Successful Companies Iterate
What most people don’t understand about technology companies is that very few actually end up doing what they set out to do. And even fewer make money how they thought they would make money. Either because of market changes, technical obstacles, or a general lack of product-market fit, things hardly ever go according to plan.
In fact, the only thing you know for sure about an early-stage business plan is that particular plan will almost definitely not happen.
Which means almost all initial ideas for a high-tech company are bad ideas. In fact, it is really hard to see the great ideas unless you are in the thick of it working hard with your team.
Take PayPal for instance. Despite the company’s ubiquity today, PayPal only became successful after changing their business model five times and changing company name four times (the original company was called Fieldglass, which changed to Confinity, then PayPay, then X.com, before finally settling on PayPal).
If you really want to start a technology company, there is only one tried and true way: fake it until you make it.
The Three Things Needed to Start a High-Tech Company:
• Moderately good idea
First, you need to come up with an idea that is compelling enough to attract a strong team. Before pitching it to other people, make sure that you yourself actually believes in the idea (although there’s 99% chance it won’t work): it’s difficult to convince others unless you believe in it first
• Strong team
Next, you’ll need to build a strong founding team that not only believes in the idea, but can also execute and iterate around it.
After the first two requirements are in place, you raise money to start executing on the idea. Money will help you buy technical infrastructure and hire more great people, and will give you flexibility to iterate around an idea.
Then you iterate. And iterate some more.
“Stone Soup” Entrepeneurs
Starting a high-tech company shares many similarities with the stone soup fable. In this story, a hungry traveler visits a village with nothing but a large stone. The villagers ask him about the stone and he says it is the main ingredient for creating stone soup. He then convinced the villagers to create stone soup by first getting a large cauldron and inserting the stone. Then, he convinced them to fill the cauldron with water, then chicken, then vegetables, then spices and flavoring until the soup was complete and the entire village benefited from the stone soup.
As an entrepreneur, your goal is to – with only a stone for an idea – convince others around you to grow the company by faking it until you make it.
Special thanks to Michael Hsu for his edits.