Imagine you are 10 years old and cycling through a suburban neighborhood on a hot summer day. Sweat trickles down your brow and you notice a child in the corner, selling lemonade behind a makeshift counter. Watching her frantically try to create a new product while juggling customer transactions, you are struck with inspiration. You pedal home, pull out a pencil and paper, and sketch designs for the Lemonationizer - a quick and inexpensive way to make consistent, delicious lemonade. Ingredients are automatically cleaned, measured and mixed, waste is disposed of efficiently, and all power is generated via foot pedals, leaving your hands free to manage money and focus on customer service. Congratulating yourself on your brilliance, you drop the pencil on the table and think about your next move. Are you opening your own stand and hoping to dominate the market thanks to the novelty of your proprietary methods?
Are you trying to employee email database license the Lemonationizer technology to many existing booths or sell the rights to just one for a net profit? At the heart of these options is a key question that all entrepreneurs must answer: Do you have a business or a product? It is extremely important that you make this distinction and do it from the start. Your early decisions, business model, long-term trajectory, costs, and workload will all vary significantly depending on the path you choose. Making the right decision now could mean the difference between a windfall of profits and a complete mess. Below I will break down the difference between a product (the Lemonationizer ) and a business (a lemonade stand with the Lemonationizer ) in a way you may not have considered, and leave you with a clear understanding of the advantages and disadvantages of each, as well as concrete steps you can take to ensure you align your entrepreneurial efforts with the right approach.
So, do you have a business or a product? I invented a Lemonationizer in the past. Well, not exactly. I actually developed a fintech product that allowed novice investors to visualize groups of securities in an innovative way. It was really a product, not a company. I also worked for lemonade stands. That is to say, I worked for small and large companies that were unquestionably companies. Their values lay in service offerings, product sales, licensing, syndication, and building strong customer relationships, not necessarily the novelty of the services or products they offered. Finally, and perhaps most importantly, I was part of a lemonade stand (business) that should have been a Lemonationizer (product). I worked for several years as a leader for an early-stage tech start-up that tried to compete in a saturated landscape, and after many challenges and failed attempts to gain traction in the market, I ended up selling or licensing the technology to established market leaders.