Kickstarting Development and Reducing Risk

Starting a new business is very risky. In the area of business that Redshift Wireless is in, there seem to be three different markets that people are going for. They are: Rule The World, Lots Of Cheap Stuff, or Start With The Big Stuff.I have spent a LOT of time thinking about this during the last few years, and I have come to the conclusion that the first two are rather risky for the business.

Rule The World is a great accomplishment if you can get away with it, but you know what? It takes some significant resources. In this industry, I don’t mean a small team of programmers, I am talking a few teams of programmers, to the point where you need multiple managers for all the programmers you have. And this adds another layer of complexity. One of the problems with this business strategy is that you are trying to be all things to all people. This is a great aim, but it is almost impossible to get it to work.

Today, Google is doing this, but they did not start out that way. They started with one thing, and doing it well. That one thing was search. They did not even do advertising. Just search. As they got more resources and more experience they built on it. Many businesses try to do everything from day one, and then wonder why they are not getting anywhere.

Another way to do things is with Lots Of Cheap Stuff. In this way you go for a niche market, like monitoring when plants need watering, or when you need to add air to car tires. But you know what – people don’t need to add air that often, and spending $40 on a wireless sensor to tell you when a $10 pot plant needs watering is probably a bit of a waste.

So, we are going for the third option – Start With The Big Stuff. From a complexity point of view, it is similar to the Lots Of Cheap Stuff model, but provides a return for the customers. They are the ones who will be buying your product, and without a return they will not buy. There is another reason for going this way. It means that we can concentrate on areas where there is more return for us from a given sale. Sure, the cost of the sale will be slightly higher, but so will the profit.

And this profit can be reinvested into the business, kickstarting it. The hope is also that kickstarting the business using sales that the risk can be reduced. Concentrating on a limited number of products limits the investment required as well, so if the concept is not as successful then there is less R&D effort wasted.