Startup Guide, Part 7: Why the initial business plan is not so important
- Transfer
Part 6 The
initial business plan of a startup means very little, because it is extremely difficult to determine which combination of product and market will be successful.
By definition, you will be doing something new in a world characterized by its uncertainty. You simply cannot predict whether your product and business will work. And most likely, you will have to adapt to reality on the fly.
As the military says, “no battle plan can withstand a clash with the enemy.” In your case, with the real world. Therefore, it is more important for a startup to more actively seek out a large market and build a product into the market, rather than trying to plan ahead. The history of successful startups speaks clearly about this.
I would just point to Microsoft, which began as a company in the field of software utilities, while IBM almost forcibly forced Bill Gates to go into the field of operating systems. Or Oracle, which advised the CIA, until Larry Ellison decided to build a relational database. Or Intel, which focused on memory chips, until the offensive of Japan in the mid-80s pushed Andy Grove to switch activities to manufacturing processors.
But I recently read a wonderful book by Randal Strauss about Thomas Edison, " The Wizard of Menlo Park ." Edison's first commercial breakthrough was a phonograph - the predecessor of turntables, turntables, Walkman, CD players, and iPods. Edison continued his work and became one of the greatest inventors ( approx. Transl. - and patent trolls) of all time.
At the beginning of the story, Edison, an unknown inventor working on his startup, wants to design a more convenient device for telegraph operators. Of particular interest is his ability to send voice messages by telegraph wire.
From book:
The story goes on ... I recommend reading the entire book, it is very interesting there. And here's the thing: if even Thomas Edison did not understand at first what he did when he invented the phonograph ... After all, he tried to improve the equipment of the telegraph operators ... What are the chances for you, or for another businessman, to foresee everything in advance?
Part 8
initial business plan of a startup means very little, because it is extremely difficult to determine which combination of product and market will be successful.
By definition, you will be doing something new in a world characterized by its uncertainty. You simply cannot predict whether your product and business will work. And most likely, you will have to adapt to reality on the fly.
As the military says, “no battle plan can withstand a clash with the enemy.” In your case, with the real world. Therefore, it is more important for a startup to more actively seek out a large market and build a product into the market, rather than trying to plan ahead. The history of successful startups speaks clearly about this.
I would just point to Microsoft, which began as a company in the field of software utilities, while IBM almost forcibly forced Bill Gates to go into the field of operating systems. Or Oracle, which advised the CIA, until Larry Ellison decided to build a relational database. Or Intel, which focused on memory chips, until the offensive of Japan in the mid-80s pushed Andy Grove to switch activities to manufacturing processors.
But I recently read a wonderful book by Randal Strauss about Thomas Edison, " The Wizard of Menlo Park ." Edison's first commercial breakthrough was a phonograph - the predecessor of turntables, turntables, Walkman, CD players, and iPods. Edison continued his work and became one of the greatest inventors ( approx. Transl. - and patent trolls) of all time.
At the beginning of the story, Edison, an unknown inventor working on his startup, wants to design a more convenient device for telegraph operators. Of particular interest is his ability to send voice messages by telegraph wire.
From book:
The day after Edison came up with the idea of recording voice messages received by telegraph, he had the idea of implementation. That evening, July 18, 1877, after lunch in the laboratory, Edison turned to his assistant Charles Bachelor, and said: “Bach, if we put a needle here, we can record something, and then stretch it under the needle and get a record.”
After this proposal seemed so obvious, they did not even begin to admire him, but immediately switched to experiments. An hour later, the structure stood on the table. Edison sat down, bent over to the sound receiver and said the phrase used to test the phone diaphragm in the laboratory: “Our Mary had a ram.”
Bachelor inserted the strip on which the phrase was written again, and she gave out "y ... ney ... ri ... yl ... wounds." “It wasn’t very clear,” recalled Bachelor, “but the essence was clearly audible.” The men issued a victorious cry, shook hands, and continued to work. By the next breakfast, they were able to get a clean reproduction of waxed paper (first audio medium) after the first recording on the same day.
The discovery was mentioned in the magazine surprisingly casual.
This was an important moment in the history of inventions, but in subsequent years, Edison never told the story the way it actually happened that summer, but constantly shifted events from July 1877 to December. One can guess why: in July, he and his assistant did not attach due importance to their discovery. At that time, they worked hard to create working phones to showcase them in Western Union. There was no time to stop and think about the random invention of the first working phonograph model.
The invention was noted in notebooks under the heading “talking telegraph”, since it was supposed to be used at telegraph stations for recording messages. One of the employees compiled a list of possible names for the machine, which included: tel-autograph, tel-autophone, chronophone - time-talker - talking hours, dialectophone - talking teacher - portable teacher, glottophone - language device, climate phone - weather announcer, clangophone - a reproducer of bird singing, a hoolagmophone - a barker ( who, who, who, who, who let the dogs out? - approx. per. )
In October 1877, Edison wrote to his father that he "currently needs money", but if he " talking telegraph ”is waiting for success, he will be given an advance from royalties. The commercial potential of this unnamed device was not visible to him.
The phonograph description in Scientific American magazine in November sparked fury in Europe and America. The New York Sun was struck by the metaphysical consequences of an invention that could play the "echo of dead voices." The New York Times predicted (which strangely coincided essentially with their review article about the Internet in the mid-1990s) that great business could be done on “bottled sermons,” and wealthy connoisseurs would show off their assembled cellars with oratorical kits.
Such was the authority of Scientific American that all this hysteria did not happen because of the working phonograph model put up for public display, but only because of the description made by Edison's assistant.
At the end of November, Edison and his team realized the commercial potential of the phonograph as an entertainment device. A list of possible uses was made: talking toys, toy trains, music boxes, talking watches. There was even a hint of future music collections - a phonograph, as a machine for the whole family, equipped with a thousand musical recordings, could provide "unlimited entertainment."
But the real model has not yet been built. On December 4, 1877, we read in Bachelor’s diary: “Our collaborator John Cruise built a phonograph today.” Unremarkable entry; above it stands "working on a talking telegraph" ...
On December 7, Edison entered the New York office of Scientific American, put a small machine on the table, and, in the presence of a dozen people gathered around him, turned the handle of the plant. “How are you?” The car asked, grunting slightly. "How do you like the phonograph?" The phonograph told the audience that he himself felt fine, and wished everyone good night.
Working in the field of telegraph equipment, Edison was perfectly prepared for the sudden inspiration for the invention of the phonograph. But that world, focused on huge industrial customers, had nothing to do with the market.
The story goes on ... I recommend reading the entire book, it is very interesting there. And here's the thing: if even Thomas Edison did not understand at first what he did when he invented the phonograph ... After all, he tried to improve the equipment of the telegraph operators ... What are the chances for you, or for another businessman, to foresee everything in advance?
Part 8