Towards Understanding Startup Product Development as Effectual Entrepreneurial Behaviors

Software startups face with multiple technical and business challenges, which could make the startup journey longer, or even become a failure. Little is known about entrepreneurial decision making as a direct force to startup development outcome. In this study, we attempted to apply a behavior theory of entrepreneurial firms to understand the root-cause of some software startup’s challenges. Six common challenges related to prototyping and product development in twenty software startups were identified. We found the behavior theory as a useful theoretical lens to explain the technical challenges. Software startups search for local optimal solutions, emphasize on short-run feedback rather than long-run strategies, which results in vague prototype planning, paradox of demonstration and evolving throw-away prototypes. The finding implies that effectual entrepreneurial processes might require a more suitable product development approach than the current state-of-practice.