“A startup is a temporary organization designed to search for a repeatable and scalable business model.”
— Steve Blank
I came across the above definition last week and found it timely. “Searching” is exactly what I am consumed with right now. At its core, my startup Uniqarta, is based on an innovation that assembles flexible, ultra-thin ICs onto a substrate at low cost. There is an infinite variety of product definitions, market channels, partnerships, end markets, etc. available to us. So what we are doing is searching for the combination that lets us repeat and scale.
The difficulty is that these elements are inter-related and there are many unknowns. The right choice of market is dependent on what benefits our products deliver (among other factors) which in turn is dependent on our technology choices which in turn is dependent on, well, our choice of market. Underlying all this is a long list of questions such as: what problems are customers looking to solve and how would our product do that, how much will it cost to manufacture our product, how much will customers pay, what alternative solutions will customers have and how will our solution compare, how will we access our market, what partners will we need, what technologies and resources will we need, what will they cost, and on, and on, and on…
This, I have come to realize, is the biggest thing that makes launching a startup so difficult. Sure, there are other challenges certainly and my guess is that 2-3 years from now I will be identifying something else that is making things tough. But right now it is painting in this vast canvas of open, interlocking questions that I put at the top of the list.
At Analog Devices I had started up a new business and naively thought doing so outside the company would have a fair amount of similarity. I did recognize that my previous experience lacked any fundraising activity and that I had the huge benefit of accessing the company’s existing infrastructure. However I had thought that the tasks associated with developing a strategy would be similar whether the business resides within an existing company or is being launched independently.
I’m finding this to be less true than I thought. Sure, a good number of fundamentals are the same: picking a focus market, defining a value proposition and positioning, recruiting and building a team, etc. But the big difference is that at Analog Devices I had an existing business model as my starting point. This model involved hiring engineers to develop products, using an established infrastructure to manufacture them, and using an established infrastructure to sell them. I had no need to develop a new business model. My team could simply focus on developing and marketing new technologies and products and pump them into the company’s existing business model. However, in a true startup that’s not the case. We have no pre-established ways of developing products, of manufacturing products, of selling products, or of doing anything whatsoever for that matter! On all these fronts we have to both decide how we’ll do these things and then actually do them.
Right now we are mostly in the “decide” phase but I don’t want to imply that “decide” and “do” are distinct, sequential steps. Since the search for business model clarity involves a complex, multi-variable set of questions an iterative assume-try-revise methodology is required. This is the essence of the Lean Startup concept that Steve Blank and others advocate. The key is to iterate and converge to a solution faster than your competitors and before you run out of cash.
So—we are indeed searching. More on that later.