In Part 1, I discussed how technology, outsourcing, and lean have impacted every industry. In this article, I’ll apply these principles directly to digital startups.
Only five years ago, most digital startups would require three things to get started:
Today, there are alternatives that have reduced the costs, and consequently the barriers to entry, for a digital startup. There are also a great many incubators, co-working spaces, and college (and high school) courses focused on helping entrepreneurs germinate and develop their ideas into a business concept, so that there is no shortage of ideas. Conventional wisdom today is that there is no good idea, only good execution. Personally, I think there are some ideas that are better than others, so it’s fair to use the term “good idea”, but the nature of technology is that any good idea is likely to be met by quick followers, and thus execution will be the distinguishing feature of successful companies.
What this execution looks like is a combination of deep market understanding, assembling a capable team, accurate modeling of cost drivers, attraction of partners, and fine-tuning and curation of the product offering. One of the applications of Lean in software development (Eric Reis’ excellent book, The Lean Startup, is a good reference) is to vet interfaces and user experience with interviews and paper prototypes before spending significant time on development, trying to understand what target customers are really looking for that they aren’t getting today, and trying to figure out the most viable intersection between the seriousness of the problem, the ease of use, and the ability of the company to deliver.
In addition to in-person interviews, some of the tools that can be used for market research include SurveyMonkey (www.surveymonkey.com), Google keyword analysis (https://adwords.google.com/o/KeywordTool), facebook pages (www.facebook.com), join.me (www.join.me), and balsamiq (www.balsamiq.com) or ms paint (or paintbrush for mac) to create mockups.
Elance, craigslist, and other sites can help enterpreneurs find co-founders, partners, and specialists in market analysis, user interface, and business development, many of whom have worked on other startups.
Once users have validated their need for and interest in the app or website, then an initial prototype can be created. Frameworks have come a long way, but generally still require developer skills. Some of the easier tools to pick up include jquery mobile (www.jquerymobile.com), zoho creator (https://www.zoho.com/creator/), wordpress.com, and visual studio express (www.microsoft.com/visualstudio). A plethora of open source tools like eclipse, rails, codeignitor, drupal, netbeans, aptana… are also available.
An alternative to trying to learn programming is to hire a developer. Again, websites such as elance.com and matchist.com, as well as craigslist, can be used to find developers, part-time or full-time, domestic or foreign. While costs for offshore programmers can be significantly lower, the risks are higher. But it’s also important to make sure that the developer will be available for future support, which is usually not included in the initial project estimate.
The availability of these outsourced capabilities has significantly lowered the cost of labor, and the emergence of cloud providers such as Amazon Web Services, Microsoft Azure, Rackspace, Hiroku, GoDaddy, Google Cloud, many of whom offer free plans, has drastically cut the cost of hardware and hosting support. In fact, at the AWS Summit this year, a number of companies discussed business models such as movie effects digital rendering, biometric computing, and consumer big data that would have been impossible to launch without the ability to instantly scale to exactly the right capacity.
Cloud services have also created frameworks for redundancy, availability, reliability, scalability, security, deployment, and cost management that make it much simpler to operate a website. These capabilities are so powerful that even Fortune 500 companies are starting to move significant portions of their operations into the cloud, and it’s been estimated that as much as 50% of web traffic can be served by just one cloud provider at any moment.
So, the good news is that technology has significantly reduced the cost of execution, making the quality of the idea- and its ability to attract and keep clients- more important than ever.