Sunday, November 7, 2010

The Extroverted Introverted Startup

The vast majority of startups fail and most successful startups succeed with a business model substantially different from the original.  In order to succeed a startup must do three things:

1) Create a business model (duh)
2)  “Get out of the building” and test the business model from day one.
3) Go back “into the building” and iteratively modify the business model until a good business model is found.

These are fairly general and non-controversial statements of the startup challenge.  The devil is in the interpretation and the details.  I offer my own interpretation:  In order to succeed a startup needs to be an extrovert-introvert hybrid. 

The startup as extrovert.  Startups need to have an extroverted, outward orientation.  They need to get out of the building, meet with real people-potential customers, partners, influential industry players--and test their ideas.  Steve Blank is perhaps the most profound contributor to how the extroverted dimension must work.  He created the system of customer development.  Customer development is a question-based process for building a set of business model hypotheses and a process of testing ideas with customers. 

The startup as introvert.  Extroversion is a necessary, but not a sufficient condition of success.  Let’s say you follow a smart process of building and testing your business model with potential customers and customers reject it.  You must go back “inside”, redesign, and re-test.  If you don’t have a good design process, you will create variations on your original idea or completely new ideas that are just as likely to fail the “reality test.”  You need a creative design process that internally iterates and internally tests so that when you turn outward, there is a better likelihood that you’ve created something interesting and different and captivating for the customer. 

There is much being said today about both of the above topics but they are not being said by the same people.  These are two dimensions of value creation:  right-brained vs left-brained, science and testing and metrics vs creativity and design.  You need both, they are in tension:  startups need to bring them together.

Without an outward orientation, you design something that no one wants because you didn’t listen.  Without an creative inward orientation, you understand the need, but can’t transform it into a creative new product or service that hits a market sweet spot.

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