you go after angel or VC backers. You get some seed capital, do more marketing, produce more results, then go after 2nd round financing.

You build stepwise in this manner. You hire only those who are essential to get your product to the next level.

Pre-dot-bomb and pre-”great recession” rules were much different, but this is 2010, and investors hold their cash with an iron fist.

I’d love to hear your 2 cents on this topic.  Is this the way lean-startups are going to live and die?  If you want to read all the responses on this LinkedIn thread, go to this link.   Do you agree or disagree?