In the weeks leading up to the deadline for YEI's Summer Fellowship application (January 18th), we've asked past Fellows to share their advice for starting a company - and applying for the fellowship.
By Max Sutter
As an early-stage entrepreneur, you are faced with a daunting task—the task of turning an idea into a sustainable business.
From day one you will run into difficult questions that need answering and you will probably find yourself bombarded with advice and suggestions, whether from enthusiastic friends, concerned relatives, supportive mentors, or any of the hundreds of books on entrepreneurship. However, you cannot begin to answer these difficult questions or take any of these sage suggestions until you know exactly how they apply to your company.
To try to manage a business without completely understanding its goals, its customers, and its potential for success can be worse than useless—it can be completely destructive to the venture.
The only way to gain such an intimate understanding of your company is to build a prototype and measure its performance. Until you have a working prototype, you cannot truly know your value proposition, your target market segment, or your growth strategy. Any research done prior to building a product is bound to be based on hypotheses, assumptions, and abstract market or demographic data. A prototype, on the other hand, gives you hard data that relates specifically to your company.
On one level, the process of building a test product forces you to work out the bugs in your technology while encouraging further innovation and improvement. It also lets you start comparing yourself to your competitors in terms of performance, pricing, and unique features.
Most importantly, however, a prototype is something you can show to customers so you can start getting real feedback. Customers may not love your first attempt at a product, but the sooner you learn what it is about the product they do love, the sooner you can stop wasting your time on everything else. The continuous flow of this type of customer feedback is what will allow you to build your idea into a streamlined, successful company. It will ultimately determine what you’re selling, whom you’re selling it to, and whom you’re going to sell to next.
This knowledge, backed up with concrete data, is what makes the difference between a few people with a cool idea and a company that generates real solutions to real problems.
Max Sutter is a 2011 YEI Fellow and the cofounder of Scaled Liquid Systems.Read More