Startup Secret No. 8: Your business model needs love, too

Get your head out of your product, and spend time tweaking your business. Now, before it's too late.

Beta test your business

--me

I'm building up a nice backlog of startup tips from various sources, and one of the things a lot of the aphorisms have in common, appropriately, is a focus on knowing what your business is, and being flexible in pursuing it.

I'll be running these specific tips in good time, but today I want to put this line out there because it keeps popping up in my head. I've interviewed thousands of startup CEOs, and to this day I am struck by how many of them come to me showing off a brilliant product, a clever social interaction model, a lineup of great investors...and not much in terms of a plan for making money. Yeah, I'm looking at you, Bill Nguyen of Color.

Often, by the time I see a product, it's in its third or fourth revision. It's beginning to mature. But the business itself? Still embryonic.

This strategy can work . But I caution the first-time startup founder, in particular, that getting the revenue side of your business working smoothly is going to be at least as difficult as getting the product sorted out. For that reason, you might want to start tweaking the business from the get-go, and not, as is the case with so many startups I see, only after the product is mostly done.

Netflix, for all its foibles lately, got this early on. The monthly fee for the service and the number of DVDs you could have out at a time were variables. Different people got different offers. The geeks in the back room tweaked the offers, over time, for maximum return.

Probably the best example of this, though, is Zynga. As this great story in the San Francisco Chronicle notes, "Pincus staffed his company with managers skilled at analyzing data. Unlike traditional game developers, which spend millions of dollars producing a game and then ship it out, Pincus continually tinkers. The idea is to get users to play for longer periods and spend more money on virtual items."

Every day you work to improve your product, don't you? What can you do every day to improve the business model?


Startup Secrets is based on personal interviews with people building companies and from their blog posts and news stories. Subscribe to Startup Secrets on Twitter or come back to Rafe's Radar every day for a new one. See all the Startup Secrets.

 

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