// December 9th, 2008 // Comments // platform, Startup, strategy
“Who cares how the platform works”? This is the subtext to a lot of web startup business plans I see. At this point, you’ve lost me.
For web businesses, web platforms are not like phone connections and photocopy paper, they are tightly woven into the fabric of every aspect of your company
But first, big props to Balsamiq, the mockup tool I used to do the image above. It costs $79, comes in Mac, Windows, and Linux versions, or you can use it from within Confluence, JIRA and XWiki wikis if you use one of those to manage your product process. It’s the best quick mockup tool I’ve ever used – quicker even than pencil and paper, and after about a month of use, it’s an essential part of my paper prototyping and developer briefing toolkit. Product people: if you have a customer or business process owner who’s always bugging you, give them this to use and tell them if they can sketch it, you’ll build it. It’s so easy to use even the dumbest marketing manager can figure it out. It’ll teach them more about web development than a week of workshops and you can get some real work done in the meantime. More about Balsamiq later.
If you’re starting a trucking company, you need at least one guy who knows about trucks. If you’re going to franchise a network of muffin bakeries, better get yourself someone who can make great muffins. Have a guess what kind of skills you need to have before you decide to open a scuba school… give yourself a gold star.
Late last week I met with a potential client (yay, I love potential clients, sometimes even more than actual clients.) The potential client shall remain nameless to protect their identity.
We met. They stepped me through an impressive and well thought-out introduction to the business, all the way through a detailed business plan, laboriously detailed spreadsheets listing costs to be incurred in the first three years, introduced the entire executive team and… uh oh…
…there was no Chief Technology Officer on the executive team. There was no budget line for recruiting a top-line team of web developers, product manager, interaction designer and customer service manager. They were planning to outsource the whole lot.
Common mistake, but critical mistake nonetheless.
Let me be absolutely clear on this: if you are a web business, you need to own your own web platform. You need to have the people responsible for the web platform represented at director level in your company, aligned with your business goals and sufficiently motivated to bring onboard a web platform team of the highest calibre.
If you’re starting a trucking company, you need at least one person who knows about trucks. If you’re going to franchise a network of muffin bakeries, better get yourself someone who can make great muffins. Have a guess what kind of skills you need to have before you decide to open a scuba school… give yourself a gold star.
In other words, web businesses are usually not businesses-that-happen-to-have-websites. When you outsource a web platform you not only incur additional cost and add to your relationship-management burden, you miss out on all the intellectual property of actually running the business.
For instance, if you discover a better way of helping customers choose and add something to a shopping cart, you can act on that learning lesson more quickly if you own the team that implements it, and crucially you keep the IP on not just the business process but the platform code used to build it, which lets you get better and faster at making other improvements in the future.
If you’re a web business, how well your web platform works defines the success or failure of almost every metric of your business: converting consumers to customers, average revenue per customer, customer churn, competitive moves, and most crucially of all, time-to-iterate. Name a big, successful web business that is still on an outsourced platform.
It’s OK to be the founding team and not have a senior technology guru there with you from day one, just as it’s OK to not have your CFO or even your CEO hired yet. But recognise that you will need that person, and you will need that person to hire a team, and that team, while it may use off the shelf and SAAS and hosted components to build your web platform, will ultimately deliver something unique that your competitors can never hope to imitate; something your suitors will pay an arm and a leg to get to… the experience that comes from building and operating a successful web platform.
