The traditional mode of starting a company is to plan a serial process, where you complete only once all the steps, leading to the “big bang” launch of the company. I strongly recommend a dramatic departure from this model, called “planned iteration,” where you assume you won’t get it right the first time. This idea was well articulated by Paul Graham in an old essay, called “Startups in 13 Sentences” in which he talked about “making a few people really happy rather than making a lot of people semi-happy.” One of his key points is that “launching teaches you what you should have been building,” and I agree. All you old software development types will recognize the analogy to the traditional two year “waterfall model” of software development, which has been totally replaced with the Agile iterative methodology

I deal often with early-stage startups, and many of these don’t have any customers yet (but wish they did), so it’s not surprising they still don’t think of customers as their friends. More disturbingly, others do have customers, but the customer service program consists of an informal focus on “problems,” rather than a proactive effort to establish a positive relationship with friends. The right time to put a formal customer service program in place, with measurements, is before the first sale of your product or service to a customer. You can’t manage what you don’t measure, and customer satisfaction these days is one the most critical success factors to every business.

It’s a long way from an entrepreneur’s “idea” to a working product with a real market and paying customers. A necessary intermediate step for proof of concept, credibility with potential investors, and communication with your team, is a working prototype. Building a prototype should be an early and high priority task for every startup. A prototype doesn’t need to look great, or be built to scale, but it better accurately translate your vision into something real and tangible

As we recover from some tough economic times, more and more people seem to be turning to entrepreneurship as an alternative to traditional employment. I applaud this trend, but caution all of you thinking this direction to approach entrepreneurship with your eyes wide open. It is not for everyone, as the entrepreneur’s path is fraught with challenges