Wednesday, September 03, 2008

Startup reality check: launching versus landing

While startups always make a big deal about introducing new products, the real birth of a company comes not when you launch your first product but when you land your first big customer.

Here's the difference: it only takes a demo to launch a product, it takes a business model to land a customer. Thus the scariest time in a startup's lifecycle is the period between shipping the product and closing the first big customer deal (this is period that the VCs call "proving that the dogs will eat the dog food").

In true ClueTrain Manifesto fashion, product launches are largely a vendor driven activity, that is to say mostly wishful thinking and hand waving about your new, improved, bright shiny thing. Getting a customer to dig deep and pony up 7 figures for your bright shiny thing puts you in a whole different league.

Launching answers the following questions:
  1. Can we give a good 5 minute demo? Silicon Valley is littered with technology in search of a market.
  2. Can we sound like we know who might want to buy this in the abstract?
Landing a big customer answers much more interesting questions:
  1. Is my product solid enough for somebody else to bet their job on?
  2. Does my product solve such a big problem for that person that they are willing to bypass much more established, safer vendors to bet on an unknown startup?
  3. Is my business model credible enough that another company will bet their business on our being around 5 years from now?
WaveMaker launched our visual Ajax development tool in February. Yesterday, WaveMaker announced a 7 figure deal with KANA. KANA sells customer service software and has over 700 customers, including 60% of the Fortune 100. They are also one of 16 strategic partners of IBM's WebSphere division.

The most exciting element of this deal is that KANA will ship the WaveMaker Studio as a built-in customization tool for their call center platform (similar to what the platform does for For WaveMaker, this will give us 700 licensed customers by the end of the year, putting WaveMaker in the top tier of Ajax tool providers in one fell swoop.

Cool technology and $2.50 will buy you a latte at Starbucks. Having a $70M company bet their future on your product puts you into the running for the Next Big Thing! Congratulations to the whole WaveMaker team for taking the step from demoware to solving hard customer problems.

1 comment:

Anonymous said...

Or, the way I see it: its easy to launch from Earth; its hard to land on the Moon :-)

-- MV