Avoiding the Startup Letdown
I read a lot about startups with the Next Big Thing in the works. Frequently I click through to see this wonderful new product and find there’s nothing there. Ready for prime time? Heck, the product would be an embarrassment amongst Saturday morning cartoons. Tech journalists get carried away with the concept and may have actually seen the promise in a demo or pilot to which the public isn’t privy. So when you and I try to get a glimpse of this game-changer, we only find a web site with funky graphics of castles in the sky. And all too often that’s the last we ever hear of the company.
What we need is a way of classifying startups according to the maturity of their product. The technology press is heavily oriented to investors (I’m looking at you, TechCrunch) and has a rich vocabulary to describe the funding of the company. We hear about the angel investors, seed and mezzanine rounds, venture capitalists and their incubators, the acquisitions and of course many cautious but rosy pictures of future IPOs. You would think that, for technology companies – which are not, after all, investment companies – the prose would be as lavish in describing the readiness of the product. Is it an idea that’s still in the garage or is there a working pilot? Do they actually have something for sale and can it really compete in the marketplace? To be sure, much of this is a problem of poor journalism, in which too much of the reporter’s research is conducted purely by reading the press release; but either way having a better descriptive framework would help.
There’s a tendency to play up the differentiating feature, but brush all the weaknesses under the carpet. The new feature is interesting; the shortcomings can be fixed with a little more development. Well, maybe. Suppose the article describes AnotherStartup.com which has a new word processor that reads the users mind and records the stream of consciousness in text. Very cool, but they’re not going to eat into MS Word’s market share until they have the same ability to format on the page, include tables and graphics, and correct spelling. The fact that they’ve just had a second round of funding that valued the company at $7 million is interesting, but mostly to investors. I really just want to know how soon I’ll be able to throw away my keyboard and stop worrying about what’s living on the crumbs down there.
What we need is a taxonomy of product and company readiness. I suggest a scale-of-one-to-five classification system that would be meaningful to those of us interested in actually using an innovative company’s wares, something like this metaphorical maturity model:
- Toddler – Perhaps a promising concept but still mostly just a PowerPoint or a web site. This product is all potential.
- Child – There’s a proof of concept version perhaps, but not yet a product you’d actually use, except for a very narrow purpose or because it’s just so damn cool. The web site shows a video of a gushing architect/founder demonstrating the thing, but you can’t download it yourself. At most you can sign up for a beta.
- Tween – A product is available and maybe even useful, but it’s clearly incomplete. It’s missing obvious features, and support is minimal, probably just a few pages on the web site and a comment form.
- Teenager – there is a complete product, but it isn’t well differentiated from other products in the marketplace. Why would I buy from this new entrant? This can be the most problematic stage. The company wants adopters. They’ve been living with the kid for a long time and they’re ready for him to move out. They might not intentionally mislead as to maturity, but they have the chicken-and-egg problem that they can’t get to the next stage unless you buy it; but you will still require a great deal of faith that the product will reach the next stage for it to be good value.
- Adult – The product is full-featured and offers a compelling story as to why it’s better than the rest. It’s fully ready to compete in the marketplace, and no questions should be answered with “that’s in the next version”.
And perhaps we need to add something like “Life Support” or “In A Home” for companies that are clearly not making a go of it; and “Organs Donated” for those that have been acquired or partnered with others so that their product has been rolled into those of another company’s.
Suppose you needed to organize your parent’s twenty-fifth anniversary party, and wanted a tool to help you organize the whole shindig. The last time you needed to do something like this you used it eVite, but it looks like they’re in a home since they seem to be doing nothing but mailing out printed invitations, just like Paperless Post which is probably on life support since they haven’t put out a press release in a year and a half. So you look around and find something called Rundavoo, but that turns out to be just a basic app and only on Apple, so barely a tween. Kaikso is an app with more functionality and available on Android so could be considered a teenager. WePopp is also mostly just an app, but it has some web and email integration so it might be a teenager with some utility. But wait, Punchbowl seems well reviewed and you learn from Crunchbase that they’ve received Socializr’s organs. More than just invitations and RSVP management, this site lets you organize potluck contributions, set up a gift registry and find a local caterer. Now that sounds like a level 5 adult that you can use.
With simple descriptive tiers like this you can learn a lot about a company and its products with a single word.
