Wednesday, February 24, 2010

Research Then Development

A lot of companies talk about R&D -- Research and Development. If you're doing a startup, wipe that phrase out of your vocabulary!

It's simple, really. Investors don't want to pay for research. Research is open-ended. Research doesn't have an answer -- at best, it has a theory. I was talking with an entrepreneur recently who has an idea about something that might work. If it works, it might be cool. If it's cool enough, it might make money. That's all fine and good, but investors aren't going to pay for all those mights. They don't want to invest in a theory -- they want as much certainty as possible. Their ideal scenario is where you're already making money and you just need money to expand. Certainly, you can find investors who will take more risk, but the more uncertainty you can remove, the better.

Don't get me wrong -- research is important. Most of the time I spent on Puzzazz in the last year and a half was research. But unless you work at Bell Labs or Microsoft Research, don't count on somebody else paying you to do it.

Instead of R&D, you have to think about R then D, with investors coming after the R and some of the D.

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