The first hint lies in its name; this is a product development model. Not a marketing model, not a
sales hiring model, not a customer acquisition model, not even a financing model. Yet startup
companies have traditionally used a product development model to manage and pace all these nonengineering
activities. The misnamed process is merely a hint of the ten major flaws of the product
development model.
1. Where Are the Customers?TP PT
To begin with, the product development diagram completely ignores the fundamental truth about
startups and all new products. The greatest risk—and hence the greatest cause of failure—in
startups is not in the development of the new product but in the development of customers and
markets. Startups don’t fail because they lack a product; they fail because they lack customers and a
proven financial model. This alone should be a pretty good clue about what’s wrong with using the
product development diagram as the sole guide to what a startup needs to be doing. Look at the
Product Development model and ask “where are the customers?”
2. The Focus on First Customer Ship Date
Using the Product Development model forces sales and marketing to focus on the first customer ship
date. Most competent sales and marketing executives look at the first customer ship date, look at the
calendar on the wall, and then work backwards figuring out how to do their job in time so that the
fireworks start the day the product is launched.
The flaw in this thinking is that the “first customer ship” is only the date when Product
Development thinks they are “finished” building the product. The first customer ship date does not
mean that the company understands its customers or how to market or sell to them. (Read the
preceding sentence again. It’s a big idea.) Yet in almost every startup, ready or not, the sales,
marketing, and business development people are busy setting their departmental watches to the
first customer ship date. Even worse, a startup’s investors are managing their financial expectations
by this date as well.
The chorus of investor voices say, “Why of course that’s what you do. Getting the product to
market is what sales and marketing people do in startups. That’s how a startup makes money.”
That’s deadly bad advice. Ignore it. Focusing only on first customer ship results in a “Fire, Ready,
Aim” strategy. Obviously, your new division or company wants to get a product to market and sell it,
but that cannot be done until you understand who you are selling your product to and why they will
buy it. The product development model is so focused on building and shipping the product that it
ignores the entire process of what I call Customer Discovery—a fundamental and, in fact, fatal error.
Think about every startup you’ve been in or known about. Hasn’t the focus been on first
customer ship dates? Hasn’t the energy, drive, and focus been on finishing the product and getting it
to market? Think about what happens after the first customer ship party is over, the champagne is
The first hint lies in its name; this is a product development model. Not a marketing model, not a
sales hiring model, not a customer acquisition model, not even a financing model. Yet startup
companies have traditionally used a product development model to manage and pace all these nonengineering
activities. The misnamed process is merely a hint of the ten major flaws of the product
development model.
1. Where Are the Customers?TP PT
To begin with, the product development diagram completely ignores the fundamental truth about
startups and all new products. The greatest risk—and hence the greatest cause of failure—in
startups is not in the development of the new product but in the development of customers and
markets. Startups don’t fail because they lack a product; they fail because they lack customers and a
proven financial model. This alone should be a pretty good clue about what’s wrong with using the
product development diagram as the sole guide to what a startup needs to be doing. Look at the
Product Development model and ask “where are the customers?”
2. The Focus on First Customer Ship Date
Using the Product Development model forces sales and marketing to focus on the first customer ship
date. Most competent sales and marketing executives look at the first customer ship date, look at the
calendar on the wall, and then work backwards figuring out how to do their job in time so that the
fireworks start the day the product is launched.
The flaw in this thinking is that the “first customer ship” is only the date when Product
Development thinks they are “finished” building the product. The first customer ship date does not
mean that the company understands its customers or how to market or sell to them. (Read the
preceding sentence again. It’s a big idea.) Yet in almost every startup, ready or not, the sales,
marketing, and business development people are busy setting their departmental watches to the
first customer ship date. Even worse, a startup’s investors are managing their financial expectations
by this date as well.
The chorus of investor voices say, “Why of course that’s what you do. Getting the product to
market is what sales and marketing people do in startups. That’s how a startup makes money.”
That’s deadly bad advice. Ignore it. Focusing only on first customer ship results in a “Fire, Ready,
Aim” strategy. Obviously, your new division or company wants to get a product to market and sell it,
but that cannot be done until you understand who you are selling your product to and why they will
buy it. The product development model is so focused on building and shipping the product that it
ignores the entire process of what I call Customer Discovery—a fundamental and, in fact, fatal error.
Think about every startup you’ve been in or known about. Hasn’t the focus been on first
customer ship dates? Hasn’t the energy, drive, and focus been on finishing the product and getting it
to market? Think about what happens after the first customer ship party is over, the champagne is
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