Making Technology Startups Successful Through Vertical Slicing

Haresh Kumbhani

A few weeks ago, at The Indus Entrepreneurs Conference in Santa Clara, California, I couldn’t stop studying the throngs of budding entrepreneurs there who were seeking to leverage the technology gold rush, and grab attention from top venture capitalists to fuel their dreams. From several presentations, panel discussions and networking events, I could deduce unbridled confidence and optimism from VCs -- and in the same proportion, a sense of futility from several hopeful entrepreneurs. I was able to put myself on both sides due to my history -- first as a tech entrepreneur in my early days, then as an angel investor. Here is what I have learned over the past few decades that I would like to share with budding entrepreneurs. In this hyper-competitive landscape, where every niche in the new cloud economy is highly contested, it is vital for young entrepreneurs to learn the concept of vertical slicing at a strategic level.

The nominal advice to entrepreneurs is to find an unsolved problem for a $1 billion-plus addressable market. There is no dearth of advice from experts, including VCs. However, pragmatism is very often missed at each stage of the creative enterprise.

Early Stage Startup: Raise The Seed Round Of Funding

Most first-time entrepreneurs know that the surest way for them to get attention from angel investors or VCs is to crisply define the problem that matches the technology theme picked by the venture partner. If you get accepted into an incubator program, you become one of the lucky few who receive regular guidance from experienced hands. A common mistake entrepreneurs might make is building a proof-of-concept model based on a set of well-analyzed problems they are trying to solve with their product idea. VCs challenge entrepreneurs in honest and often brutal ways to reassess their business strategy. Invariably, a shiny new cloud-ready proof-of-concept (PoC) solution is built by a new entrepreneur that utilizes cutting-edge open-source technologies to emphasize their technological prowess. There may be insufficient analysis on storyboarding and use cases in building the PoC and more focus on erecting a malleable platform in their PoC. While the platform might be cool, the key concept of business analysis and vertical slicing of the problem domain is ignored in building the PoC here, which is a serious mistake. It is backward -- like building a solution and then looking for a problem.

Mid-Stage Startup: Micro-Pivoting To Acquire Early Adopters

Congratulations! By now, the startup is off the ground and the entrepreneurs feel secure, having raised seed and perhaps Series A funding from well-intentioned professional investors. However, the composition of the board can decimate a promising startup. Investors may sometimes offer bizarre, unsolicited inputs.

For example, in a recent startup, a board member called out the need to adopt an open-source licensing model with a freemium business model, when the solution had not even achieved enough traction among early adopters. Entrepreneurs have to walk a tightrope of keeping board members engaged and yet pursue the strategy of the core investment hypothesis, turning it into a minimum viable product (MVP). VCs guide entrepreneurs to listen to feedback from early customers and initiate micro-pivots, sometimes wholesale pivots, to fine-tune the product and its use cases. Here again, investors often might ignore the need for hiring a seasoned product manager who can help translate the cacophony of feedback into consistent themes. All the ideas pour into a tool like Jira as a massive backlog of epics and user stories. An educated guess of what to build in an MVP, sometimes without vertical slicing, can create a mess of the MVP. Without disciplined guidance from a product manager, engineers start falling back into their comfort zones and building what they know best: an over-engineered, cloud-ready platform. By ignoring the fundamental concept of grooming the backlog and vertical slicing key features, the end result is an unwieldy MVP.

Mature Startup: Fulfilling Promises To Early Adopters

So you survived the process of building a successful MVP. You may have also raised more VC funding based on enthusiasm from early adopters. In my experience, this is also when entrepreneurs will have to pay the dues for early sins. This is the phase when the original product architecture is strong in parts and weak elsewhere. It is when a hurriedly built product starts cracking. You have customers and sales teams using your product in ways never envisioned before. Invariably, the answer is to clean up the mess and rebuild the platform based on a well-defined product roadmap. Despite money in the bank, and a seasoned product management team, the burden falls on the engineering team to re-engineer a new platform without causing discontinuity in the momentum of your product. The product team should align the re-engineering activity such that weaker parts are shored up without gratuitous changes to the platform. Using the vertical slicing concept, splice the stable parts of the platform and re-engineer the core functions as microservices, then wrap them in containers like Docker. Next, focus on rewriting the weaker parts into additional microservices and bind them together using an orchestration layer. This evolutionary technique is far superior to restarting platform development from scratch.