We investors frequently fault entrepreneurs — especially tech entrepreneurs — for not understanding the difference between a great product and a great business.

A business is so much more than a product: it’s a value proposition; it’s communicating that value proposition to the customers; it’s bringing the product to the market, and to the customers; it’s establishing an advantage vis a vis competitors; it’s building an organization that can reproducibly do all of the above.  It’s no wonder that many startup businesses don’t know whether or not they have a great business, even when they might have a great product.

To be fair, however, many VCs and angels don’t get the difference between a great product and a great business either.  We convince ourselves that just because we understand how a product works that we understand the business that could successfully sell that product.  Or we think that because we can understand a product in a marketplace that we undertand all the “gotchas” of running a business in that marketplace.

It’s not just entrepreneurs who need to be honest with themselves about the distinction.