The future of startups is inside the corporation
Beyond the shiny “startup” tag you find a company like any other. Money in, product or service out and, for the happy few, money in from sales.
The functions are the same even if the people performing them are fewer than. You have product and project management, marketing, sales, accounting, legal, business development and so on.
Personally I’m a strong believer in bootstrapping and having maximum four people playing all the roles. You can sort of place me in Generation X: work hard, play hard.
In my case business administration, marketing and sales are done by one person, platform development by another, UX, graphic design and front end by a third, and the fourth does some very industry specific creative, strategy and business development.
In the digital world, the cornerstone of any startup is the developer, the software engineer. Without him, me and thousands others, we are just people with ideas that never see the light of day. Why we are still part of the game is related to the continuous learning process required from any software developer. A rough split between writing code and managing the business between two people or two groups of people makes sense since the early days of the most famous fruit on the internet.
While the garage or hub startup is still here, any executive in a company needs only to go into the room were the developers are to notice potential. If you don’t see money flowing when you see a bunch of developers in a room, you’re in the wrong industry.
The pieces of the puzzle are quite simple to put together around any idea for an app, SaaS, or service.
On one side the company can provide legal and accounting advice as well as leverage business, marketing and sales advice or execution. Keep in mind: the company also wants to keep the turnover at minimum, train and profit from the long-term relationship with its employees.
On the other side you have developers that want more than just a 9 to 5 job. They might do some freelance work, but the output is only money. The startup dream is there in the back of their minds. Ownership is a way to get more if a product or service is successful.
The idea is not new, but I think there isn’t a more auspicious environment now than the corporation. The costs for creating a company are a few hundred dollars, various accounting and trade-mark expenses are not a lot too.
The company should own share according to the contribution it brings and delegate one man from the business side in it. This is a case by case negotiation. The other three should be developers, project managers, creative engineers, or any other expertise / skill is required. Most small and medium companies’ teams are between 10-50 developers. You’re looking to at least five startups. Not bad.
The new partners should focus on three things:
1. Business education
From basic understating of the market for the product/service to the deeper implications of the network and platform effect.
This will help decide what kind of exchange the new startup will facilitate, who are the participants and which value units are to be created.
You’ll be surprised by the insights people will offer once you give them the tools for interacting with clients, about how the role of their product/service is to pull customers, facilitate interactions or match needs.
Explain growth strategy even if you need to explain what follow-the-rabbit (see Intel), piggyback (see Airbnb), or producer evangelism (see Kickstarter) are.
Explain also basic business processes and cash flow to manage expectations.
2. Work hard, play hard
The startup is an extra working hours’ activity. The employee / employer relationship needs to remain the same. Also take in consideration here clauses about shareholders exit when they are not employees of the company anymore.
Don’t make things easy for anybody. Pain and sacrifice are still better building blocks for business or character.
There is no product or service until you find the first person that pays for it. Leave the dreams about instantaneous success for when you sleep. When something fails, the only things that matters are the lessons learned and how small is the sunk cost.
While I dream about being able to dedicate 100% of my time to develop my ideas, I still need to eat and contribute to the wellbeing of my family. It’s hard to do both. Time is the universal constraint.
It’s hard to go to work and give 10 hours of the 24 to it. You might sleep and eat 4-6 hours. You have to spend time with your family, otherwise nothing makes sense. Another 4 hours.
What remains is maybe 4 hours which you are lucky if you can put together. This is the time to write your book, grow your business. Fun is not on the list unless is the minimum for sanity reason.
There’s nowhere to run to from your dreams unless you kill them and live a cog’s life inside the machine.