If you have no customers you'll work on your project and eventually give up. If you have multiple customers you have a business of some sort. If you have only one you are in a dangerous place.
A case study from last year. I'm on a board of a company that had a small product under way but got excited by a much larger market. They even got a customer who paid a small down payment (~75K). So they spent more than a year developing the new product (several engineers on staff) in close partnership with this customer. We board members kept urging the CEO to find a second customer but he was more interested in engineering than sales. You can guess what happened: after a year the customer declined to make the second payment of ~75K. So I called the customer and he said he wouldn't pay but would just buy the company for a pittance (less than had been spent on development). The board declined, and as I predicted the customer attempted to recruit the development team, so we just fired the customer. He was quite irate because he had built this into his own development plans, but fuck him. The one fun part was that he couldn't re implement what he needed himself as we had patents they would need.
If that wasn't bad enough, the customer's use case was quite specific and not adequate for the broader market. So further development was needed (development that would already have been done had there been marketing and product management) before the company could even try to enter the market.
In the end I had to come in and do a restart and spin out. A regular starup would have died.
It doesn't have to be as bad as that. But a big company can be committed to you and then cancel a whole product for whatever reasons that have nothing to do with you.
And I wasn't kidding with the Google example. They have struggled to develop new lines of revenue, even pulling puny old Nest back onto their balance sheet for an extra percent or two of non-advertising revenue. With a more diversified revenue stream wall street analysis would drive the stock price up. If there's a secular change in the advertising market they really would suffer. So this advice isn't just for startups.
A case study from last year. I'm on a board of a company that had a small product under way but got excited by a much larger market. They even got a customer who paid a small down payment (~75K). So they spent more than a year developing the new product (several engineers on staff) in close partnership with this customer. We board members kept urging the CEO to find a second customer but he was more interested in engineering than sales. You can guess what happened: after a year the customer declined to make the second payment of ~75K. So I called the customer and he said he wouldn't pay but would just buy the company for a pittance (less than had been spent on development). The board declined, and as I predicted the customer attempted to recruit the development team, so we just fired the customer. He was quite irate because he had built this into his own development plans, but fuck him. The one fun part was that he couldn't re implement what he needed himself as we had patents they would need.
If that wasn't bad enough, the customer's use case was quite specific and not adequate for the broader market. So further development was needed (development that would already have been done had there been marketing and product management) before the company could even try to enter the market.
In the end I had to come in and do a restart and spin out. A regular starup would have died.
It doesn't have to be as bad as that. But a big company can be committed to you and then cancel a whole product for whatever reasons that have nothing to do with you.
And I wasn't kidding with the Google example. They have struggled to develop new lines of revenue, even pulling puny old Nest back onto their balance sheet for an extra percent or two of non-advertising revenue. With a more diversified revenue stream wall street analysis would drive the stock price up. If there's a secular change in the advertising market they really would suffer. So this advice isn't just for startups.