Archive for the ‘Startups’ Category

The #1 Strategy for Raising Money for Your Startup

February 20th, 2010

Don’t Need it.

Seriously, that’s the entire strategy - and it’s the only one that works.

I was going to keep this blog post at 3 words long, but since blog posts are supposed to be longer than 3 words, I’ll take a few extra words to elaborate… 

Investors smell “need” like dogs smell fear.

The problem with most entrepreneurs who are caught in the pitch cycle is that they teleport their strong ”need” for the money from a mile away. They “need” the money because they can’t seem to execute without it, they “need” the money because they have grand visions that require lots of resources to bring to fruition, they “need” the money because it’s the only way to keep the lights on while things fall into place. I’ve been there, I’ve tried this approach - it’s a complete waste of time.

Instead of setting up a “need” for money, start making things happen without the money.

Meanwhile, there are other entrepreneurs who make it happen without investors. They find a way, they execute with a lean and mean team, they start proving the business model, they deliver milestones - and open up doors for the business on their own terms. Then as the business starts to succeed in its own right, they realize they:

Don’t Need the Money.

And this is the best time to talk to investors. If you can look an investor in the eye and tell them with 100% integrity that your business is going to grow with or without their money - then they will want to put their money in the business. I’ve been there, I’ve had the 100% belief (because it was based in reality), and I’ve used this to raise money that helped take a business that was already on a fast track and put it on an even faster track.

Author: Jeff D'Urso Categories: Startups Tags:

Don’t Eat the Goose

February 16th, 2010

Despite how applicable the goose / golden egg metaphor is to startups - there is a distinct lack of goose related articles in entrepeneurial writings, so with this post I’m going to try and pick up the slack :-)

At its healthiest, the relationship between entrepreneur and startup is the same as the one between the farmer and the famous golden goose (disclaimer: I don’t actually know anything about farming except what I’ve learned in my son’s popup books). The goose starts out small, gets care and feeding, lays small golden eggs, gets more steady care and feeding - and over time the relationship blossoms until the goose is laying lots of golden eggs.

Unfortunately, in real startups, the entrepreneur and goose don’t always get along so well.

For most of the startups I’ve seen, there is an imbalance between the goose and the entrepreneur that supports one at the expense of the other, and makes it difficult for the goose to grow or the entrepreneur to keep their sanity. This usually takes on one of two forms:

1) Goose Abuse

Way back in my entrepreneur classes (Intro to Entrepreneurial Strategery or something like that) - I learned there are 2 types of companies: lifestyle companies, and growth companies. Lifestyle companies exist primarily to provide a lifestyle to their owner / operator. There is certainly nothing wrong with this objective - but if you’re looking to “change the world”, “rock your industry”, and achieve the big payout down the road, it is hard to commit to growth and lifestyle at the same time.

Beware though - lifestyle is tempting! When my first startup was making an extra $1,000 per month, my partners and I pondered how cool it would be to just “lease a Porsche” and continue to enjoy “being our own bosses” at our nice little lifestyle company.

Fortunately, we chose the growth path and were able to instead build our company to a $10 million sale within 4 years.

Eating the Goose

At its worst, “Goose Abuse” can seriously slow the growth of the goose (and cause shareholders / investors enormous frustration in the process). I’ve seen startups that were just beginning to hit their stride get seriously sidetracked by shortsighted owners who were more focused on pulling cash out of the company to support their lifestyle than re-investing the cash to grow the goose to its potential.

Remember - the goose may taste pretty good, but the eggs taste much better in the long run!

2) Abuse by Goose

The opposite of abusing the goose and diverting its resources to support your lifestyle is to endlessly dump resources into the goose without ever expecting it to produce profits on its own. Abuse by Goose takes 2 general forms - abuse of the entrepreneur and self-abuse by bloat.

Abuse of the Entrepreneur

The most important thing a startup needs to thrive is a profitable business model. That is where you put $1 in, and get more than $1 out. This doesn’t happen on day 1 - but it has to happen eventually or you have a money pit, not a goose. Unfortunately, some entrepreneurs are willing to pump all of their time and resources (and even worse - all of their friends and family’s resources) into a business where the profitable model never materializes.

Unfortunately, you can’t guarantee golden eggs will come out just by continuing to fund a failing goose (and there’s no point pitching investors at this point to feed your money-pit-goose either!)

Self Abuse - The Bloated Goose

Even if the abusive goose isn’t bleeding an entrepreneur dry, it can potentially be stunting its own growth through bloat. A profitable business model requires more than just revenue - it requires that more revenue comes out than cost goes in. Unfortunately, in targeting promising markets, some entrepreneurs scale resources too quickly (to “be ready” for the infinite demand they expect on day 1.)

A budding startup that could have been profitable with 5 developers - may be massively in the red because it hired 20 instead. The marketing campaign that showed promise - may not show enough promise to cover the cost that was spent too quickly.

It doesn’t matter how promising the market is, or how positive the revenue growth looks - if the goose was designed to be fatter than it needed to be - it may miss out on its opportunity to grow to a golden egg-layer because its burn rate was 2, 3, or 5x more than the model could actually support during its growth phase.

So keep your goose lean and mean!

Author: Jeff D'Urso Categories: Startups, Web Startups Tags:

How Business Plans Destroy Startups

January 31st, 2010

Business plans - at their best - are an invaluable tool to help a small startup or growing company plot its path to the next stage of growth.

Unfortunately, most business plans are a complete waste of time and energy - turning would be founders and startup builders into word-smithers and BS artists.

At their worst, it is not uncommon for the business planning process to waste months of effort - or even put the startup (and sometimes the entrepreneur) out of business.

So how did business plans become such an enormous waste of time (and startups)?

The original intent of a business plan - to force the entrepreneur to think through all of the issues for getting the startup launched, and to cover all bases - is actually quite sound. The problem is that most entrepreneurs who write business plans are doing it to play the “startup lottery” - writing the plan in the hopes that after the 6 month to 1 year grueling process of begging angels and VC’s for money, they will be amongst the 1% of startups who get funded. This process creates a few major problems:

1) Business Planning turns into “Let’s Pretend”

By definition, any startup faces a sequence of short term and medium term hurdles that are critical to determining if the business model is viable, and then getting the startup off the ground. Generally these “short hurdles” involve testing a market, gauging interest, and determining if there is a profitable business model. If you are using your own money, then these challenges are real - and all of your planning and execution effort is naturally focused on confronting them.

If you are chasing other people’s money, the real and immediate challenges suddenly seem less urgent - and your business plan focuses on how you are going to take over the world after easily sailing over the “short hurdles” (the same short hurdles that ironically spell the death of the majority of “lucky” startups that do raise money). And so your business plan turns into a steaming pile of “Let’s Pretend” - and investors can smell it from a mile away.

2) Time spent schlepping for money is time not spent building the business

Most entrepreneurs who are chasing money are burning their own cash reserves while doing it, and also not focusing on the business. As time goes on, and the business plan is revised, and the financial model is lipsticked for the 18th time, there is little focus on actually getting the business off the ground - and the startup suffers enormously. Maybe it turned out there was a market, and customers would have loved the product; but you’ll never know because you spent time you could have spent launching your startup in the game of chasing money.

Imagine if the Allied forces ready to storm the beach on D-Day put the mission on pause for a few months so they could instead draft the perfect plan for rebuilding Europe after the war. Just like this, millions of entrepreneurs every year wuss out on their own D-Day, deciding it’s better to spend time writing about their business idea than making it happen.

3) Investors can smell a BS plan from a mile away

Having read a lot of business plans over the years, I’ve found the vast majority can be summarized in 3 steps: 1) the startup will lose (amount being raised) in the first year, but discover that everyone loves the product, 2) the startup will somehow break-even in the second year, and 3) the startup will then become amazingly profitable and everyone will get rich.

Though this plan smells the same every time I’ve read it, it is sadly what I’ve come to expect from entrepreneurs who’ve skipped out on their “D-Day” in favor of the money chase. And for all the bad plans I’ve smelled, angel groups and VC groups have smelled many more. On the rare occassion that a plan doesn’t smell like this, it’s usually written by an entrepreneur running a startup that is already taking down milestones and genuinely has a reason to raise money.

4) The “captain gets glued to the ship” the longer the process drags on

Perhaps the only thing worse than the impact the “money chase” has on the startup is the impact it has on the entrepreneur. What was once a rational person who had a potentially good idea is now a stubbornly determined blind optimist who has “bet everything on this idea and has to make it work.” Had they tried building the startup and actually testing the idea 3, 6, or 9 months ago - they may have realized very inexpensively that it wasn’t viable - and thus moved on with their life (and come up with another idea that did work).

But now it’s too late. They’ve got too much riding on the idea, the business plan, and the belief that some investor some day is going to give it a chance and give them the money they need to pursue glory (and now vindication).

The Launch Plan - a Better Way to Start

If your plan is in the 1% that is going to get funded, then just write your plan - don’t waste your time on pressing issues or on building the business :-)

For the rest of us, the key is to use the scientific method (remember from junior high) and break out the most pressing issues you need to solve in order to prove there is a business model. For each of these questions, what is the simplest / smallest thing you can do to prove there is or isn’t a viable product, market, etc? What is the smallest test market you can learn from? What is the minimum set of features you can offer to gauge interest? How much will it cost to acquire attention, interest, and purchases from each customer? Will the purchase cover that cost?

Your Launch Plan should turn all of these questions into an actionable plan for launching the initial product, getting feedback from the market, and determining if there is a viable business model as quickly and as inexpensively as possible. If the answer is no, congratulations, you’ve filtered out an idea on the cheap and can move on to the next idea. If the answer is yes - and there is a viable business - then you can start writing your business plan in earnest knowing it will be based on proven facts and not make believe.

Author: Jeff D'Urso Categories: Startups, Web Startups Tags:

Why ABC’s “Shark Tank” is a Great Show for Entrepreneurs

September 1st, 2009

While millions of entrepreneurs are busy building the country’s future, very few of them are given any direction on “what not to do” - and thus they must learn the hard lessons of launching a venture first-hand.

Enter ABC’s “Shark Tank”

Finally a show that gives a vicarious dose / diet of reality to help other entrepreneurs hone their startup instinct and keep their entrepreneurial careers on track.

During the show, entrepreneurs pitch their ideas to 5 successful investors (i.e., the sharks) who then decide on the spot whether or not to invest. As in real life, more often than not the decision is to not invest, and the reason why is given in colorful - and often harsh - language.

The problem with most entrepreneurs…

Most entrepreneurs start with an interesting idea, then gradually invest more and more  time, energy, and money into that idea until it becomes an obsession. If it turns out the idea was a good one - this obsession is EXACTLY what will make the idea transform into a successful startup.

But if it turns out the idea was not so good (or the world wasn’t ready for it), this same obsession will lead to disaster. And sadly, far too many entrepreneurs don’t see the writing on the wall until they have lost literally everything.

Kevin O’Leary’s solution to the lost entrepreneur.

The show’s “Simon Cowell” is a shark named Kevin O’Leary, who built a software company out of his basement and sold it for $3.2 billion. Fantastically successful, and even more fantastically blunt - O’Leary told one entrepreneur on the first show that he was “lucky to have people like us tell you how terrible your idea is”. I.e., the sharks don’t pussyfoot aroud their opinion - if they think your idea is horrible - they will tell you. And that may save you months and years you would otherwise waste.

Shark Lesson - the expertise is often as valuable as the money it comes with.

Another great lesson from the “Shark Tank” is the value that comes from connections (vs passive investors, or “dumb money” that just invest their cash). In many of the deals offered by the sharks, the connections and execution experience of the sharks offering the cash is far more likely to impact the company’s ability to succeed than the $500,000 or so in cash they are bringing to the table.

Some of the entrepreneurs pitching their companies have seen the value of the connections and jumped on these deals - even if the valuation they were given was much lower than they had originally hoped for. Other entrepreneurs have pig-headedly stuck to their guns and walked away from amazing offers of expertise - and many of these no doubt will now watch their companies rot on the vine as a result.

Separation of Entrepreneur and Idea

As harsh as the sharks are with many of the ideas that are pitched to them, they will often make it a point to praise the entrepreneur even as they are trashing the idea. “I think you are awesome, I just don’t like the business.” There is a really powerful lesson here that most entrepreneurs miss until they’ve burned through an enormous amount of time and money.

Entrepreneurs are different from their ideas. To the degree that an entrepreneur can recognize this fact, and see themselves as distinct from their idea - they will be much more levelheaded in making decisions to continue investing time and money into their business. By thinking less like someone who is married to an idea, and more like an investor, they will be able to make that tough decision to “move on” if necessary - and they will then be able to pursue another idea with more potential to succeed.

Author: Jeff D'Urso Categories: Startups Tags:

10 Top Startup Killers

August 16th, 2009

Top 10 lists are popular, so I couldn’t resist the urge - but since I’m positive these 10 aren’t the only 10 or necessarily the top 10, I decided to call this 10 Top Startup Killers. So stay tuned for 10 More Top Startup Killers :-)

Now down to business…

There are unfortunately many more ways to kill a startup than to make it succeed. The 10 below are some of the worst startup killers - violate these at your own risk.

Market Doesn’t Really Exist

So you were walking down the street, and inspiration struck - now you’re obsessed with the world’s greatest idea. Problem is - no one else thinks it’s a great idea; and it turns out - maybe it isn’t.

It’s always horrifying to me watching shows like “Shark Tank” and “American Inventor” and seeing people who’ve literally wiped out their life savings chasing an idea without ever validating whether a market existed for it. Validation isn’t always easy, but you absolutely must spend some energy determining whether there is a market and a need before investing huge resources building out an idea.

If you believe in the “Measure Twice, Cut Once” axiom, then now is a good time to “measure” the market.

“Nice to Have…” vs “Gotta Have!”

Although the “Market doesn’t exist” problem strikes many an entrepreneur, often terrible ideas are easy to stop in their tracks - especially if you have a loving spouse or trustworthy friend who’s willing to break the news to you before you waste too much energy on it.

The problem is, many ideas aren’t terrible, they’re “pretty good” - and these can be just as deadly.

When picking companies to invest in, VC’s try to determine whether your customer base deems your offering “nice to have” or “gotta have”. If it’s the latter, they will be interested, if it’s the former - they will run as fast as they can away from your idea. And maybe you should too.

The problem with “pretty good” ideas, is that prospects are more than willing to give you positive feedback until it’s time for them to take out their wallets. Or even worse - a small segment of prospects are willing to take out their wallets, but the mainstream will never care enough to pay to solve the problem.

Know whether your idea is “Gotta have”, or “Nice to have”.

Can’t profitably target your market

Even if a market exists, and even if they are willing to pay for your service; if it costs you more (or much more) to attract a customer than the customer is willing to pay you for your service, then you are in big trouble.

To determine if you can profitably target your market, you not only have to know where you can reach them (Internet locations, media, etc); you also need to know who you are competing with for the customer’s attention. I.e., you aren’t just competing with the “competitors” you envision who offer your service to the same customers - you are also competing with other companies who are trying to gain the attention of those very same customers.

If you can target your market cost effectively, you can win. If you can’t - then it doesn’t matter if they “need” your product, you simply won’t be able to attract enough customers without running out of cash.

Lack of Development Horsepower

If we take a simplistic view of a startup company (and especially a web company), then it is safe to say the company needs development (geeks) and sales (suits) to succeed. To argue which of these two is more “strategic” or critical to succeed is to miss the real answer. If either is lacking, your startup is destined to fail no matter how stellar the other side is.

The developer or development team (although if you’re a startup, chances are the “team” should start out as 1 person) needs to be the “A Team”. They should be passionately excited about the product; they should understand the business objectives; and - oh yeah - they should be good at developing (and you should keep in mind that ~80% of developers are not good at development).

If you have the world’s greatest salesman, and the real pulse on the business potential - and then you hire the B, C, or D team to develop your product; you are all but guaranteed to fail, unless your vision of the startup doesn’t go beyond a “pitch deck”.

Lack of Sales Horsepower

 Equally frustrating to “Lack of Development Horsepower” is lack of sales horsepower. You can have a great market, and a killer product - but if your sales person / team lacks the chops to get it sold, you are in for a world of hurt. Your killer product will die on the vine, and you will constantly hear the sales team saying “if only it had x feature, it would sell like crazy.”

In the ideal world, your product will be ultra-viral like Facebook, and you won’t need any sales people to spread the word - but for the 99.999% rest of us - if sales is a factor in connecting to your market, you absolutely must make sure the sales team can sell.

No Plan

Like a game of chess (from what I’ve heard, I’ve never actually played :-) ), you need to think several moves ahead when you are launching your startup. If you are only gunning for the next milestone without thinking about what will come after that, you could end up hitting the milestone only to find out that you can’t go on because you ran out of resources from lack of planning.

It’s a cliche - but business plans (the kind that you actually use to run your business) are critical.

Planning to Plan

The opposite of no business plan can be equally deadly and costly. Many entrepreneurs spend weeks, months, (or years even) perfecting a business plan without ever working on their business, exhausting all of their resources in the process.

If you want to be a writer, be a writer - don’t start a company. Business plans are useful, but businesses are more useful. Make sure you spend the vast majority of your time actually building the business, not “planning to plan”.

Chasing VC Dollars instead of Customer Dollars

Often the biggest driver for the “planning to plan” crowd is the dream of VC dollars coming in to make everyone rich as the company goes through the roof (or in the later stages of planning to plan, the dream is the VC dollars coming in to save the day).

Here’s how it actually works.

If you can’t convince customers to give you their dollars, don’t waste your time pitching VC’s about how if only you had their money you could sell customers. They don’t want to hear it. For the vast majority of deals, customer revenue MUST come first, then (maybe) VC revenue (might) come later.

Premature Ramp-up - or hiring “just in case”

In the world of “if we don’t build version 15 immediately, some huge competitor is going to eat our lunch”, it is easy to get caught up in the pressure to build out a huge development team to handle the influx of “imminent sales”.

The problem is - whenever this is done, the only thing that ends up being “imminent” is the constant onslaught of developer salaries.  I’ve seen too many companies that actually could have organically found their path and grown into great companies - but they ramped up too early, got stuck with a devastating burn rate - and ran out of cash.

A better strategy - keep your development team as light as possible (remember: A team only), and only ramp development capacity when sales justify the need.

Confusing a Pitch with a Product

You might have a huge idea, a powerful set of slides, and a sheet of numbers that show how easy it will be to scale into the billions of dollars in revenue.

But if you don’t have a product (or a “Beta product” as I’ve written in previous posts), don’t kid yourself - you only have a pitch.

I’ve seen way way way way WAY too many entrepreneurs tell me about a great idea and get me excited about a great pitch; only to return 6 months later to tell me about their great pitch.

If your pitch is really so great (and thus the product you are pitching is such a great idea), then first “buy it yourself” and build the thing already! :-)

Author: Jeff D'Urso Categories: Startups, Web Startups Tags:

Warning for Entrepreneurs: If your idea is not yet in Beta, it’s just an idea!

July 28th, 2009

Ultimately, it’s big ideas that change the world (and make loads of money in the process). eBay, Google, Amazon - all of these started out as “big ideas” - and all of them have great valuations.

But it takes a lot more than a “Great Idea” to achieve great value.

If you have a great idea, in a great market, with a great presentation, and maybe even a great business plan - then what is it currently worth? The only accurate valuation method I can think of is that ideas are worth “a dime a dozen” - therefore your (unlaunched) idea is currently worth just under 1 cent.

And sadly many entrepreneurs spend weeks, months, or even years stuck in the “Idea” stage.

The old axiom “Measure twice, cut once” certainly is true in the game of entrepreneurship. Before spending enormous time, money, and resources building out an idea - it is worth researching the market potential and receptivity to the idea. But there’s a reason why it’s “Measure twice”, and not “Measure 500 times”.

Don’t get caught in the “Presentation” / “Great Idea” feedback cycle.

Once you’ve determined you have a good idea, you will likely put together a presentation and start getting feedback from friends, associates, and others - and the feedback will inevitably be that you have a “Great Idea!” Now that it’s a “Great Idea”, you can double your valuation to 2 cents, and then:

Build out a Beta site already!

Some of the greatest web success stories (including eBay) were up and running in Beta within days or weeks of the initial concept. Then the real magic began. What started as a “Great Idea” quickly became a proven idea, a proven model, and a proven business.

In the case of your idea, there will be 3 possible outcomes that you can get from your Beta launch. 1) the idea is the next killer app and you just need to add water, 2) the idea is “close” and needs some tweaking and iteration to get closer to “hitting a nerve” with your target audience, or 3) the idea is not good.

Now for the key take away…

It’s less important what the outcome of Beta is, then how long and how much it took to get there. If it takes twice as long as it should (or longer), and costs more than it should have (and remember that time is money if it took too long to get here) - then welcome to the land of lost opportunity.

If instead you got to Beta fast, and found out that “the idea needed tweaking”, then you have not exhausted your resources and can tweak away and get it right while the momentum is still there.

Author: Jeff D'Urso Categories: Startups, Web Development, Web Startups Tags:

Entrepreneurs: Get Your “Chickens” and “Pigs” in a Row or Else…

May 13th, 2009

We’ve all heard that we need to get our “ducks in a row” if we want to succeed as entrepreneurs. This is certainly true, but…

Chickens and Pigs are even more important to your business.

There’s an old farmer’s parable that talks about the difference between the “chicken and pig at breakfast” - the moral being that the “chicken” is a participant while the “pig” is committed. I.e., the chicken lays an egg and can then go on his merry little way. The pig has become ham or bacon and is therefore fully committed.

Take stock of your Chickens and Pigs.

If you look at all of your customers, partners, employees, investors, coaches - or anyone else you engage with in your business - and then you compare the nature and quality of your interactions with each of these parties, you will quickly realize there is a huge difference in motivation, commitment, and dependability among them. Some are clearly “chickens” (casually participating in your success and failure), others are “pigs” (committed to your success).

You need both to succeed.

It would be nice if everyone we interacted with was a pig - but unless you’re preparing the cult for ascendance to the mother ship, this probably isn’t the scenario you’re in. In the real world, we are surrounded by both chickens and pigs - and the key is to 1) know which category each person falls into, 2) make sure we treat them accordingly, and 3) realize that they are both critical to getting to the end goal.

As a general rule, a company’s initial traction is hugely dependent on pigs (i.e., your initial supporters, evangelists, etc); and its ultimate growth depends on getting lots of chickens (i.e., the mainstream)  involved along with continued commitment from the pigs.  Treat your chickens and pigs as you should - and the growth will be smooth. But get it wrong and you are in for some serious pain…

Beware the Chicken that Oinks.

Perhaps the biggest disappointment that we ever experience as entrepreneurs comes at the hands of chickens that we mistake for pigs (through their fault or our own).  They seem excited, they agree to get involved, they make some promises - and then… nothing. Even worse - maybe we acted like pigs and wasted our time, money, or energy catering to their “needs” or following through on our side of the bargain with them - but still, nothing.

Meanwhile, (and fortunately)…

The pigs deliver the goods.

Any entrepreneur who’s experienced success has had fortunate encounters with some pigs along the way. They seemed excited, they agreed to get involved, they made some promises - and then they delivered. Maybe it was the initial customers who became avid evangelists and sang your praises as you were getting your concept nailed down, maybe it was the investor who got involved in your business and worked alongside you to get it done, maybe it was the employee who bought into the vision and then did her part to push it forward. It’s the pigs that get you off the ground, but…

Treat Your Pigs Right or Else…

Pigs are special, and they should be treated as such. If you treat them the same way as chickens they will quickly lose steam, feel hurt, and maybe even get disillusioned and shift from your strongest asset to your biggest headache. If you treat them as special, and acknowledge their commitment, they will continue to match you with their own commitment; and they will continue to rally alongside you to help you grow. Then all that’s left to do is…

Bring chickens into the game while continuing to treat the pigs as special.

For most meaningful market plays, there simply aren’t enough pigs in the world to achieve the growth you want. At some point, you need to bring chickens into the mix - and you need to satisfy the needs of the wider chicken audience while continuing to engage your pigs so the momentum continues.

In terms of company growth, you will likely encounter more pigs when you are targeting “Innovators” and “Early Adopters”, than when you are rolling your concept out to the mainstream market (which has very different needs than the early market). We’ll save that post for another day - but in the meantime, you can read “Crossing the Chasm” by Geoffrey Moore for more detail, or read this excellent summary of Crossing the Chasm here.

Author: Jeff D'Urso Categories: Startups Tags:

“They Loved It!” and other dangerous entrepreneur traps…

May 8th, 2009

One of the funniest scenes in the 1999 movie classic “Office Space” happens when Tom Smykowski lets Peter, Samir and Michael in on his great idea for the “Jump to Conclusions Mat” - which is a “mat, with a whole bunch of conclusions on it, … that you jump to!”

Not surprisingly, the reaction was that it was “the worst idea I’ve ever heard in my life.”

Unfortunately, not all ideas are so black & white; and not all people are so honest with their feedback.

Most ideas fall somewhere in between the “Jump to Conclusions Mat” and “Google” - and so in the real world it can be a bit more difficult for an entrepreneur to get honest feedback from others. The popular business literature often tells you to “not let all the no’s and negativity dissuade you from going after your dream.” 

Obviously, most of these authors and armchair entrepreneurs have never been involved in the building of a startup, because in actuality you are far less likely to encounter direct negativity as you are to discover that…

“They Loved It!”

And therein lies the problem, and perhaps the single most deadly trap to an entrepreneur. When someone tells you they love the idea, it either means 1) they love the idea, or 2) they really aren’t all that excited by the idea, but are too polite to tell you - or are holding out to make sure you keep them in the loop “just in case” it turns out to actually be a good idea.

The problem is - it feels really good when someone tells you they love your idea, and it can be very addictive. And if you buy into the BS too deeply, you may find yourself spending a lot of time continuing to present to new people who “love the idea”, rather than actually moving the idea forward. I’ve seen a lot of entrepreneurs fall into this trap and lose weeks, months, or even years in the “love cycle” without moving forward on their actual dream. (Yeah okay, I may have done this once or twice before too :-)

The moral of the story.

You have the ultimate responsibility - and the reward - of determining whether your good idea will become a good business. It’s good to get feedback from others, and great to hear that they love your idea - but you must be a vigilant prober. Dig deep to get more honest and specific feedback from others - don’t just take the generic line. Judge people’s actions (i.e., do they use it, buy it, recommend it) as about 1000X more valuable than their words.

And finally,  spend your time building the dream - not just presenting it to people who tell you how great it is!

Author: Jeff D'Urso Categories: Startups Tags: