I've thought a lot about the best ways to incubate b2b software businesses and I've come to a 9 month 3 stage program. I shared the basics on twitter but this post goes more in depth about why I set it up this way.
After school I joined a startup accelerator put on my Red Hat and Citrix. They gave us some grant money and coached us + did their best to push us in the right direction. I learned a metric ton from the following 3 years after entering that program and would NOT be near the individual I am today without having done it.
So, if I could design the ideal b2b startup accelerator what would I create?
9 months. 3 different phases for 3 months each.
I'm not entirely sure what the $$$ should be. It would vary based on location and team size and all that. But I think it should be equity free. This may come off contrarian but this should be thought of as less of a vc arm and more of a professional development opportunity, that might eventually the company a sh** ton of money.
The goal of the program is to create lasting businesses. If you want to raise vc after so be it. If you want to say thanks and walk out, so be it. The individual who wanted to operate a small bootstrapped business would resent having a vc on the cap table daily. Not a good fit for either party.
The first phase of the program would be solely about thinking. This might come off as a weird way to start but its way more important to learn how to think about these problems than it is to sprint full speed and be wrong. In this stage it would be the main focus of the program to teach you how to discover problems and then to rudimentarily cross them off. You would go through something simple like
- is this problem large?
- is this problem frequent?
- many more
The entire point of this would be to prevent you from building something that people do not want. Or that would be unable to sustain itself. I've long thought weddings were a bad problem to think about since, in theory, your customers would use your service once or maybe twice in their life time.
You'd want to discover something that was a big pain. And happened frequently. A true problem. I've made the mistake of conflating problems vs solutions I could build. There is a very big difference. In this portion of the program it would be explicit to build no solutions. You will always have time to build. At this stage every assumption you make has the possibility to kill you. Each wrong step puts you 1% off course. That compounds to extremes over time.
There are lots of people better at this than I am so it'd be ideal to have some experts working with the program to help force teams to do this exercise correctly.
The second phase of the program would be focused on calling potential customers. You might ask yourself how do I sell anything without having the product built?? OMG I need to code it up. Slow down cowboy. You will always have time to build the perfect product. You will build the wrong one without this step.
You will be locked in a room. Forced to cold call customers over. and over. and over. After doing this you will have very valuable data about what gets customers interested, why they might be interested. And most of all, it would get you over your fear of lead gen. It'd be helpful to have some coaches in this phase of the program who are excellent sales professionals as well.
The last, and final phase, would be building the product. Armed with all of the data, the feedback and your new found skills in selling a product that doesn't exist, you will now sit down and write the v1 of your product. This is a v1, not a full featured product.
There are thousands of ways you could improve this section with talks about MVPs and how to test your core assumptions that are outside the scope of this article. Just know, moving slowly and learning how to think will serve you very well for the rest of your career. Getting over the fear of demand gen and learning how to talk to potential customers will also serve you very well. And finally, once you've gotten some customers interested you know exactly what to build. And depending on your deal size, might be near ramen profitability!
9 months. 3 phases. Designed to build a lasting business.