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Lecture 4 - The Software Development Life Cycle -> Quick Intro -> Idea -> Product Design

First let me tell you how software start-ups are often born. And please note that I’m not joking here (well, maybe a little bit).

Once upon a time in California…

One sleepy Sunday two friends, John and Paul, both programmers, meet at a sports bar in downtown San Francisco. Their conversation is about the two things that are always discussed in Silicon Valley:

1. How to create a cool start-up.

2. How to make enough money to retire young.

The bartender keeps the Budweisers coming, and nothing extraordinary is expected to happen, but suddenly Paul moves his head towards John, directs his pointer finger to the wooden ceiling of the bar, and says: “Got it!” That “Got it!” means the birth of another GRAND SOFTWARE IDEA, which sometimes can be as ridiculous as “Let’s make a cool Web site to sell toilet paper.” John says, “Wow!” and they start writing a business plan. After a couple more beers, their business plan is finished and ready to be presented in front of venture capitalists (VCs).

If you have someone in front of you who you think might be a venture capitalist, you can ask him two questions:

Q1: Is your office located on Sand Hill Road in Menlo Park, CA?

Q2. Do you have 5 million dollars to invest in a cool Web site that sells toilet paper?

If the answer is Yes to both questions, the person is a venture capitalist.

Don’t think that if someone wants to invest 5 million into some dumb project, he is stupid. Although venture capitalists are risk takers, they are smart risk takers, and they just happen to know that after they invest 5 million in a toilet-paper-selling Web site, somebody might pay 500 million to buy (or as they like to call it, “acquire”) it.

BTW, John’s Stanford pal Jerry happens to be a partner at a VC firm. The next day they all get together at Jerry’s Sand Hill Road office. Guys pass their excitement onto Jerry’s boss, and a week after that historic event the first round of financing (i.e., the first pile of money) in the amount of 5 million is available for wasting on the project of the century.

Paul, the guy who said, “Got it!” naturally becomes the CEO (Chief Executive Officer), and his buddy John becomes the CTO (Chief Technology Officer). Jerry becomes a member of the board of directors.

And now the craziness starts:

– The new company, Just WOW Toilet Paper 4U, Inc., rents out an office as close as possible to the condo of the CEO (but not too far from the CTO’s condo and Jerry’s office).

– In order to buy Servers/Desktops/Linuxes/Oracles and hire inspired followers, money is pouring from their bank account like a Himalayan avalanche.

– Pepperoni pizza and Diet Coke become the everyday food and drink, even among the vegetarians and I-drink-only-water types.

– New lines of code appear with the frequency of bullets from a well-oiled AK47.

– Yahoo! Messenger becomes the primary means of communication between the spouses of the start-up employees and the start-up employees who just cannot afford the luxury of going home before 3:00 in the morning.

– Each atom of air inside the office is filled with excitement about the project and hopes about future fortunes.

– Nobody can convince start-up employees that their project is nonsense (but wait, maybe somebody will buy it!).

Got 500 mil for Just WOW Toilet Paper 4U, Inc?

As you were reading that story, you probably noticed that it all started with beer… sorry, with an idea. Everything starts with somebody’s idea; software is not something unique in that respect. First you envision, then you implement.

Question: Who generates ideas at the software start-up?

Answer: As a rule, ideas come from the fellows who work in marketing or product management. But anyone at the company can come up with a great idea that can be implemented as a part of the software.


In the case of YouTube, somebody came up with the idea to put thumbnails with related videos to the right of the main video clip. The beauty of that idea is that it makes site users want to watch more videos and thus spend more time on the site.

Question: What are other sources of ideas, besides the creative thinking of the start-up employees?

Answer: In many cases, ideas for new functionalities might come from:

– Users, e.g., via customer support people.

– New contracts, e.g., a company starts to work with another credit card processor.

– Internal data, e.g., by analyzing data from the database and log files, we can discover:

a. how users interact with our Web site (e.g., behavioral patterns) and

b. what social layers and types (e.g., age, education, gender, wealth, interests) our users represent.

– Cool features found on competitors’ Web sites

– Other sources

When presenting The Big Picture of the Cycle at the end of this chapter, we’ll refer to the person who generates ideas as the “marketing dude.”


Here is a good way to collect ideas from within the company:

Create a special Web page on your Intranet called something like “Idea Vault.” Everybody in the company should be able to read and edit it. This page is valuable because:

There are a lot of great ideas in the people’s heads and there are a lot of great ideas being communicated during lunches, meetings, etc. But for many reasons (like the need to rationalize new ideas before you bring them up or because people just forget stuff), many great ideas stay in those heads and die in restaurants, meeting rooms, and other places. This page gives everyone an opportunity to express an idea in easy and nonobligatory way.

You’ll be surprised how fast this page will be filled with great stuff, because start-up folks are very creative and LOVE to express themselves!

Two more things about an “Idea Vault” page:

– You should clearly communicate that a person should NOT think twice before putting his idea onto that page. That’s the whole point. “If you’ve got an idea, just go ahead and record it. DO IT even if you think that the idea might seem stupid, unexpected, or irrational. If you think it’s a good idea, BRING IT ON!

– You should make sure that everyone in your start-up knows about the page. Send out an email with a link to the page with an explanation of why your company needs that page. I guarantee that everyone will love your initiative. Next ->

Lecture 4 - The Software Development Life Cycle -> Quick Intro -> Idea -> Product Design