Steve Blank has an excellent article “When It’s Darkest Men See the Stars” which is the talk-of-the-town in the serial entrepreneur community. A brief excerpt:
“Entrepreneurial Singularity - The barriers to entrepreneurship are not just being removed. In each case they’re being replaced by innovations that are speeding up each step, some by a factor of ten. For example, Internet commerce startups the time needed to get the first product to market has been cut by a factor of ten, the dollars needed to get the first product to market cut by a factor of ten, the number of sources of initial capital for entrepreneurs has increased by a factor of ten, etc.”
Sounds a lot like CPU’s and Moore’s Law, eh?
If you follow Steve’s writing you find his basic premise is that a start-up is a project to find a business model, and that most startups will need to “pivot” before finding a model that works.
Iterate to Success – Start-up Clock Speed
I look at each pivot as a special type of iteration. An iteration is a change in product, packaging or business model. Not all iterations are pivots, but all pivots are iterations. The pace of iterations is an organization’s clock speed. The faster you iterate, the more likely you are to strike success with the market. Usually the faster your clock speed the less cash you consume between iterations. A start-up that has a clock speed of 6 months will have two chance to get it right on I year of cash, a startup with a clock speed of 30 days will have 12 chances. In large organizations, an iteration is merely a product enhancement, or market expansion, but in a start-up one iteration can be the difference between riches and bankruptcy. Urgency is critical.
At the core of Ray Kurzweil’s Singularly is CPU clock speed. In 1981, my first computer, had a clock speed of 4.77 MHzs, but computer speeds have steadily marched forward. The time and cost of a cycle was roughly cut in half every two years. Will the same thing happen with start-ups? Could faster iterations result in a startup singularity? I don’t know. It seems that the maximum start-up iteration speed is constrained by how fast customers will provide feedback. But people have said Moore’s law would meet its constraint for over 15 years, yet every time the chip engineers think its over someone finds another way to speed up the chips.
I wonder if entrepreneurs will have similar success in increasing the start-up cycle time. Certainly in the next few years there will be massive improvements. The time it takes to build teams, release software, attract investors, and close customers is still measured in months. We (entrepreneurs and investors) can do better, and we will. Recruiting, Agile Development, Seed Investing and Marketing are all fertile ground where innovation is flourishing, and increased innovation will increase speed.