Most people believe that a great idea that will change an industry will change the way something is done, or that revolutionizing a process is all it takes for an entrepreneur to gain the American dream… hitting a home run in the software business.
Most companies start with this great idea, start developing the software with software engineers with limited subject expertise for 2-3 years until they’re ready to have something to sell.
A better approach would be to identify the business problem and the solution jointly with a customer with a high level of need who views the new tech people as experts, or the best people to build a solution for this problem. If the value is great, and the technical expertise is better than is available in the market, customers will allow and pay to joint-develop their requirements put into a new technology platform and be delivered for the savings. In this fashion, the entrepreneurial idea begins an execution process to go live with an abundance of subject matter expertise and real-world requirements and problems to be solved during this implementation.
The original joint-development partner and customer need to be a name that is respected and looked at as a market leader so that other companies can glean respect of their requirements “if they were able to be successful with the market leader, then they can do it for us”.
Continuing to build on this first success building out the product with about 10 customers gives a strong narrative that you can accomplish and execute the business problem with your solution. After 10 customers, then the scalability of what you’re doing needs to be put into one product as opposed to ten joint-development projects as a lowest-common-denominator to go into other companies. This allows the company to scale.
This process is almost 100% counter to what most software entrepreneurs start with. Execution is the key and there are many examples of execution in the market today. One of the easiest ones to look at is the company Seattle Consulting who wrote MS-DOS and was later re-sold to Microsoft to IBM. Microsoft found the business problem and the customer who could use the technology. They didn’t sit in a room and develop for 3 years without a customer.
Another example of developers developing a product without customers or without an organization that could leverage it with experts is Xerox and Park Palo Alto research center. They’re the ones who developed windows, the mouse, icons, the whole windows environment. Steve Jobs and Wozniak took these inventions and went and marketed them directly while Xerox who was a copier company and focused on copiers, couldn’t get their organization to focus on those products. They developed the products and failed.
In conclusion, the last example of joint-developing a product with a customer is how Oracle and Larry Ellison and Bob Minor built an SQL database for Amdahl Corporation written in C. They co-owned the code they built and took it to market, and today Oracle is one of the largest software companies in the world.