The Dynamics of Product Development in Software Startups

Abstract

Software startups are increasingly under high pressure to deliver successful products to survive and thrive in the modern highly competitive technology market. Larger organizations with deep pockets can replicate the same business ideas used by startups with relative ease. So how does the average startup stand a chance at succeeding at this seemingly David vs. Goliath contest? This article looks at the available literature and identifies such factors that can affect the success of software development startups. Using causal loop constructs from the field of system dynamics, the interactions among the various identified factors are visualised to reveal the dynamics of the system. The result is as a three-dimensional view of success factors in form of time, capital and (product) differentiation. The modelled system is then simulated, and the resultant trend is reviewed and interpreted. This research acts as ground work for analysing the workings of software development startups and sets the stage for a more holistic study of the area, upon which further research can be carried out.