Clicking around on FriendFeed today, I ran across this blog post from Peter, a startup founder with a dream.  And an apparent lack of $500,000.  They’d done some asking around and had come up with an estimate of $150,000 to build the site they were thinking about.  They’d hired some consultants and the consultants said 12 weeks * 2 people = $150k.  Plus other startup costs and I’m assuming some small salaries for the founders and they figured they’d need a total of $500k just to get started.

What?!  $500k just to get started?  The insanity!  The best way to get started is…wait for it…just get started!

And start small.  You don’t need to build a huge product with all the bells and whistles to know if it’s going to work.  And it’s probably best not too.  Because what if you’re wrong?  One of the advantages that startups have is that they can be quick and change direction and experiment without huge overhead.  The more you build before you launch, the more it’s going to cost you to change direction.

One of the things we’ve been doing with our clients at Koombea is helping them figure out how to break their idea down into bite sized pieces.  Once you know what your pieces are, prioritize them.  There’s always going to be one thing that is the MOST IMPORTANT THING.  Ask yourself, “What is the very core of my service?”  It should be small.  Maybe one feature.  Maybe two.  Then build it and launch it.  Then see how people use it.  Then go back to your list of bite sized pieces and ask, “What’s the next most important thing for my business?” Then build it and launch it.  Repeat.  Collect feedback along the way.  Talk to your users.  Reprioritize.  Then repeat again.

So my advice for Peter Spook is to start small and iterate.  The worst thing you could do is build a Taj Mahal and then find out that what your users really wanted was something just a bit more cozy.  By building incrementally, you can better manage your cash.  And for startups in this environment, cash is very very important.

Reid Hoffman summed it up perfectly when he said, “If you’re not embarrassed by the first version of your product, you’ve launched too late.”  He’s right on the money.

P.S. Peter, whoever quoted you $150k was off their rocker.  Drop me a note.  We can help ;)