Just read this article on
http://www.codinghorror.com/blog/2009/12/version-1-sucks-but-ship-it-anyway.html
We did exactly this, but for this to succeed CHOOSE your first customer right!!!!! They absolutely need to be completely on board with the new way of doing things, and agile methodologies. If you are stuck with a customer cant decide on the feature set required, or is not familiar with iterative development then you are stuck.
Any way the reason version 1 sucked is spot on in the article (regurgitated)
- The schedule was too aggressive and too short. We need more time!
- We ran into unforeseen technical problems that forced us to make compromises we are uncomfortable with.
- We had the wrong design, and needed to change it in the middle of development.
- Our team experienced internal friction between team members that we didn’t anticipate.
- The customers weren’t who we thought they were.
- Communication between the designers, developers, and project team wasn’t as efficient as we thought it would be.
- We overestimated how quickly we could learn a new technology.
After spending the last 3 months in India, making the rounds through many customer meetings, I have learnt a lot about sales in general and India in particular. Thought I would pen them down for review some time later 
- Understand your customer - This is obviously a no brainer, however India in particular is very different I think. Most schools have their own IT teams, who believe that everything can be done in house. While there is some truth to this, I think what many of them miss is that technology is just an enabler. What can you offer your customer, which is beyond just technology? At one of the meetings while the conversation started with a discussion about technology, it soon morphed into a discussion about what the clients wants to enable for their alumni. It was quite clear that they were looking to provide VAS services for their alumni beyond just the ability to network. Our portfolio of partners is something that the school appreciated. Interesting how sometimes we think about our portfolio of services, as a monetization plan actually is a value added service that the school itself is looking for.
- Relationships matter - Sales is about hitting the right person within the institution. Thanks to all our friends who have helped us get the first meeting with the right person. We realized very quickly that sharing our ideas with others actually helps. People will go out of their way to help, it is better to talk about your products and sales plan and invite others to help you hit at the right people in the industry. Gaboli is growing because of our friends who have helped us throughout this journey.
- Flexibility - I know Vineet is going to laugh that I am saying this. But flexibility has actually helped us in our sales. Customers want many different things and understanding their needs and being flexible about delivering on these needs and morphing the product accordingly has helped us close accounts. This is of course a dangerous area to be in, but being flexible in the first few months is important. Our initial idea to where we are now is completely different; many of the opportunities that we see today wouldn’t have existed if we had stuck to our original plan.
- Competition is good - Competition actually makes you think more, we quickly realized that we aren’t going to make money by just having a technology platform. Any IT company can build a platform. Where Gaboli adds value is VAS and support. Our customers have clearly understood this and value our knowledge and partnerships.
- Monetization - there are many ways to make money through a platform, however none of it is going to work if you aren’t adding value to the end customer.