Small Business Startup News

Product Development Model Can Be Cause Of Death For Startups

Written by Jenna Weiner
Published: 8/31/2009

The reasons for small business failure are many. Serial entrepreneur Steve Blank offers one more cause for small business failures: use of a product development model that is not appropriate for startup companies.

The product development model is more or less old news for small business owners, as most companies use some form of it to develop and launch new products or services.

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However, this model may not just be ill-fitting for startup companies, but it may actually be a cause of death, said serial entrepreneur Steve Blank.

Blank, who has started eight Silicon Valley startups since 1978, wrote on his website that the product development model is often a cause of early startup failure.

The model, which consists of four stages - concept and seed, product development, alpha and beta tests, and product launch and first customer ship - is most successful when the product is being launched into an existing, well-defined market, Blank said. This is not the case with most startup companies.

"Following this diagram religiously will more often than not put you out of business," Blank wrote. "Most experienced entrepreneurs will tell you that the model collapses at first contact with customers."

Regardless of the use of product development models, two-thirds of startups survive at least two years, according to the Small Business Administration.

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