While our decisions are often affected by costs we have already incurred that cannot recovered – known in economics as sunk costs. The more we invest in a project, the harder it becomes to abandon it.
This is Sunk Cost Fallacy, and it can be a deadly cognitive bias for an early-stage startup whose resources are scarce and must be used wisely.
Founder's dilemma 🤔
Every programmer will tell you that working code is the ultimate sunk cost in software. To create working code, your team must first make a strategic decision to build something, adjust the marketing messaging, and design the solution—all before even starting its implementation.
Because of the significance of these efforts, it’s often wise to delay beginning implementation for as long as you can. At the same time, many experienced entrepreneurs will advise you to hit the market as early as you can. These two ideas may seem too contradictory to follow both.
Thankfully, you’re not the first person to face this dilemma. There are multiple proven ways to handle it, depending on your product idea and the market you’re working in. I will talk about three of them here.
Validate the concept 🔬
The first approach is to utilize existing platforms to see whether your idea appeals to users as much as you expect it will. This is particularly useful when building social products. For example, let’s say you’re thinking about creating a crowdsourcing app that allows passengers to report delays in public transport, and suggest substitute routes to their peers. Before writing a single line of code, you could try to get initial traction around a hashtag, such as #delays-london, to get an idea of how interested people would be in a product that provides a similar service.
Hack it 🛠
The second method is even simpler. It’s based on the observation that most of the apps you use every day can be boiled down to a single form. Facebook and Twitter can certainly be simplified to one “What are you doing?” input. Airbnb’s form would consist of a handful of questions about location, price range, and a few other parameters. Its service could in fact be provided as a newsletter—users receive listings based on the form input they provided. This sort of implementation would again be just enough to validate the concept with potential users.
If you need a super simple tool for building forms, you can use Typeform or Google Forms. If you need email, you can send messages manually or use a service like MailChimp or SendGrid. You can even use Zapier to automate task management and build simple workflows. For example, you can create a Trello board for your Airbnb listings, put each user in a separate card, and add links to properties in the card comments. Then, build a workflow that will automatically send these comments in an email.
Hire experts 🕴
If your market requires a high-fidelity solution that cannot be simulated with simple tools like hashtags, Typeform, MailChimp, or Zapier, the third method is for you. While I love the hacker approaches I presented above, I realize that they won’t work for all early-stage startups – sometimes a fuller MVP is required. In such situations, you should aim to reduce the amount of your investment.
For example, instead of building an in-house team, you can hire a developer or two for a flexible amount of time and ask them to build an app from out of the box libraries and frameworks.
Truth be told, most apps are similar. Most likely, the developers you hire will be able to reuse open-source code to create working code in a short amount of time. You can even use a platform like Pilot to find experienced engineers more easily, and take advantage of the plug and play processes they’re used to.