I love Joi Ito’s advice about startups. Mostly he is talking about understanding risk. I particularly focused on one section just after 9 minutes into the video where he talks about how it’s folly to spend a lot of time building a business plan when it’s so inexpensive to go ahead and develop your product iteratively and develop the plan after you’ve seen how your customers are reacting to the product. Here’s the video:
* Understand risk. Buy low, sell high. Manage your risk.
* Spend your time (as in investor) on the companies that are doing well, don’t just “nickel and dime” the ones that are failing.
* The cost of failure is decreasing. If you start from open source, and have a designer, an engineer, a products guy, users, and you get growing 30% a month or so, you don’t even need to write a business plan. [just after 9:00 minutes into the video – THIS IS THE KEY point I want to make]. If you can get your project to the point where it is running, growing, perhaps bringing in some money, you bring in the VC investors at that point – no earlier!
* Open standards give you a big advantage. Big companies spend $ millions to even think about a new project, but you can get your project off the ground for far less by starting with open source, good ideas and good thinking.
* Development methodology needs to be flexible, iterative, and respond to what you can learn from your customers. ”If you’ve launched your product and you’re not embarrassed by it, you‘ve launched too late.”
* Distribution. Every failed startup has had a business model, team, and so forth, but no users. Almost every team that has users eventually comes up with a business model [if they’re smart and paying attention]. You must be viral – you must infect your customers.