Monday, July 7, 2014

Your Startup's Identity Crisis

photo by Hans Richard Pedersen

Don't think about the following question; just answer it.

Is your startup a Product company, or a Services company?

If you answered "kind of both," you answered wrong. Only mature firms can handle both. If you're still trying to find decent revenue streams, and/or product market fit, and you answered "both," I'll bet you a dollar you're tearing your sales, engineering, product, marketing, and "services" teams apart at the seams.

If you started out as a Product company, but then started doing more custom/one-off/services like projects to make financial ends meet, be honest about the situation and acknowledge that you're organization is likely suffering from the challenges of trying to both, without the experience or maturity, or resources to actually pull it off. The challenges of doing both are nothing to sneeze at. I'd argue they're the hardest to resolve.

If you stated out as a Services company, but then realized you had a leverageable Product on your hands, consider carving it out as a separate entity (with separate staffing) to give it the air it needs to breathe and fully succeed, without the oil and water challenges of trying to do "both."

Over the past six months I've spent time with several startups (from 1 to 100 employees, and from zero to ~$15m in annual gross revenue) conversing about various challenges the business is going through. More often than not, there's confusion around whether the company is a Product company, or a Services company.

A Product firm != a Services firm. They take two different kinds of brains most of the time: from the CEO, to the individual contributor with her fingers on the keyboard.

Pick one; until you're older and wiser.

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