Chapter 8

THE PRODUCT

• People, product, plan.

  -Venture capital adage

   

The venture capital adage "people, product, plan" clearly emphasizes the product as one of the crucial elements of a start-up. The product, together with various services the company sells, is the organization's output; it is what customers buy and use. Customer purchase orders convert the product to revenue, and the quantity of those orders determines whether the firm is viable.

During the concept stage, the product is represented by a few sketches and perhaps a prototype demonstration in a laboratory. After that stage, the product progresses through various design phases as a series of specifications and demonstrations until it can be realized and replicated through a manufacturing process, as described in chapter 7. As the company enters the market development stage, the actual product is produced by the manufacturing organization and shipped to customers for revenue. A product can be viewed in three ways:

• The product specification: Instructions or information (the bit pattern in the case of software) developed by engineering to describe the product so that a manufacturing organization can replicate it.

• The product itself, or reality: The physical product coming from a production line or replicated from a master software tape; this is what customers ultimately buy.

• A market, or the buyer's image: Specifications, pictures, and brochures that describe what a product is or how it appears, explain why someone would want it, or cause prospective customers to believe it can do something significant for them.

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