Iterate or Die – Part 1

I’ve been hearing a good bit of chatter lately among the startup community in Atlanta about how important it is to iterate in a startup. By “iterate” I mean the process of determining exactly which product, market, and business model will result in success – in short, finding out what works.  Of course, success means different things to different startups. Let’s dive into iterating in a startup.

Lance Weatherby is a venture catalyst at ATDC’s Georgia Tech and a well-known blogger in the Atlanta tech scene.  He values velocity and versatility in team members, and on his blog Force of Good (http://blog.weatherby.net/) he coined the term velocitile to label such a person. I believe that you need both a good market and flexible people to be successful in a startup.  Atlanta is a phenomenal city for talented people that have these characteristics. With both of those in place, iterating is a natural and healthy part of building a company.

My Atlanta-based Inc. 500 software company, Hannon Hill, makes mid-market web content management solutions for higher education and other industry verticals. It wasn’t always this way. I started the company in Durham, North Carolina, and my intial vision in December of 2000 was to provide a software-as-a-service (SaaS) application that would make it easy to update a generic, small business website, for $30 per month.

The service worked with existing websites over FTP and provided a visual interface, similar to Windows Explorer, so that people could click on a file and edit it in a browser-based word processor. Upon saving the changes, the file would then be sent over FTP back to the web server, along with a backup version. The benefits of this model included:

• No software to install on the client (web browser) or server
• No initial up-front fee and a low monthly cost
• Familiar file manager interface with word processor

On top of these benefits, the software was as easy to use as web-based email. The only problem?  It was a complete failure.  I started out working on the company part-time and eventually went full-time within six months.  I learned several lessons shortly after going full-time:

• The market wasn’t accepting of SaaS as businesses were used to purchasing installed software with a perpetual license
• $30 per month per site did not provide a sufficient path with little capital to build a $1 million+ business
• Customers needed significant hand-holding to get up and running even though the product was easy to use

At that point, I knew something had to change. By August 2001 we had retooled the product to be an installed server application (it was always a PHP/MySQL app) and priced it at $1,000 for a 10-user license.

Head on over to Iterate or Die – Part 2 to learn why we moved to Atlanta and if our iterating paid off.

Note: This is republish of a previous series with some aspects reworked.