A startup’s job is to reach product-market fit. Before having product-market fit, that’s really the only thing startups should focus on.
You don’t “focus on” building a great product, you don’t “focus on” getting customers, you don’t “focus on” changing the world. You focus on building a business. A defensible business is the only way to survive in the long term.
All the other things are a side effect. Startups build great products, because that helps building a great business.
The experiment perspective
When you start out, there are a zillion questions you have to answer, and they all point the same direction. “Is this a team that can build a product that people want to buy, for a price that supports the team?”
This is the question startups want to answer by building a minimum viable product. Think of an MVP as a series of experiments. Each of those experiments aims to confirm or reject a single assumption. For example,
- We can hire someone to build product X within two weeks
- Product X solves problem Y
- Niche Z has the problem Y and is willing to pay for it
- Reaching niche Z is a breeze with Facebook ads
Each experiment costs both you and the customers time and money, so you need to be frugal. There’s no point building an app to answer a question, if you could just send out a simple questionnaire.
And similarly, maybe you don’t need to build anything. Maybe you can buy it all on the cheap.
Open source and side projects for sale
This is where purchasing products can make perfect sense. You can use them to answer some of the questions you could answer by building an MVP — but quicker.
Before you build anything, look at the free and open source projects out there. There’s always a chance that you’d get lucky if you just look at Github.
Remind yourself that “free” in this case doesn’t mean as in beer, but free as in free puppy. Linux, for example, is a great operating system but only for the people who can spend the time to learn.
Pricing
If a project isn’t free or open source, the price for it is: as much as people are willing to pay. If you look at broker sites like SideProjectors.com, you’ll see a wide range of prices. Anything between $100 to the $10K range.
The price depends on too many factors to list, but to give an idea about what comes into play:
- Is it a working product, an MVP, or just a prototype?
- Does it have customers? Does it have paying customers?
- How do user metrics and churn look like?
- Is there a strong brand and marketing, maybe a social media following?
- Are you buying a business, and are you building a defensible business?
- Competition
- Are you buying a product or just the underlying tech?
- Is it easy to transfer to somebody else?
- Is there a durable marketing advantage?
- Are you the only potential acquirer?
- Do you need a lengthy handover process with additional support?
- External audits and metrics (security, deliverability, user growth, etc.)
- Documentation maturity
Is it right for you?
These are exciting times for companies with lots of ambition but limited budgets. Anyone can now purchase software or products, and leverage them for their own company.
For startups, this is a brilliant option to know about, and there’s help out there. Many law firms can help with the process, and there are tech consultancies specialized on due diligence.
Before you do anything, always consult with a lawyer. You want to make sure all corners are covered in both legal and technical terms. But if starts align and you find a match, you’ll do what all startups do one way or another: stand on the shoulders of giants.
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