Was having a discussion with an inventor. He's the archetypical "loves to build" inventor that sees business a fun lab/shop to invent and build in.
However, he's been toiling away on his newest invention for quite a while, and isn't sure about if there's light at the end of the tunnel, or what to even do next. Here's what I wrote him -
Ikigai - thank you. I really appreciate it. [he bought a copy of Ikigai; you should too]
Re: business... here, let me blunt here, for your own good.
Stop this "build first then sell" if you want to do business.
It basically doesn't work. Sell first then build almost always works, because you're forced to deliver after the product concept is pitched. Build first without a team around you usually doesn't work... I'd sell some sort of contract version of your work ASAP, maybe non-exclusive where you still own the IP afterwards, or whatever, but get someone to pay you and get real deadlines, and you'll be forced to deliver.
Honestly, I've tried build-first-then-sell many times, and it almost always fails. Sell-first-then-build almost always gets resolution quickly, either in that you sell first and then have to build rapidly (plus, you've now got money and cred to attract people with) or you find out the market doesn't want it. Both of which are much better outcomes than toiling away with uncertain payoffs at uncertain times.
If you've got the skills to deliver (and it sounds like you do), then sell-first is the way to go.
There's two general philosophies employed by inventors -
1. Build first, then sell. This is the "Archetypical Crazy Inventor" way. You build something thinking it's the greatest thing in the world, and the masses will flock to your door for your better mousetrap. Unfortunately, it's just not true. This way usually leads to discouragement and product abandonment. (There's noteworthy counter-examples, but they're noteworthy because they're so damn rare. I'll hazard a guess that 99% of build-first projects never lead to anything noteworthy, not even a credible completed failure.)
2. Sell first, then build. You make an ultra-rough prototype, define the benefits if you can deliver, and get it in front of your customers ASAP. If they won't buy, commit to buying, or help you improve the product, you're going down the wrong path. You correct mistakes before they happen with this route, and it leads to success - or, at least, a quick completion and failure that doesn't hurt.
I think inventors take the first path so often because they don't understand selling, which is understandable. But note that the second path still requires selling, just later - and if you're not studying marketing and sales while you're inventing, it's going to be just as hard after you've built whatever. Actually, arguably it'll be harder - when you have a loose prototype and benefits, customers will tell you what exactly they need and don't need to buy, and you can build with their input in mind. When you're building off of your own intuition, that's not going to cut it unless you've got a mind like someone like Tesla.
(Of course, every serious inventor fantasizes that he's got a mind like Tesla, so maybe that's part of the problem.)
Anyways - sell first. If your idea is good enough, someone will pay you to build it. If no one will pay you to build it, then you're doing some sort of hobby or project or experiment - not a business. Unless you're Tesla, which... well, then you don't need my advice, so carry on.
I honestly feel unethical promising things before I can deliver them. But I've discovered that people with a business background are less squeamish about that.
Oh, and I partly agree with your first point, you are always asking people to invest in a combination of you and your product. Just what combination depends on the stage of development you are at. Even a buyer of a mature product places some faith in the ability of the supplier to support the sale.
In my engineering career, the most successful products, without exception, have been the ones where customers have parted with at least some cash in advance of substantial development. I didn't understand this in my early career, and it always frustrated me to under the gun to develop things that have already been sold. Usually, the first customers were sold on a mix of mock-ups and PowerPoint presentations. Experience taught me the sales guys were right.
Evert single complete flop I have seen (there have been plenty) involved a build-it-and-they-will-come product.
A successful product or service needs customer feedback during it's development and the only feedback that counts involves prospective buyers choosing whether or not to part with cash.
The majority of my point still stands, though.
1. no prototype -- people are investing in you, not your product (although with some sleight of hand you may have convinced them otherwise)
2. prototype -- you still built something, you just decided when to stop.
The whole of this article still doesn't show the crux of the issue: build first mentality is a slippery slope, because it doesn't say at what point anyone has stopped 'building' to start 'selling'.
If you're nervous making a promise, ask yourself what specifically you're unsure of being able to make, then prototype only that. Then start selling, and when you have customers you can fill out the 99% of the product that's routine construction.
My guess is unless you're on the bleeding edge of physics or biology where money can't buy a product, you can make anything you sell -- the bigger it is and the sooner it's needed, the more you'll be receiving from the buyer to fund development.
I don't see how this is a helpful tip. In both cases you cite, you're still building something. In a tech startup, you'd probably call it a Minimum Viable Product. You can call it a 'prototype' or whatever, but you still have something that you can show to interested buyers. I don't think I'd even want a buyer to throw money at me without me proving that I can do something for them, which would mean at a minimum to prove that I can build, or that I am almost there anyway. Would you want to give money to someone based on nothing but promises and dreams?
It's more interesting and infinitely more valuable to know:
1. when to stop building that MVP
2. how to sell it
And I'd rather read about either of those.
August 11th, 2011. Chiba, Japan.
A mix of confusion and awe as I step off the platform.
I must have made a mistake. But maybe a good mistake.
Birds caw and cicadas click gently, filling the warm afternoon air with sounds of nature. The train platform is open to the air and on the other side of the tracks is a high fence. Beyond it, a bicycle and walking path leading to a park.
Children are running around and playing in the park, but surprisingly quietly. Very Japanese.
Tesla stock is down almost 10% today, after its 2012 earnings report became public. Tesla missed its projections and investors hammered the stock in response. So what did I just do? I just bought a lot of TSLA. Why did I do it? Because I'm betting on Elon.
There's a SeekingAlpha analyst report that's very bearish on Tesla stock. The author writes:
Here's the problem with the author's perspective: He doesn't understand Elon's master plan, nor does he appreciate Elon's "relentlessly resourceful" ability to execute on that plan.