Time to Market is seen as an important factor when building out the technology underpining a startup environment. Although there have been some spectacular contradictions to the "1st mover advantage" notion (Microsoft's C# language vs Java, ... ), I certainly agree with this idea as even the best business plan is going to find it harder to get traction and exposure in the market place if your competitors have beat you to it. The VC community is well aware of how much harder it is to complete in well-established market places which is why it's in your best interest to get out a version of your product or service as soon as possible if you are indeed in a well-established market. (Side note: you will find it significantly harder to raise capital if you are entering into a crowded, mature market. In that case think differentiation and market niches.) I also believe that the ability to constantly innovate and update your product, without significant distribution costs or end-user hassle, is one of the main factors driving the popularity of Software as a Service.
Rather than spending years developing your product before bringing it to market, out of necessity many startups use a highly iterative approach. Because of this you often see startups labelling their services with terms used by engineering teams to describle interim versions of a product: "alpha", "beta" and "gamma", a practice I refer to as "going through the Greeks". The idea being that this labelling indicates to the consumer that the product is still undergoing a significant degree of development. Although, to be honest, you would need to be familiar with software development terminology to make this connection!
Conducting progressive releases has it's pros and cons. On the downside:
- it give your competitors early access to your product allowing them to copy it;
- it gives your competitors a glimpse into your longer term strategy; and
- you risk losing appeal with your target market if the product is not feature complete to an extent that appeals to your target market.
On the positive side:
- you get earlier exposure in the market place allowing you to glimpse the likelihood that your business model has merit;
- you are effectively announcing your presence to your customers and potential suitors;
- you get early feedback from your initial users which can help you refine further development and marketing efforts; and
- once the core architecture has been implemented, your engineering team can focus on smaller chunks of development and refinement (aka "phased development and release").
Naturally, it is a management decision to decide what can be released in beta for strategic purposes but it's prudent to be prepared for this phased development and release process, and to establish internal procedures that allow you to "release early and release often".