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I’m seriously stumbling over the description of phases I and II. Wait, this is a startup that doesn’t have a strong product vision from day 1 and isn’t aggressi

I’m seriously stumbling over the description of phases I and II. Wait, this is a startup that doesn’t have a strong product vision from day 1 and isn’t aggressively iterating to find product market fit? Here’s a tell tale sign that you have product market fit - your product is buggy and sucks and your customers constantly complain and demand more improvement but they can’t give you up. They need to pay you because you serve a need they can’t or wont find somewhere else. The customer needs a bespoke feature that really only they will use and isn’t general to anyone else? Is the founder team disciplined enough to say no and focus on what really adds value? Sure, they would love for you to be a cheap outsourced dev shop, but that’s why your CEO needs to push back and sell the vision of the company. Phases 1, 2 and 3 are backwards. Why is the startup trying to be a consulting company? This doesn’t sound like the story of any visionary startup I know of. It sounds like a group of developers who can make a profitable software consulting company trying to pivot to making a product. IMHO a startup can be really dysfunctional in its dev process and management and still succeed, if they find product market fit first.

hyperpape 5y ago
He says this is common to pre-SaaS companies. So he's mostly describing companies started at least a decade ago, perhaps two or three. However, the problems he describes can easily affect enterprise SaaS companies in a niche. If your market literally has a few thousand potential customers, you could end up in a situation where onboarding a big new customer is a double-digit percentage of your current revenue. At that point, it doesn't matter if you're a SaaS or not, you're gonna feel the pressure to do things for the sake of them.
throwaaskjdfh 5y ago
> Why is the startup trying to be a consulting company? This doesn’t sound like the story of any visionary startup I know of. Why does a successful software business need to be a "visionary startup"? Taking on consulting work and discovering the product by listening to customers seems like a reasonable approach.
- landryraccoon 5y ago
  What are the biggest success stories of consulting businesses pivoting to product based companies? I can't think of any off the top of my head.
  - lixtra 5y ago
    Basecamp? SAP?
    - andrewlgood 5y ago
      Definitely SAP. If you believe the movie, Facebook. Trello/Stack Exchange (Foghat)
      - throwaway9980 5y ago
        Mailchimp
      - progre 5y ago
        I belive you mean Fog Creek. Foghat is a blues rock band.
        andrewlgood 5y ago
        Ha. You are correct
  - panchicore3 5y ago
    Salesforce?
  - el_dev_hell 5y ago
    Atlassian
jldugger 5y ago
> Wait, this is a startup that doesn’t have a strong product vision from day 1 and isn’t aggressively iterating to find product market fit? You don't see "strong product vision" and "iterating to find product market fit" as contradictory?
- atoav 5y ago
  As someone who spent half his life in the world of (physical) product design: to me this sounds incredibly contradictory. A "strong product vision" is a bad thing when you are "iterating to find product market fit", because most people tend to be unable to kill their darlings and do what is needed to achieve said market fit. If your "strong product vision" is really as strong as you believe, it should already contain an idea which market and target group is ideal — or if it is a really genius idea, this won't even be necessary because it will create it's own market.
  - emteycz 5y ago
    Perhaps it's a vision of e.g. technology which could be applied in many different verticals? I can see the founders having a clear product idea but having to find its specific applications on the market... E.g. let's say you make a database and then you begin looking for companies that need your specific favor of database; then there could be customization for specific customer needs too.
- iovrthoughtthis 5y ago
  depends on how you understand vision i guess. imo vision is “how is your customers world going to change as a result of using your product?” not “this is precisely what the product will look like”.
- mehphp 5y ago
  This made me scratch my head too. I see so many startups come up with an idea/product and then try to make it fit in the market. That is completely backwards; you need to find a problem that the market has and create a product that solves that.
sgt101 5y ago
Back to money flows I think - if your business has significant venture backing then your view about it is correct. The driving force in the business will be to satisfy the investors, not the early customers. Many businesses are not like this though - they start out as a consultancy gig gone good and then scale up from there. Investment comes from a workable functioning business in these cases. A new investor isn't going to be hugely interested in "vision" but much more in "the business" - what is the potential for selling more of the same?
Closi 5y ago
> Sure, they would love for you to be a cheap outsourced dev shop, but that’s why your CEO needs to push back and sell the vision of the company. The issue with this is that it means your software won’t meet that clients requirements. If you want to go into the enterprise space early rather than pivot their later, you can’t start by point blank refusing requirements from your first big client - particularly as you don’t know what customers want yet (or more accurately - your customers are telling you but you are saying it doesn’t meet your vision). The problem is that if you want to break into enterprise and aren’t willing to make things bespoke, it probably means that your MVP is going to be huge for certain types of software. This isn’t a rule for all types of software and things like infrastructure provisioning / internal IT tools are different - but I can see where he is coming from. It’s also different in terms of selling to the SMB or consumer market, where the requirements will either be less-varied (consumer) or the customer will generally sacrifice a lower match to their functional requirements to save cost (SMB). This of course depends on how mature the market is, and in a mature market the MVP gets bigger (for example, word processors).
- wayoutthere 5y ago
  One of the biggest mistakes you can make as a founder is to go after enterprise B2B without understanding it. Companies in this space are usually not willing to buy a half-baked product. Corporate procurement doesn’t like buying from vendors without a track record. The hardest part is getting your first client — which is why SMB is the typical entry point. The only companies I’ve seen be successful starting with the enterprise have older founders who have spent a decade or more working in the industry and already have the professional network and clout to reach their buyers. Without that professional network and a track record of delivering, you’re not going to make it past the front door. And in these types of environments, consulting / maintenance absolutely must be part of the business model. Your customers will demand it (or at least demand you have SIs lined up as implementation partners).
  - Closi 5y ago
    Totally agree. The difference in 'enterprise-level' software often is configurability and the ability to meet client needs without being totally custom (although even for the biggest, most feature-rich enterprise software, most implementations will still require custom development. Often the problems 'enterprise software' solves aren't overly difficult, and if every company worked the same way it would be trivial to write the software, but the issue is that every company is different, and building everything custom isn't scalable or supportable.
hamilyon2 5y ago
No, this is more fundamental than that. This customer-revenue-project-tean relation and habit holds true even if we have vision and understand direction and have strong leadership. In this case, your customer is more abstract, it could be a million people using your, maybe free, or maybe "pay once" product, physical or digital. But then you seek another market because management realises that your product will sell to different market, completely different million of people. But that will take new development. Team 2 is born. It is a project in a sense that this team works with one single goal in mind: get the project off the ground and start selling it. This doesn't look like consulting company at all, but the problems are the same: technical debt, maintenance, shared code, and eventual rewrite and platform.
lifeisstillgood 5y ago
I want to add this to the wit and wisdom of Hacker News book. The product market Fit thing is just right.
nemetroid 5y ago
I don't understand if you have a contention with the article, and if so, what the contention is. You say that this "doesn't sound like the story of any visionary startup [you] know of", but the article never makes the claim that this is a successful path to go down - it is very clear that this is a failure story.

hyperpape 5y ago

He says this is common to pre-SaaS companies. So he's mostly describing companies started at least a decade ago, perhaps two or three. However, the problems he describes can easily affect enterprise SaaS companies in a niche. If your market literally has a few thousand potential customers, you could end up in a situation where onboarding a big new customer is a double-digit percentage of your current revenue. At that point, it doesn't matter if you're a SaaS or not, you're gonna feel the pressure to do things for the sake of them.

throwaaskjdfh 5y ago

> Why is the startup trying to be a consulting company? This doesn’t sound like the story of any visionary startup I know of. Why does a successful software business need to be a "visionary startup"? Taking on consulting work and discovering the product by listening to customers seems like a reasonable approach.

landryraccoon 5y ago
What are the biggest success stories of consulting businesses pivoting to product based companies? I can't think of any off the top of my head.
- lixtra 5y ago
  Basecamp? SAP?
  - andrewlgood 5y ago
    Definitely SAP. If you believe the movie, Facebook. Trello/Stack Exchange (Foghat)
    - throwaway9980 5y ago
      Mailchimp
    - progre 5y ago
      I belive you mean Fog Creek. Foghat is a blues rock band.
      - andrewlgood 5y ago
        Ha. You are correct
- panchicore3 5y ago
  Salesforce?
- el_dev_hell 5y ago
  Atlassian

jldugger 5y ago

> Wait, this is a startup that doesn’t have a strong product vision from day 1 and isn’t aggressively iterating to find product market fit? You don't see "strong product vision" and "iterating to find product market fit" as contradictory?

atoav 5y ago
As someone who spent half his life in the world of (physical) product design: to me this sounds incredibly contradictory. A "strong product vision" is a bad thing when you are "iterating to find product market fit", because most people tend to be unable to kill their darlings and do what is needed to achieve said market fit. If your "strong product vision" is really as strong as you believe, it should already contain an idea which market and target group is ideal — or if it is a really genius idea, this won't even be necessary because it will create it's own market.
- emteycz 5y ago
  Perhaps it's a vision of e.g. technology which could be applied in many different verticals? I can see the founders having a clear product idea but having to find its specific applications on the market... E.g. let's say you make a database and then you begin looking for companies that need your specific favor of database; then there could be customization for specific customer needs too.
iovrthoughtthis 5y ago
depends on how you understand vision i guess. imo vision is “how is your customers world going to change as a result of using your product?” not “this is precisely what the product will look like”.
mehphp 5y ago
This made me scratch my head too. I see so many startups come up with an idea/product and then try to make it fit in the market. That is completely backwards; you need to find a problem that the market has and create a product that solves that.

sgt101 5y ago

Back to money flows I think - if your business has significant venture backing then your view about it is correct. The driving force in the business will be to satisfy the investors, not the early customers. Many businesses are not like this though - they start out as a consultancy gig gone good and then scale up from there. Investment comes from a workable functioning business in these cases. A new investor isn't going to be hugely interested in "vision" but much more in "the business" - what is the potential for selling more of the same?

Closi 5y ago

> Sure, they would love for you to be a cheap outsourced dev shop, but that’s why your CEO needs to push back and sell the vision of the company. The issue with this is that it means your software won’t meet that clients requirements. If you want to go into the enterprise space early rather than pivot their later, you can’t start by point blank refusing requirements from your first big client - particularly as you don’t know what customers want yet (or more accurately - your customers are telling you but you are saying it doesn’t meet your vision). The problem is that if you want to break into enterprise and aren’t willing to make things bespoke, it probably means that your MVP is going to be huge for certain types of software. This isn’t a rule for all types of software and things like infrastructure provisioning / internal IT tools are different - but I can see where he is coming from. It’s also different in terms of selling to the SMB or consumer market, where the requirements will either be less-varied (consumer) or the customer will generally sacrifice a lower match to their functional requirements to save cost (SMB). This of course depends on how mature the market is, and in a mature market the MVP gets bigger (for example, word processors).

wayoutthere 5y ago
One of the biggest mistakes you can make as a founder is to go after enterprise B2B without understanding it. Companies in this space are usually not willing to buy a half-baked product. Corporate procurement doesn’t like buying from vendors without a track record. The hardest part is getting your first client — which is why SMB is the typical entry point. The only companies I’ve seen be successful starting with the enterprise have older founders who have spent a decade or more working in the industry and already have the professional network and clout to reach their buyers. Without that professional network and a track record of delivering, you’re not going to make it past the front door. And in these types of environments, consulting / maintenance absolutely must be part of the business model. Your customers will demand it (or at least demand you have SIs lined up as implementation partners).
- Closi 5y ago
  Totally agree. The difference in 'enterprise-level' software often is configurability and the ability to meet client needs without being totally custom (although even for the biggest, most feature-rich enterprise software, most implementations will still require custom development. Often the problems 'enterprise software' solves aren't overly difficult, and if every company worked the same way it would be trivial to write the software, but the issue is that every company is different, and building everything custom isn't scalable or supportable.

hamilyon2 5y ago

No, this is more fundamental than that. This customer-revenue-project-tean relation and habit holds true even if we have vision and understand direction and have strong leadership. In this case, your customer is more abstract, it could be a million people using your, maybe free, or maybe "pay once" product, physical or digital. But then you seek another market because management realises that your product will sell to different market, completely different million of people. But that will take new development. Team 2 is born. It is a project in a sense that this team works with one single goal in mind: get the project off the ground and start selling it. This doesn't look like consulting company at all, but the problems are the same: technical debt, maintenance, shared code, and eventual rewrite and platform.

lifeisstillgood 5y ago

I want to add this to the wit and wisdom of Hacker News book. The product market Fit thing is just right.

nemetroid 5y ago

I don't understand if you have a contention with the article, and if so, what the contention is. You say that this "doesn't sound like the story of any visionary startup [you] know of", but the article never makes the claim that this is a successful path to go down - it is very clear that this is a failure story.