
When it comes to startups, products and services don't mix - icey
http://giffconstable.com/2010/01/when-it-comes-to-startups-products-and-services-dont-mix/
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jacquesm
I'm a 'bit' investor (angel round) in a small startup that has been doing
both, a product and a service.

There is a really nice synergy between the two happening there. The product
functions as the ice breaker, the services come after.

It saves them a ton on marketing costs for their services division, basically
the customers come to them, find out what a nice little company it is and then
decide to trade 'up'.

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edit: In general I think this is bad advice, small startups that do only 'one
thing' and are not willing to move where the money is tend to die out rather
quickly.

It often doesn't really matter what brings in the $ to stay afloat, as long as
you are clear about where you want to be.

If consulting or fixed price jobs are what keeps you in business long enough
to get a solid product or if you use a product as the door opener to sell more
services, as long as you don't let the interests in the one conflict with the
other you should be in good shape.

Much better shape than those that only have a product or only do contract
work. Ideally you need three legs to stand on, so three products, preferably
aimed at different markets, or a services division that you can use to pick up
the slack.

Just a single product or just contracting is asking for trouble, and
contracting with only a single large customer to bring in more than 40% of
your total income stream is really playing Russian roulette.

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aditya
I think you're wrong. Once you go down the path to doing consulting, you lose
the hunger to build the product business because the money keeps coming in.

pg says[1] that most product startups die when they become consulting
businesses, and I think he's right. Do you have counter-examples of how a
product startup became a consulting company and then went back to being a
product startup? Not saying it isn't do-able, just that it's much harder. I'm
in the spot now, and having an interesting time dealing with the challenges.

EDIT: By wrong, I mean, I think you're right that you shouldn't let the
consulting business interfere but in practice that is almost impossible to do.

1\. <http://www.paulgraham.com/startupfunding.html#f2n>

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ruang
37signals is an obvious counter-example.

