Hi Guys - I'm the Yottaa guy. Agree with lots of things said here. However, each company operates within its own context and the popular way may not be the appropriate way for a particular company.
For Yottaa, from our background and industry experience (In my previous life, I started and grew an enterprise software company to profitability. I have also been involved with quite a few startups from initial formation to successful exits), we knew there is a $billion market for what we do because it is a proven market (It really doesn't take a genius to know there is a big market for web performance, monitoring and security). We also knew that we can execute on the ideas (normally it would take some real work to convince others about one's execution capability. Fortunately in our case, our decisions don't require us convincing other people to make). So we can skip the some of the initial "validated learning" process (not entirely, but a part of it). It is risky to skip some of it - however, that is the risk we decided to take anyway.
More importantly, as I learned from personal experiences, the biggest startup challenge is growth. The major hurdle to success is not financing, getting the first 10 customers, getting to the first million dollar revenue or even the first $5M revenue - we have done these before and lots of people have done these before. However, it is exponentially challenging to grow from $10M to $100M in revenue. Out of 1000 startups, there may be 100 get funded and 50 actually get to a million dollar in revenue, but there are probably only 5 get to $50M revenue.
Another important aspect to take into consideration is the kind of product that we are building at Yottaa. As highly distributed software service that optimizes and processes Internet traffic in real time, it takes more than five smart engineers to reach the basic level of performance, reliability and scalability.
There are quite a few other reasons that drove this decision that I won’t bore you folks further. In the end, we decided to take the approach we took. After a lot of real hard work and experiments, we have figured out the right process, people and methodology to be extremely effective and scalable. We have been able to roll out a major product every 3 months:
Late 2011: Site Optimizer
Jan 2012: Web Performance API
Feb 2012: Yottaa CDN
May 2012: Yottaa Mobile Acceleration Service
(lots more coming soon).
The pace of development and efficiency is fairly rapid. In 6 months, our Optimizer has grown to from 0 to over 100M unique visitors per month. So we are definitely seeing the benefits of our model now.
How successful can this model be? Time will tell.