Build product or do sales first?
Seen a few posts recently on whether you should try do get some customers first and then build the product, or the other way around.
There are a lot of reasons to do sales first. And I talk about them often here on IH.
But here's one I don't mention much...
For your product to be a success, you need to be able to build it and make some sales.
So which should you do first?
Well, normally I'd talk about how having sales makes it easier to build the right product, but having a built product actually makes sales harder.
But today I want to look at risk instead...
It's much more likely that your product will fail because you can't sell it, than because you can't build it.
And it takes much longer to build the product than it does to do a few sales calls/coffee meetings.
So the logical approach to take is to do sales first, get the quick, risky part out of the way, and then start building.
#growth #fyi
Yes! I also like to think in terms of de-risking. The following post is a must-read and re-read on the subject: https://www.codingvc.com/how-to-de-risk-a-startup/.
Now, should you do Sales or build a Product first? ... That depends :)
Imagine you are selling a microprocessor which is 10x more powerful than the latest Intel chip, then the sell is not going to be too complicated. Buyers fully understand what your product means for their business and fully understand its value value (Closing can still take a very long time but that is just the nature of the industry). The main issue is that before you build it enough to show reasonable performance numbers (in simulations) nobody will believe you. You build first.
Image you are making a Customer Relationship Management (CRM) that takes into account the particularities of the Real Estate industry in Finland, and decided to sell it as a Software-as-a-Service (SaaS). Here nobody will doubt you can build the software. The doubts will be about the end user and the size of the market, i.e. Is the niche niche-enough that it warrants a dedicated solution? You sell first.
Imagine you are making a taxi service that uses personal cars and a mobile app to connect drivers and passengers. There is a lot of chance your business model is illegal unless you clear it with City Hall. So you lobby first ... OK bad example :).
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I think you make a lot of really good points.
Without trying to be difficult, in this case I think in real life you would actually still sell first! (although I totally agree about the risk being higher on the 'can I build it side')
After all, how do you know that customers need 10x better? Especially if it comes at a higher price. If it were me, I'd want to lock in some sort of commitment/contract based on expected performance. I'm by no means in industry expert, but I think that's how they do it too.
I would check first if people need/would pay for 10x better microprocessor. However I think this is a point in between sales and production, in my opinion. You do have to get out there and ask, it would be marketing even, right? before the sell. Once you get interest, then you can contact those interested people and sell - while you work on your prototype?
The semi-conductor industry is very interesting in terms of selling because there are:
1/ Incremental roadmaps: A back-and-forth, for example, between the TV guys telling you the features they want to put in their TVs 4 years from now, and you selling them a processor you will deliver 2 years from now that will enable them to do that at a specific price point.
2/ Disruptive technology: DARPA has million dollars grants for anyone producing 10x better processors, Facebook, Google, Apple have teams dedicated to find the 10x better processor that will leap frog new applications and business models.
In the second case, build it first means you have to sell to the most talented engineers you can find that it is worth joining you on the adventure.
OK. You are always selling, but it is not always a product.
I think sales first is more important because in these days, building a product is not difficult. Anyone can really develop a product, learning it is not hard. But sales is the opposite. It's harder to get customers. I generally produce a validation page just explaining what I'm offering. I can make a judgment on the number of people who signed up to the early access form.