If It Makes Money, It Makes Sense

"We've got an opportunity to generate some revenue for our startup, but it's not exactly from our core product. Does bringing in outside revenue from consulting or other sources prevent us from growing our startup?"

February 28th, 2024   |    By: Wil Schroter

The only product that makes sense right now is the one that makes dollars.

We all want to believe that in the formative days of a startup, all we should be building is the exact product vision in our heads. We should be turning a blind eye to anything that doesn't directly contribute toward that vision. Everything else is a distraction... right?

While that does sound wonderful, it's not only rare, it's also somewhat delusional. The reality is most startups (who aren't funded) need to focus on building stuff that makes money, regardless of whether it's directly contributing to the product vision. And guess what? Sometimes that winds up being the best product investment we can make.

Money = Runway

Let's start with the obvious — we need to get paid. While it sounds wonderful to be able to overlook that fact, it's kind of like gravity — it doesn't matter if we believe it's true; it's going to weigh us down all the same. Revenue is never an afterthought.

We should be most concerned about ensuring we have enough runway so that we can be around long enough to figure out what the product needs to be. That could mean we're working on something that's not quite our product, like doing consulting and services work related to the product.

That's perfectly OK because while it's not directly contributing toward the product we may want to build in the future, it's underwriting our ability to work on it all. It doesn't matter how focused we are on building the future product if we're not around long enough to use it.

Paid Product Development

What's nice about doing work related to the product, if not directly on the product, like consulting or services, is that we get a chance to learn from our customers. Remember that sitting behind the scenes tinkering on our product is the worst possible place for us to be. We want to be talking to customers actively and bringing their needs to the table.

Before we launched Startups.com, we were working on Fundable.com, which is a startup fundraising platform. We thought that was the product. It wasn't until we started trying to onboard Founders to the fundraising platform that we realized very few had any idea how to build the startups they were trying to build. They needed our help with everything from creating a pitch deck to acquiring their first customer. That's how we discovered the need for a broader product, which became Startups.com.

In all of the 9 startups that I've done, I've always used services and ancillary revenue streams as a way to do product development, because it meant I was getting paid for something people clearly wanted while building something they might not. I've found that the best product was typically a combination of what people were paying for now and what they might pay for in the future — not one or the other.

Cash Rules Everything Around Me

Even if, in the early days, we're making 100% of our revenue from ancillary channels (including a day job, by the way), that's fine. Above all else, our primary goal should be keeping the startup alive. Sometimes that means raising capital, sometimes that means bartending until 3 a.m. Either way, it's allowing our startup to live.

Anytime we can build a part of our startup product that generates some revenue, even if that revenue is temporary, it's a critical part of our success, not an afterthought. It's a lot easier to diversify our time and resources into building our core product when we're not constantly worried about whether we're going to pay rent next month (OK, maybe that's still an issue...)

"If it makes money — it's the right decision" should be our core premise in the early days. Later on, as we develop some more consistency and stability we can start forming a more singular focus on what's most important to us. Right now though, cash rules everything.

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About the Author

Wil Schroter

Wil Schroter is the Founder + CEO @ Startups.com, a startup platform that includes BizplanClarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years (despite his involvement). After that he launched 8 more companies, the last 3 venture backed, to refine his learning of what not to do. He's a seasoned expert at starting companies and a total amateur at everything else.

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