Aren’t we in the business model generation? Whenever an entrepreneur brings up their new venture, there’s always some smartass in the room who wants to question your business model.
Next time this happens, tell that spreadsheet jockey to hold his horses. The business model is not the first thing on your things to do list when you start your new venture.
Fred Wilson does a great job breaking this down in a post he wrote in his blog titled: Product > Strategy > Business Model
Based on the title, you can see Wilson suggest that business model discussions should come only after the product and strategy are completed. He states:
We have also had many portfolio companies build revenue models that did not line up well with the strategic direction. And in some cases, the companies really did not have a well articulated strategic direction at all. That led to a lot of wasted energy building a team and a customer base that ultimately was not of value to the business. We have seen teams walk away from parts of their business because of such mistakes.
If you don’t have a strategy yet, but have already decided on who and what you are going to charge for you product, then I suggest you go read both Fred Wilson’s post on this topic, as well as go read a follow up post from Mark Suster riffing on what Wilson shared in his post.
There are three type of entrepreneurs. The majority are either makers or managers. The third type is the rare combination of both. Assuming you fall in the majority case, you will eventually have a big problem to solve as you start to scale your company.
If you want to focus on being just a manager and not a maker, who will lead product innovation? If you want to focus on being just a maker and not a manager, who will lead your employees?
Fred Wilson did a nice write-up on this conundrum earlier this year on his blog in a post titled Becoming A Boss. Wilson’s primary point is:
the time and energy and passion for making things can be all consuming and managing people can also be all consuming. Doing both well is really hard.
He also points out the following:
The maker/manager conflict sits at the heart of many of the development challenges that founder/CEOs deal with as they scale their companies and scale themselves. Conquering it is possibly your greatest opportunity and will lead to your biggest success.
In the full blog post Wilson shares several personal stories including one from his venture capital firm’s CEO summit, and one particularly telling story about an entrepreneur that he worked with in the past.
Please read the entire post over on Fred Wilson’s blog to get the full essence of his advice.