Re:The 5.2 billion dollar mistake.
by InclinedPlane on Tuesday November 02, 2010 @05:46AM
(#1859739)
There are a couple of lessons for startups here.
Things to avoid doing: spending crap-tons of investment money long before your product is on the market; gold-plating the business plan; relying on the classic "expect everything to go as planned waterfall / big-bang integration" model.
Iridium could have been much more successful (read: profitable to the initial investors) if they had used different techniques at each step such as iterative development with strong market / customer feedback. If they had begun by gauging market reaction through using pre-order commitments (paid and unpaid) instead of relying heavily on deep pocket investors they would have been able to scale their initial offering to the market a bit better. If they had planned to launch a "minimal viable product" initially that could be scaled up over time as the business grew they would have avoided the massive up-front costs that sank them (the biggest cost was launches, they could have pre-built the entire fleet of satellites and kept most on the ground for a pittance in comparison).
Instead they put an entire fleet of satellites into orbit at tremendous cost and launched a service which on day 1 gave essentially 24/7 phone coverage over the entire Earth. An impressive achievement to be sure, but at too great a cost.
Some companies can grow like this, ramp up to enormous proportions quickly and find enough traction to keep running and keep growing. But for every success there are many more failures, companies that devoured their seed corn too fast.
Things to avoid doing: spending crap-tons of investment money long before your product is on the market; gold-plating the business plan; relying on the classic "expect everything to go as planned waterfall / big-bang integration" model.
Iridium could have been much more successful (read: profitable to the initial investors) if they had used different techniques at each step such as iterative development with strong market / customer feedback. If they had begun by gauging market reaction through using pre-order commitments (paid and unpaid) instead of relying heavily on deep pocket investors they would have been able to scale their initial offering to the market a bit better. If they had planned to launch a "minimal viable product" initially that could be scaled up over time as the business grew they would have avoided the massive up-front costs that sank them (the biggest cost was launches, they could have pre-built the entire fleet of satellites and kept most on the ground for a pittance in comparison).
Instead they put an entire fleet of satellites into orbit at tremendous cost and launched a service which on day 1 gave essentially 24/7 phone coverage over the entire Earth. An impressive achievement to be sure, but at too great a cost.
Some companies can grow like this, ramp up to enormous proportions quickly and find enough traction to keep running and keep growing. But for every success there are many more failures, companies that devoured their seed corn too fast.