I just listened to Greg Gianforte’s presentation on bootstrapping a company. What he says is that the way of starting a company that’s taught in all business schools is not the right way. Of the hundreds of thousands of startups every year, only one percent follow the business school dogma of writing a business plan, finding investors, and then starting to develop a product.
Greg’s message is also available in his book Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money. The basic message is to start by contacting potential customers and asking them would they be interested in the product or service. And if not, what would make them interested. After a good amount of these inquiries you’ll have a very good idea of what you should develop to get interested customers. And it’s a lot sooner than with the traditional method, where the first contact with potential customers can be 1-2 years after starting to draft the business plan. And at that time it’s a lot harder to accomodate customer requests that you haven’t thought up. Whereas with bootstrapping you can respond to all requests, because you have no product – yet.
This whole approach seems quite reasonable, and has a good analogy to the agile software development method. The method taught in software engineering schools is to start with requirements gathering, followed by analysis and design, followed by implementation, then testing, and finally delivery. The agile approach is to start with a minimal set of requirements, first do tests, then implement those tests, do analysis and design as necessary, refactoring the code while you’re at it, delivering every 2-4 weeks, and gathering more requirements after each delivery. The benefits are pretty much the same: you have customer contact with every release, not just at the end of the project, you’ll have a working product after 1-2 iterations, and you can respond to customer requests more easily.
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