I wrote this tweetstorm yesterday at lunch after engaging in a discussion on Ethan with an entrepreneur who wanted advice on his idea:
The opposite is just as bad. Entrepreneurs waste 5 years because a VC was not honest with them.
There are also lots of great businesses these days that don’t need VC funding at all. Not saying that Fred doesn’t have an informed opinion on these, but I was talking to a close friend of mine recently who was thinking about starting a business and his goal seemed to be “get funded” whereas in my mind the goal should always be “build a great business”. Bootstrapping that can be a beautiful thing.
every. single. one.
Most of the best ideas are also really hard for outsiders to understand… see Peter Thiel’s thoughts in Zero to One on this
ANY IDEA STUPID ENOUGH TO CHANGE THE WORLD LOOK IDENTICAL TO ONE THAT JUST STUPID.THAT WHY ADVICE ON REVOLUTION NO GOOD!
and he does give that.but at the same time, it can be hard to identify the outliers and I agree with Jordan’s comment that it can be hard for outsiders of an industry to understand the pain point that the entrepreneur might feel if they’re close to a specific user base.
But it makes more sense asking potential customers this. If you have a photosharing app, is Fred most likely to use it or should you get feedback from a 17 year old female teenager?
I’ll give free advice there: It’s a bad idea.
I think it’s a problem to assume that in a game where VC’s are wrong more than they are right that you need the blessing to be spurred on. Besides Fred is never going to be able to take the time to fully vet the idea like USV does when they invest (which is not based on a tweet or email but a long process) and the prospective entrepreneur will never have enough time to fully present the idea (nor will Fred have the time to digest).
Fred’s showing his JFK in him. He’s a logical thinker who asks questions and demands to talk things through- that’s how he wins. He’s not the oracle like from the matrix!! 🙂
I completely understand why Fred wouldn’t want to be seen as someone giving “stamps of approval” to startup ideas…. he does that when he says yay or nay on funding them.BUT…I don’t think there is anything wrong with asking others for feedback on your idea. Of course, the best way to do this is to present it as something you came across… not YOUR idea.”I heard about this new company that is setting up Ashley Madison profiles to catfish leads for divorce attorneys… what do you think of that?”That way, the person you’re asking is more likely to give you honest feedback, rather than attempt to encourage you and not hurt your wittle feeeeewings.
I like that idea. Did you just make that up?
ya got tired of getting fluffed
Yeah, that must have been hard on you.
The ‘best’ way to get an idea validated is to get people to buy/subscribe/commit to the idea (sales) and then use that to shape/build/fund the initial build…but I like your approach as 2nd best… 😉
totally agree. My ideas are always sliver-medal believe me
Another variation (if you can’t do stealth as you suggest) is to simply ask for things that are wrong or that you don’t like or outwardly state upfront that you are looking for criticism.Example: I was considering buying a small business that made backpacks so the first thing I did was setup a meeting with the buyer in a college bookstore (Penn) and told him “I haven’t bought this business yet and I don’t want your opinion on what you think of the bags, I want to know how hard it would be for me to get this into your bookstore or any other bookstore if I came cold calling”. (In other words like slotting in supermarkets..) He was totally open to advice at that stage and we talked for quite some time. I don’t remember what he said but I never did the business after various fact finding. Research and legwork are important prior to going down a particular road. Information has value. Takes effort to do this.That said most people aren’t good at finding flaws or being honest with this type of thing. And they very well might not even be able to honestly understand the various revs of the product down the line anyway. It’s a crapshoot. Or you may overvalue what you think is their expertise or bias them in their reply. And of course saying they like or would buy something doesn’t mean they will (and vice versa).Not a problem that I have of course. When someone asks me what I think I always tell them “don’t ask me if you really don’t want to know what I think”. I will also tell them exactly whether I think what I say should matter and why.
Now you guys are talking. This is experienced business at it’s best! You’re doing market research and you’re doing it yourself. That’s what a true entrepreneur does. An entrepreneur is a person who applies resources to situations that will produce better returns..How does the entrepreneur know if the situation is a candidate for producing better returns. He/she gets finds out from the market place (the customer)!.The software entrepreneur doesn’t care to know how to write programming code. The landscaping entrepreneur doesn’t care to know how to shovel landscaping materials. The automotive entrepreneur doesn’t care to know how to build engines. Thats for labor or scientists or mecanics..The entrepreneur finds ways to ***make money***!!! The entrepreneurs best friend is the investor because they both want to ***MAKE MONEY***!!!
some entrepreneurs want to make a difference, and give a liittle on the money.
I like you Emily. But not in a creepy late night internet chat way..It’s good to want to make a difference. But it has no place in the business world. Business is and should be all about making money. Then a person can help others with that money.
Virginia, it is possible to do both at the same time.
Would you stop disagreeing with me?! lol
If / when I start another business I would value early-on critical feedback. We all need to remember that our goal at that point is to 1) validate our core hypothesis about solving a pain, 2) uncover what we might of missed, and 3) determine what it would take to scale to our desired size. In the past my most valuable insights came from honest thoughtful evaluation of ideas. This is what I’ve alway strived to deliver to others.
Product/Market fit has to enter into this conversation as well.
BEST WAY TO FIND PRODUCT/MARKET FIT IS BUILD PRODUCT, SEE IF FIT WITH MARKET.IT ALSO ONLY WAY.
or do some due diligence and see if the market already exists, and how you stack up against the incumbents.
Ridiculous as it sounds, I struggled in articulating the “believe in your product part”. Especially in the very earliest days of Startup. Frankly i was a little embarrassed by our barely viable product. For it was, and it always will be, a pale imitation the vision in our heads. I’ve always been struck by how my American counterparts could bullshit belief into being. I’ve learned that if you don’t believe, it won’t exist.
IF YOU NOT BELIEVE IN IDEA ENOUGH TO BUILD IT, WHY ANYONE ELSE WOULD?
go to war with the army you have
Hilarious and approp’.Two things happened this week:(1.) I met with an IBM Research Machine Intelligence veteran (15+ years there and 30+ years in SV in all). He told me what I’m doing is “beyond the dreams of what we can do in AI” and I’m “3 tech cycles, at least 5 years ahead of the market and so bleeding edge I may bleed to death before the market arrives where I am.”(2.) I met a former Google Product Manager that an angel had connected me with 3 years ago. He was skeptical about me building the system I envisioned because it’s so innovative (and because I’m a woman and a team of 1, I shouldn’t/ couldn’t do it).I informed him I’d built the system anyway and the patent’s published.For pretty much every day for the last few years, there’s been resistance / challenges and people wanting me to build what already exists with minor tweaks — an incubator even told me to do another version of Disqus.I declined, parted companies with the incubator and just kept executing on my idea and system.The reason I won’t bleed to death is because the market is ready for my system. Old school media companies like Italy’s RCS implemented my ideas within 6 months of meeting me.Without exception, every single company in the world wishes they could measure consumer perceptions more accurately than is provided by 5-stars, likes, #tweets.Every single Machine Intelligence (whether it’s text mining, sentiment analysis etc) needs to be able to classify items beyond the over-simplistic negative/positive, 5-stars, some probability %.Every single economic model in the world wishes it could factor in not simply the functions of product, price, people socio-demographics etc to make predictions about Consumption, but also the perception metrics that drive people to purchase.My personal view is that being innovative is an apex of our humanness.If we’re not innovating — whether it’s something as small as adding an ingredient to a cooking recipe or as big as what Apple / Google / Tesla etc do — we’re dying.If you have heart, a pulse and a brain…INNOVATE & EXECUTE.
NO ONE CAN SEE THE FUTURE LOOKING AT BACK OF PERSON IN FRONT OF THEM.
When we stand there, we factor in the context of our time-space and its existing tools as well as our own visions and perceptual states…………And then as the light flexes…………..We may see the way forward to build innovative systems that are “beyond our dreams”.
Alternate wording: If you’re not the lead dog, the scenery never changes. (dog sled reference)
That’s frustrating. Ugh.
(1.) I met with an IBM Research Machine Intelligence veteran (15+ years there and 30+ years in SV in all). He told me what I’m doing is “beyond the dreams of what we can do in AI” and I’m “3 tech cycles, at least 5 years ahead of the market and so bleeding edge I may bleed to death before the market arrives where I am.”.That’s what happened to me with my EMR system. It was too advanced. Unless you have unlimited funding… Run! Run as fast as you can away from what you’re doing. You have nothing but misery to look forward to.
Actually, that was his opener. By the end of the meeting he said he’d be a Technical Advisor so, clearly, I presented market context he wasn’t aware of.Never assume seasoned tech veterans and investors know more or better than the founder-innovator.
“I presented market context he wasn’t aware of.”.Or he realized you were gonna’ spend the money no matter what he said. So he figured why not grab some of it for himself..Keep us posted on how soon what you’re working on turns it’s first million.
I understand your cynicism. I’ve overcome so much s*** to get to this point, it would be easy for me to be extremely cynical about the motivations of other people.However, at heart, I’m an optimist and I try to find the goodness in others and in whatever situation I find myself in.
It’s good to be optimistic. But it’s bad to make decisions based on emotion. Keep a tight leash on your emotions and be ready to pivot or jump ship as soon as logic tells you your timing is wrong!.I was fortunate in that I’ve done the bad timing thing before. I’ve always been years ahead with my technology thinking. So put in place some stops and don’t let ego get in the way..BTW… A stop is kinda’ like a “stop loss” in stock trading. With stock trading most people lose money because they let emotion get in the way. People will say “I’m buying at $10 and selling if it drops to $9.50.” But when the time comes to sell at $9.50 they let it ride until it’s $7. Then they kick theirself for not selling at $9.50..Write down what you think are indicators to stop the madness and have someone else help you stick to it.
Did you notice my avatar? It represents head, heart and soul in unison. It’s me and my life and how I do everything.No one ever makes decisions based purely on emotions. That’s a fallacy.Every single one of us makes decisions that are an integration of intuition and logic.
Allow me to introduce you to… lol
For the full interactive conversation… http://tweet.authorbee.com/… .
THE ONLY GOOD IDEA IS ONE YOU BUILT ALREADY.
…and that is generating sales (or at the very least, emotional engagement from outside sources)
TRACTION IN METRIC THAT ACTUALLY MATTER.SOMETIMES THAT SALES.
You need to do a cartoon that shows sales and profit vs. just eyeballs or “accounts” and how they work in the mind of an investor. Make sure to highlight that not all signups are valid signups or active users and so on. You get it.In other words what is more valuable 100,000,000 eyeballs paying nothing or $1,000,000 in profit or $10,000,000 in sales with a loss and so on. (Arbitrary numbers).
LIKE THIS ONE?
THERE WHOLE PAGE ABOUT WHAT METRIC MATTER IN “HOW TO STARTUP” EBOOK ME MAKE.ME NO LINK, BECAUSE FRED BLOG NOT PLACE FOR ADS.
No I’m looking for something that shows various x and y axis such that it would answer the question “to a VC 100,000,000 free accounts just as valuable as $ in revenue or $ in profit” something like that. In other words showing the irony of better to have no revenue and many free users than low revenue.
you can mock that up yourself if you have a going concern. and I agree. getting the user base is the entire battle. then iterate and upsell
There is a reason to focus on free users. Many times people have no intention on ever seeing the biz make a profit. They are in it to get funding by selling most of their interest in the company. Then they don’t care what happens. It’s a game that works well if you know how to play it.
Right now, I’m in the camp of: if you have to ask someone if it’s a good idea, then it hasn’t set your ass on fire enough for you to work on it.Entrepreneurship usually comes with extreme emotional and psychological ups and downs (if you really commit to it, anyway). You need to be madly in love with your idea. You need to believe that the world needs it, badly.
Depends on some stuff. Sometimes it’s a good idea, but technically it just can’t be built.
Sure, there’s that 😉 You can’t charge your cell phone from thin air – wait, someone’s working on that!Seriously, though, how are you going to have the fortitude to smash down the barriers that will inevitably get in your way (unless you’re really really lucky) unless you are a true believer?But, I think I am responding to the concept of just asking “is this a good idea,” vs getting feedback for the purposes of calibration/cybernetic correction (which I think is valuable, of course, to a point).
yup, check out nucurrent.com and what they are doing with distributed power.sometimes in the course of executing the idea, you develop new technology too-so there is that.
Yeah I’d agree w/you Kirsten – I think the problem with “is this a good idea” is that it’s an inexperienced (and sometimes lazy) question to ask. It’s like saying you haven’t figured out the context for your idea yet and seeing if someone can help you with it. When people ask me if something’s a good idea I almost always tell them “I have no idea what you should do, but if you can ask better, more specific questions I may be able to give you perspective.”
I was getting emails from someone last week asking, “What would your dream chat app look like?” Ugh.
Oh jeesh that’s bad.
IT SIMPLE CHART:1. THING YOU CAN DO2. THING PEOPLE WANT3. THING NO ONE ELSE DOINGNEED ALL 3.
Don’t agree with “thing no one else doing”. I think that’s obvious on many levels as to why I won’t even footnote that thought.
IF THERE NOTHING DIFFERENT ABOUT WHAT YOU DOING, WHY YOU DOING IT?
Because a variation of what you are offering is differentiated enough in a way to allow you to build a business that’s why. I mean you know there are many examples of this no need for me to even footnote once again.Perhaps you can simply modify your cartoon to change the “things no one else is doing” to “things no one else is doing or things you do better than existing solution”
ME SAY DO IT BETTER IS DO DIFFERENT THING!
thing people need > thing people want
“Find something no one else is doing” is probably one of the most foolish bullshit drive people to suicide tricks there is. In almost all cases that is the hardest approach to doing a startup! Educating the marketplace takes years of work and tons of money. Definitely not the place for startups..That being said. Many times people just *think* they have something completely different. When in reality they’re just a bit different. I think the recommended amount of innovation for promote success of a startup is 10%.
Why does it have to be a THING NO ONE ELSE DOING? Very, very few such things. Used to be, a business could succeed at selling services people want even as there were other competing businesses in the area.
because it’s so much more exciting
IT MAY BE…
not all big ideas are “built”
Your ass can be on fire with passion AND you still want to know what Fred thinks.
TRUTH! Although, I think I’d still build it first to show him how awesome it is.
IF YOU CAN DO ANYTHING EXCEPT “BUILD IT”, YOU NOT A STARTUP.
IF SOMEONE TELL YOU IDEA WRONG ENOUGH TO MAKE YOU STOP, YOU NOT A STARTUP.
Kind of depends on who that someone is though. And the reason and specifics of what they say and why.And besides “someone” is typically not a single person but many people. And depending on who those people are, and their knowledge, (vs. your knowledge) they could be quite correct and you would be foolish to ignore their advice.
ONLY WAY TO FIND OUT WHO RIGHT IS DO IT, SEE RESULTS.THAT PROBLEM WITH ADVICE. IT JUST WHAT SOMEONE THINK.
Business is also about not wasting time.Now if you happen to be an investor you can fry many fish at the same time (in parallel) but if you are an entrepreneur you are working in serial on one idea.Consequently the idea that you are working on for the next 1 year or 10 means you won’t work on another idea.So I think you have to be quite careful to assess the downside risk (loss of your valuable time) prior to “DO IT”. This is really no different than any business decision.My daughter is considering an internship that she was offered in NYC. She has to make a decision on whether she will accept or turn it down and try to get something better. She said “but if I don’t take it and I don’t get anything else I will really be upset” (or something like that). So I said “welcome to the world of business this is not school and you will be confronted with decisions like that and unknowns every single day so get used to it”. Then I went on a bit about how in school everything is laid out for you “study this, take test” and so on and quite easy. But in real life assessment of downside is quite important.
THAT WHY STARTUP GOOD FOR PEOPLE WHERE ONLY RISK IS “MIGHT GET AMAZING SKILLS AND EXPERIENCE BUT STILL BE JUST AS BROKE AS YOU ARE NOW.”IF RISK IS “MIGHT RUIN YOU”, YOU BETTER BE SURE ABOUT IT.
Well you know the saying. If you want a guarantee buy a toaster.Look let’s face it. It’s a crapshoot and you know it.
But the only part that really is a crap shoot is whether or not the consumer will take to the product/service. Much of that can be mitigated through proper market research. There is of course those surprise hits that people stumble across from time to time. But with investing and entrepreneurship the key, in my view, is not to look for the big hit. But instead to eliminate wasting time and money on something that you could easily see was gonna’ be a flop!.This is why VCs want YOU to build it and MAYBE they’ll invest. Too many people go off half-cocked these days. They don’t even bother to ask a friend what they think of the idea. They just fire up a compiler and start hacking.
“but if you are an entrepreneur you are working in serial on one idea”.I’ve been pondering that. The problem is the internet is making it oh so difficult to do business with people. Sure I can email or goof around with any number of bullshit services that don’t get me in touch with the person I’m wanting to do business with. But for someone who doesn’t want to waste time and instead wants to talk with visionaries and go getters to get things done those services are just a wall in the path to money..Of course you are correct LE about analysis BEFORE action. But you have many hackers out there hacking things up and getting funding for ad hoc businesses that go nowhere. So since no one cares about sustainability they aren’t going to invest time and money into proper preparation..Just look at what Fred posted yesterday. Build it first then maybe he will invest. That helps promote the don’t do it correctly just do it approach. Which is way so many businesses fail to be sustinable. That’s OK if you’re hacking together some junk to dump into someone’s lap through an aqui-hire or something. But it’s not proper business.
Are you very familiar with venture capital?
Go ahead and ask the whole question. No need to slowing get there. I’m in this for the discussion. No emotional attachments for me.
You have correctly identified the “throw shit at the fan” scenario mixed in with the pyramid of success. If you have enough people trying enough things some of those things are going to stand out and work ridiculously well as multiple factors come together at the same time.VC’s, like Hollywood, the music business and professional sports, are in the business of encouraging a large quantity of people to throw that shit at the fan and to follow their dreams  . I would do the same thing as they say “nice work if you can find it”. RFFGC: Request for Fake Grimlock Cartoon. Which have been created by positive press highlighting big wins and success.
EVERY WAR WON ON IDEA ALL THE OTHER GUYS THE ONES GOING TO GET SHOT.
“I would do the same thing as they say “nice work if you can find it”.”.No kidding!
Rick – Some “branding” advice here. You need an avatar to go with your name.
Thanks LE. But I’m not doing the online self promotion thing anymore. When you chat with me I have no vested interest in any process or approach. I’m all about raw logic..Of couse I can tell say you look cute in your jogging shorts. lol.No worries. I dig on chicks.
I don’t jog I run.Having an avatar is not so much about self promoting as it is about having an tighter identity that is tied to your comments. Meaning your name plus the avatar makes it easier for people to follow what you are saying and read your comments in chunks and get to know you as one of a cast of characters. Perhaps I used the wrong word when I said “branding” in this context.
Definitely. Though one thing to consider is that today most employment is at-will and thus there is minimal downside to accepting an employment offer and then later resigning if something better comes up. Obviously the situation is different if the place is offering a full employment contract or if it’s a place you’ve been working at for a while.
Yes, LE, there’s more to it than what people seem to think. We have to remember. Fred is a VC and he needs a pipeline of deals flowing. He doesn’t care where they come from or how many people go belly along their way to the pipeline. He wants 100’s of start ups to prove they can make him money BEFORE he invests. Every investor wants that!.But we also need to keep Fred gets to see lots of companies and he has a good view on things. So his opionion is of value..Why is it so hard for people to understand that VCs are in it for the money. They don’t give two shits about people! They want to make money. They have a legal responsibility to do what they must to make a good return for their investors. Why can’t people understand that?!
that is a gross mistatement.
I disagree Emiliy. I think Fred’s position does in fact give him a good view of things happening in the business world and think his opionion on certain things is valuable.
My disagreement is in your statement that VCs are in it for the money only and don’t care about people.
Well when not at work I’m sure they do care about people. But, if I’m not mistaken, they are legally bound to do what’s best to make money for thier investors. That’s called “for-profit”..If VCs invested in every idea just because they wanted to help someone. Then we’d have 3 out of 3 startups failing instead of 2 out of 3..Don’t get me wrong. I know friends of friends get funding when others with the same ideas don’t. But the fact is the idea is the same and if the friend of the friend is just as capable then it’s basically the same.
Some of the best VCs care deeply about people. Team is one of the fundamental things they assess. And that is not at all inconsistent with making piles of money. In fact, it’s highly aligned.
I doubt you’re stating that correctly. I can imagine VCs assessing what they think a particular team can do. In other works how well a team can perform. But what would be the reason to assess a person? The best team can remove their emotion and do things logically. That more or less takes “the person” out of the assessment..You’re saying that they look at a person. See what religion the person is. How well the person likes chocholate. What color the person likes. Or other things that make a person a person and choose based on that?.I would find that hard to believe. A machine of a person is what you want. A person who can let go of emotion is the right person for business. A person who can have $1 in the company bank account and they don’t miss a beat in their work. That is a person who is great at business.
Rick, you are way, way wrong here. And that is the last I am going to say about it.
Well that doesn’t do any good. You didn’t explain yourself with reasoning so it’s nothing more than a passing opionion.
But if 1000 people tell you the idea is wrong then you should take a moment to think about it.
Fred can tell you why it has not worked in the past (when he has seen it). Hopefully you can tell him why it will work now.Fred can tell you if your idea requires unrealistic behaviour changes (because he has see how tough it is to change customer behaviour).Fred can tell you if it is uneconomic.And Fred can totally validate your belief.But he is bang on that he cannot tell you whether it is a good idea.If you have to ask for the recipe, you are not ready to be the chef.
Madly in love? Great. Delusional? No. I’ve seen way too many people who were delusional about how amazing their idea was, even after it was invalidated. This is also why a lot of startups fail: inability to recognize reality and pivot.
Problem is: Love is blind.
The reverse is also true, pivoting all over the place because they lack the conviction to see beyond some early and possibly erroneous invalidation.
Agreed. Seen plenty of that, too.
I’d agree, if you’re going to be madly in love with anything let it be the people you’re creating the idea for…that way it lives outside your head and is based in the world.
I like that. a lot.
It’s crazy how doing so changes your perspective – we’re in dev currently and don’t have a lot to show nor do we want to engage in fluff content marketing, so we started sharing one story a day on tumblr about how people could use our platform. I’m in Oakland for a few days and I started seeing use cases everywhere, down the block, by the lake, at BART, in the corner store, talking to someone about their furniture making business.
it brings it home. makes it tangibe and that is really motivating. love Tumblr. share it.
oooh, yes. in fact, I defer to this statement 🙂
my latest started 3 years ago as a labor of love for my 5 nieces. now, literally, we are going live-ish.
I suspect it was implied in your point about believing the world needs what you are creating…but I thought to myself, it doesn’t hurt to be direct
Agree and part of that comes from the press and media bandying about “defy the odds” type stories.I think that happens in any pyramid type business  you see it in the entertainment industry as well “Hillary Swank was homeless, lived out of a car and look where she is now”.  Freakanomics wrote about this with “why drug dealers live with their mothers” http://articles.latimes.com… http://newsfeed.time.com/20…
Sure. I’m just saying that passion doesn’t _usually_ occur in a vacuum. And it’s a great place to _start_ from.
LOVE WHAT YOU BUILDING, OR YOU RUN OUT OF FIRE BEFORE IT DONE.
Find out if the market wants it before you run out of money and become just another wanna’ be.
As stated don’t agree with the LOVE meme or theme.Businessman and opportunity wasn’t invented in the last decade (or so). Motivations haven’t changed. Think Sam Walton was in love with the idea of selling goods in small towns?If you are a businessman or entrepreneur you will love what you make money at and what provides positive reinforcement in some way or helps you achieve some goal.You think I liked waxing cars to make money because I was in love with the hard labor needed to wax and wash a car by hand? I wish people would stop thinking that the core of business has changed. It hasn’t. I did like photography which I made money from in high school and college as well (and still do). But what mattered is that someone would pay me money to do it. The idea that puts money in my pocket is the one that I like. And it’s the reason I don’t do photography to make money now. “Love” to take pictures but no way to make a dollar doing so with all the competition out there.Whatever the idea is, if it works for you and takes off you will like it. And then you will get to spend your spare time playing with something that you want to play with whenever you want. Like computers or playing golf (ugh).Bottom line (to recap): Fire runs out because nobody will pay you (before the runway ends) for what you are doing (or in this new world you can’t get enough eyeballs or signups for your free shit). Not because of love.
It’s nice to have seasoned business professionals here. We need more of you. The US is a mess and it’s people like you who can fix it..+1000
NOT EVERYONE IS YOU.
You are right I am special.  And over the years I’ve come in contact with literally thousands of business people and I can assure you that they typically aren’t motivated by any love of what they are making their money from except that they find great love for it if it works out for them and meets or exceeds their expectations. Btw, “not everyone you” applies more to you than it does to me.
“I am special”.That’s for sure. You are one of few who see things correctly and can explain why!.We do need to keep in mind that Fred and some other are selling here. So they aren’t here to discuss facts and logic. Some are only here to promote something. That’s fine by me but we all need to remember that were here because Fred wants to make money and so he runs this blog.
ME, GRIMLOCK, MEET LOTS OF HUMANS TOO. SOME OF THEM SURVIVED!PERSON THAT IN IT TO MAKE MONEY, THEM AVERAGE.PERSON THAT IN IT TO CHANGE WORLD, IF MONEY HAPPEN THAT NICE SIDE EFFECT, NOT AVERAGE.ONE TEND TO WIN AT STARTUP. OTHER TEND TO WIN AT NORMAL BUSINESS.
Person in it to make money knows money makes the world go round. Know with money they make the world better. Person in it to change world without money is religious man not entrepreneur.
PERSON THAT IN IT TO CHANGE WORLD, IF MONEY HAPPEN THAT NICE SIDE EFFECT, NOT AVERAGE.Yeah we call that naive and wet behind the ears.And you are doing that “change world” shit just to torture me. It is working.Btw, people in “normal” business after any success, try to start another “normal” business. People in “startup” after success tend to try and become a VC or angel deciding not to press their luck and wanting to spread their risk. From my observation haven’t studied it.PERSON THAT IN IT TO MAKE MONEY, THEM AVERAGE.You can’t be serious about that one. That’s sounds like something that a programmer would say about an MBA that was an english major as an undergraduate and didn’t think about business until they decided to “get their MBA”. News: Lots of people really like business and making money and aren’t “average”.
NORMAL, AVERAGE, WHATEVER WORD YOU WANT.MOST PERSON IN BUSINESS = THERE FOR MONEY.MOST PERSON IN CHANGE THE WORLD = THERE TO CHANGE THE WORLD.
? who is this
In that particular case that person is not a business person nor an entrepreneur nor a hard worker. Nor someone you want to invest in!.Objectives that’s what a business should run on. Not emotion. The objectives should drive you to perform not how you feel about things.
There’s a reason you love it. If you are similar to others, there should be others who will love what you build too. Find that core reason, make it easy for others to see in your product. Win.
How to keep stoking the fire when running low? (Me realise FG grammar contagious! 🙂 )
1. CELEBRATE EVERYTHING THAT AWESOME, EVEN IF IT TINY2. CUT AWAY THINGS DRAGGING YOU DOWN3. SOMETIMES JUST HAVE TO KEEP GOING UNTIL FIRE ROAR BACK. TRUST IT WILL.
Thanks fake grimlock
YOU WELCOME!OR ELSE.
Wicked cool reply!
SAME AS EVERY GRIMLOCK REPLY!
I like the ones where you end up eating people!
That’s all great stuff if you like backruptcy..”You need to believe that the world needs it, badly.”.Actually… The world needs to believe it needs it badly!
actually, it’s both, and if you see it, part of your “build” is education
Not quite right Emily. I can take any idea even one I don’t think is any good. Assign a team to it and they will do all the work and I will then see if the consumer likes it. I don’t have to care at all about the product or service..You’ve jumped on the “lean” bandwagon. It’s a bad approach to building businesses. You need to think business, which is about logic, not emotion..Take me as an example. I’ve been looking for a while for something to get excited about doing. I haven’t found it yet! But in reality this is a bad thing for me to do. I need to stick with analyzing things logically and throw emotion out the window!
To me, this makes as much sense as marrying someone because they look good on paper. That’s just how I roll.
That’s OK but you’re just not seeing this correctly. Many companies have R&D departments that work on ideas without one bit of emotion involved. All with the hopes that some great product will come from the effort. Like sticky notes. From what I understand those came from a failed experiment that produced the semi-sticky adhesive.
those are not startups, and those are not entrepreneurs.
yeah, and why I don’t work at one of those 🙂 In fact, I watched someone crash a promising startup straight into the ground trying to use corporate methods. No one there was the HEART of the startup.
Well you again are not quite right. Many times startups come out of R&D done at universities and large companies etc. All having done research with no emotion attached..Many large organizations are entrepreneurial. To the point of starting small companies around single product and/or service ideas. All done using logic and proper analysis not emotion..Let’s be clear that we can’t eliminate all emotion. But the idea that a person starting a business should be running heaviliy on emotion is foolish. It’s great for that person but it’s a strike against the business and it’s ability to make good decisions.
Rixk, are you an entrepreneur? Have you ever worked at a bleeding edge startup? Because literally most of your positions fly in the face of what I have lived and breathed these past 15 years.
I’ve only ever worked at a couple places that weren’t a startup..I know what goes on in the world. Just because you’ve lived it doesn’t make it a good approach. I’ve bootstrapped before and I’ve been at well funded startups. I’ve watched hackers drive startups into the ground and I’ve watched business people grow great companies. I’ve been involved as programmer, founder, consultant, and friend..I’m telling you what I see as proper technique. I’m not selling anything. I don’t have any vested interest in supporting any particular process or approach. I’m just here discussing things..If you disagree. Tell me why. Give your logical reasoning as to why.
we’ve grown up in different statup worlds. neither of us is right or wrong. just very different environments.
Different startup worlds, and different levels of EQ/emotional intelligence it would seem.
I am a 3x entrepreneur and I know what works for me. I am not a “typical” “build” entrepreneur.
Even so emotion is a bad thing in business. The experienced and achieving business person uses logic! Saying to someone that they need to be passionate and driven etc. is great if you feel they don’t have what it takes to make things happen. Or if you want them to spend their money and put their life on the line so that they can proof a concept with no funding. But it’s not good business..If someone is going into business they need to be able to get up everyday and do the work that is needed to build that business whether or not they *feel* like doing it. They need to be able to be completely down and uninspired but still get up and go to the office. They must be a machine!.One of the biggest reasons startups fail, other than not enough funding, is that people follow their emotions instead of logic.
logic and emotion are not mutually-exclusive.
Umm… Yes they are. You are subject to emotion. But you use logic.
umm. no. psychology student, 8 years.
We can’t believe you just because you say it Emily. You’ll need to explain..If everyone just listened to what people said without an explanation we’d have even more kids addicted to drugs because they would blindly listen to peer pressure telling them drugs are great..Also I don’t know how you figure that we are not subject to emotion. I thought that was exactly what emotion is about. I can’t apply emotion. I can only apply logic. I feel emotions. I don’t feel logic.
You have passion – emotion – for your venture. You approach your dealings logically. They are not mutually exclusive. That’s end of lesson. Basic.
I can tell by you wanting me to just believe you that you’re starting to argue just to be declared the winner. However there is no competition in this. This is just a discussion..OK I think you’re saying emotion and logic can both exist in a start up situation. Yes I agree. But using emotion instead of logic in the decision making process is a very bad thing. Taking into account emotions of the customer for decision making can be a good thing..Just for the record I’m not a psychologist. But I think when emotion gets mixed in then it’s no longer logic. In other words once emotion enters the mix you can no longer count on the outcome as being the result of logic.
a professional finds the balance.
nope, you got me wrong.
just a thought: apparently you need the emotional centers of the brain just to have logic. if you destroy them, you apparently can’t make logical decisions and will starve to death (true story, this does happen with people with actual brain injuries, and they do starve to death)
cool, will have to look into that. thx
Could be. Maybe Emily knows. I only care that it’s not good to run a business on emotion. Logic is the right thing to use..Too many people won’t pivot or won’t close up shop until it’s too late because of emotion. It they would instead use logic to analyze the numbers they would make better decisions..Now there are examples of how people struggle for decades and then get back their money and make a profit. But the thing to learn in that is their timing wasn’t right. They just wasted time and investor dollars waiting it out.
emotion stems from the amygdala, the primitive pleasure center, then ties to what brings pleasure, or pain, and in equating emotions that is ultimately the thinking in the prefrontal cortex. Which is where logic resdies.
“primitive pleasure center”.I like to feed that with some 150mph runs on a two wheeled engine!
to each his own.
Chris Dixon & Caterina Fake – most of the time I spent on my first startups was just me freaking out – http://bijansabet.com/post/….Stuart Butterfield on Slack – office almost always empty by 6:30 (Stuart is 41 & 2 other founders are OLDER than he is – https://www.youtube.com/wat…Being crazy in love is overrated in both life and startups (makes for great art but crappy reality).
Sample size N=1. If you get a “no” and quit, then the email wasn’t worth sending.
Loved your tweet storm yesterday. I expanded on your thoughts. What do you think? http://www.arilewis.com/how-do-you...
To point #5, I would add- Do your customers think it’s good (assuming you’ve built at least a phase 1)? Or paraphrased a different way, are you solving a problem that a potential customer is having? Is that problem such a pain that they are willing to use a solution created with minimal time/resources by a startup with no name recognition?
Great approach Fred, although I am an entrepreneur not a VC I follow that approach as well when I provide my personal opinion to anyone about anything. Nobody has a crystal ball and whether it is a good or a bad idea is almost irrelevant, it is more about the execution of that idea and the entrepreneur(s) behind it. We all know how Pinterest and other successful startups came into being from originally bad ideas, which were later changed/pivoted to create billion dollar companies.
True. I also think execution is more important than the idea itself, but I understand someone would want Fred’s approval and endorsement. I think this chart from pickcrew.com illustrates it well:
Love the chart, most definitely one of my favorites
Yes, illustrates well how important execution is and how worthless an idea without it. It’s from https://pickcrew.com/how-to…
I’d add it has to be something you actually LOVE and/or care about. It might be the best/most potentially profitable idea in the world, but you are going to be working on it 24/7 for the next ten years so you better be sure you are going to be excited about it.
I’d add it has to be something you actually LOVE and/or care about.I don’t really agree with that and I think that is actually a myth or meme that is perpetuated in the startup community. If the idea that you have works (or if it appears to be progressing) and it provides positive feedback to your brain (or earns you a good living) you will be carried along in a sea of reward that will drive you further whatever (within reason) the idea is.  By the way back when I was in business school the operative meme was “find a niche and fill it” iirc.Anyway, not only have I seen this happen  but as only one example the first business that I started wasn’t particularly exciting, wasn’t going to change the world, and wasn’t sexy to anyone, and in fact nobody would have picked it thinking “this is what I want to do for the rest of my life”. You are not wrapped up in your business for the rest of your life. There are exit opportunities.Separately, I’ve also seen people get wrapped up in some stupid idea that they believe in to the exclusion of more reasonable and practical ideas as well. You know sort of similar to “gamblers are gamblers and they don’t care what they gamble on only if they win..” Rebecca Rescate, “City Kitty” and “Hoodie Pillow” on Shark Tank two times and doing quite well and starting another business or two. Nothing exciting about selling cat toilet training kits other than the money that you make (and she is making money I do know that) and the excitement of owning a business. Nothing world changing. Ditto for “hoodie pillow”.
I don’t think it’s a myth. I bet you Rebecca likes cats, or is a cat person. It would be hard if you were a dog person, didn’t like cats and you were selling cat toilet training kits for a living. I think you could do it, i mean i work in advertising, and worked on the Pontiac Vibe launch in Canada (world’s ugliest car), but a start up is so singularly focused for such a long time, i think it would hard to do something you didn’t care about.
I worked in advertising for 15 years. I hate advertising. but it was the best model for it that exists, and it was challenging, and great money potential. that was enough for me.
Rebecca (who I know and who I have helped) started it because she was living in a small NYC apartment at the time. Of course she likes cats. But she had an idea to solve a problem that she had. And the idea was nothing new either she just essentially packaged and marketed it.As far as cats, in the past, I didn’t particularly like cats. But my 2nd wife had a cat and now I like the cat but I’m not head over heels with cats or anything like that. And if I had a chance to make a product and make money in the cat business I would. And in fact I often suggest ideas to rebecca on her cat products or new product ideas that she can offer or modifications to her marketing or her packaging. Sometimes I will be in a supermarket and see something that her competitors are doing and send it to her. And I’m not in any way “head over heels” with cats to me it’s just business. I like business. Nor is Rebecca “cats only”. The new ideas she is doing have nothing to do with cats.”Some” of the things she is doing here were based on suggestions that I made, based on casual observations of my stepkids:http://www.3purpose.com/
that is not necessary for all, but is for me.
I was in the process of writing a world-changing comment when I got distracted by this video of an orchestra playing The Can Can — with a TODDLER on drums.I suppose world changing will have to wait ’till tomorrow.https://www.youtube.com/wat…
Ha! That kid’s got game! And I dig his hair.
Awesome advice. We met with about 200 entrepreneurs last year, and 35 launched. All are brick and mortar start ups. I never want to be the guy who tells them its a bad idea, rather help them walk through the concept and answer their own questions.Sometimes the best work we do is to help entrepreneurs not start businesses doomed for failure…
This is too harsh. A solo ent is sitting in his (or her) garage banging on a HUGE idea that seems obvious to him. But he looks out into the existing world and sees that it doesn’t exist. Why? Is the concept impossible? Stupid? That is normal thinking – especially if your idea is a big one. Who else but a VC to validate your idea?The reality is that people still get funded based on a slide deck every day. And others spend years chasing their dream that never sees a penny of funding.
See my above post. VCs are generally not great at validating ideas. You’re better off going to customers and/or other domain experts. In fact the average VC fund is underperforming the stock market and on average VC funds barely break even. (see https://hbr.org/2013/05/six…I’m guessing USV is doing above average and that is part of the appeal of asking Fred. But if Fred could articulate and bottle his Fredness, then I’d just take all the learnings I have from AVC and head down to Fairfield county to find myself some limited partners and easily make it rich, and the other VC funds would also read Fred’s blog and do the same thing and then we’d all fight over funding the same companies. And if Fred was correct all the time, then USV would have a 100% hit rate and take us all out to a really nice dinner or something. 🙂 Prediction is hard, especially about the future.
You are right – VC is best to validate the “fundability” of an idea – not the overall concept.
Sometimes you do need to check yourself, but not at idea-stage and not asking someone you do not know or trust.
The funny thing about start-ups is that most of them fail. If I knew nothing about a start-up and was asked about how well it would do, my best guess every time is to say it is a bad idea, and I will be correct about that the majority of the time. In the world of venture where if I recall correctly a 10% hit rate is the standard, you’re also not expecting to be correct the majority of the time but it’s ok because the 10% is enough to cover the times you are wrong. VCs win by being contrarians and seeing things others don’t, but in the real world the conventional wisdom is often right.Also a lot of people did not like AirBnb yet here it is, existing out of the will and stubbornness of its founders.
agree. in my 15 years I was part of 1 win, part of 4 losses, and had 1.5 independent wins. still trucking
Most interesting is that a Tweetstorm replaced a traditional blogpost.Interesting for twitter to explore, no? Especially when many have been so public about tweeting being their outlet and cannibalizing their blogging…
Both founders and investors need to discern that while we value the opinions and analysis of other founders and investors, what we need to focus on are the processes (DOING, execution) that enable us to scope, understand, target, build, deliver to and then adapt with the market.In tandem with the design, architecture and engineering of my system I made 800+ strategy slides, examining my system’s potential to attract users, generate revenue and be competitively differentiated. Of the 800+ slides, about 60 slides are dedicated to Business & Innovation Processes.One of the slides contains the Business Model Canvas.
Opinions are great as long as you departmentalize as just that, opinions. Third-party concept validation is a nice psychological reinforcer but meaningless without strong execution and product market fit. There are so, so many variables that go into achieving success, which is why the start-up failure rate is so high, even among so called “enlightened” VC’s.
i am firmly in the camp that it also doesn’t matter if the entrepreneur thinks that it is a great idea. what actually matters if your potential customers think it is a great idea. passing the filter of whether you think it is a great idea doesn’t preclude you from wasting 5 years of your life. However, using the filter of whether your target customer does, goes a far way in making your investment of time worthwhile.
There was a vegan hotdog stand struggling at Wes and I remember so clearly the shock I felt when, after purchasing a hot dog, the proprietor asked “This is a good idea, right?”Most humble entrepreneurs necessarily have doubts though. The accepted rhetoric seems to say brush aside insecurities and fight forward if you believe in your idea (enough?).Couple rational fears with the theory of great start up ideas lacking verisimilitude makes for occasional nods of approval added wind in the sails. This seems doubly true if the nod is coming from someone with an eye for differentiation.Not a defense of someone asking for approval flat out though, seems weak/unnecessary. Entrepreneurs end up with plenty of advice, fly-by or otherwise, even if they don’t ask for it.haha I really like the fin ending to tweetstorms. It should be required.
Wrong again Fred! You’re losing your touch..It doesn’t matter if you think it’s good. It also doesn’t matter if the entrepreneur thinks it’s good. The ONLY thing that matters is whether or not the customer thinks its good!!! Because the customer is who pays for it and money is all that matters in business.
Good or bad idea, is not what i care about. Whether it fits a VCs investment thesis, I must certainly do.But there is a nuance.I also don’t believe that the majority of consumer plays have a model early on. But they do make more or less sense based on an understanding of the dynamics of a specific market. That expertise is what VCs also share. Super useful feedback.
Can I clone that answer? I was asked a similar thing yesterday by an entrepreneur, and I tried to deflect my answer by saying that his idea needs to be implemented before it becomes viable. I didn’t say yes/no for the same reason you outlined.I think some first-time entrepreneurs ask that question naively, in the hope that if you said yes you like the idea, then that means you would eventually fund them.But I’m reminded of Paul Graham’s 2005 essay on Ideas, and specifically this part: “Startups end up nothing like the initial idea” http://www.paulgraham.com/i…
“Startups end up nothing like the initial idea”.Right. Because too many people today are starting a software project not a business. They don’t know how to start a business but they do know how to write HTML..Tell them to first prove, on paper, thier idea can make money. Then it might be a good investment. When trading in stocks everyone is told to first “paper trade”. That’s an approach to proofing a trading philosophy BEFORE implementing it with live trading..People should “paper proof” their startup before they do anything at all toward building that startup!
I’m not sure that paper proof is the answer. It’s the market that will tell you.
I agree the market has the final say. But paper proofing includes many techniques that can uncover market sentiment prior investment.
I have a specific endeavor in mind that is wildly outside the box. Forgive me.
Why forgive you? That’s great. Just keep emotion out of your analysis and stay disciplined. If it doesn’t grow fast have the discipline to move on when the numbers tell you to.
some concepts require you to tell the market what the answer is.
I agree. But educating the market can take years and boat loads of cash. Take cell phones for example. They were not much of an innovation. We already had walk abouts with short range. People already knew they wanted cordless phones that had much greater range. But it still took time for the market to buy into the large and costly cell phone. Now that it is so cheap everyone is willing to toss a few bucks at having one.
It’s a function of the venture upside.
some things are much harder to paper proof than others
and those are the high-risk/high-reward plays
The risk reward ratio is not a determinent of whether or not paper proofing can help. But a high risk endeavor can make paper proofing more valuable in the equation.
I have found high-risk/high reward plays, the only ones I do, to be more easily “paper proofed”.
Many people lack the vision to recognize a good idea or resent the fact that it wasn’t them who thought about it first. To this type of people your idea will seem bad. In my opinion the best people to validate your idea are potential customers without letting them know you are behind it.
That type of counsel is invaluable. I am incredibly grateful for mentors who have generously spent time discussing potential ventures with me. I always respected their time and only presented well-thought out businesses that I believed in, but they had experience that I didn’t. They could highlight roadblocks that I couldn’t. It wasn’t a matter of believing in the business, it was just that this person may understand the customer or market better than I do.
“Magic” In case anyone missed this. – A good poster child for ideas that will probably get funded right now:http://www.wired.com/2015/0…https://news.ycombinator.co…
Thanks for the great piece of advice! We re-posted on our blog: https://teamupstartup.com/b…Cheers!
THIS BLOG ABOUT VC.WHO VC GOING TO MAKE BET ON?PERSON THAT SLEEP ON COUCH, EAT RAMEN WHILE POUR LAST DROP INTO CHANGE THE WORLD NO MATTER WHAT ANYONE ELSE THINK?OR PERSON WAIT FOR SOMEONE ELSE TO SAY IT OK BEFORE TRY TO KIND OF DO SOMETHING ON THE SIDE MAYBE, WITH DAYJOB AND BACKUP PLAN AND NOT REALLY MEAN IT?THERE LOTS OF WAYS TO BE SUCCESS WITHOUT BE STARTUP. ALMOST EVERYTHING BETTER CHANCE OF HAVE NICE LIFE.BUT YOU WANT SOMEONE TO BET MILLIONS OF DOLLARS YOU CAN MAKE BILLIONS CHANGING EVERYTHING?YOU NEED TO BE ON FIRE.
Money is a of no real value from paper to minerals gold,silver etc. Happiness, wealth and success are not achieved by such. Knowledge of Truth is power and finding balance with oneself and surroundings is peace and joy and spiritual growth or soul searching is wealth in time surpassed through all earth’s inhabitants lasting for one’s lifetime and thereafter.
I belong to the Elon Musk school of entrepreneurship and, in particular, his arguments about ideas and innovating from first principles.
So well said!
I liked the “10/fin”. You should end your blog posts with “Fin” too.
I am partial to fini.
Confidence in oneself is a developed skill
how do you see that as a process, from your experience?
And a form of one’s character and not talent
I think a lot of times people want to be validated for coming up with a clever idea, which I think everyone can relate to… everyone wants to be told by a smart person that they came up with something cool.But ideas, like talk, is cheap… creating a ‘tractionable’ implementation of your idea yields better returns than a validating comment.
Well I completely agree that the entrepreneur has to think it’s a good idea I think that’s only half of the issue. The other question that I like to ask entrepreneurs is does your customer think it’s a good idea or better put, do you have customers are dying to use it or even better pay you for it?
Disagree! I would still want to speak to Fred Wilson so that I can fix the things that need to be fixed. Speaking with people like Fred is like gold. They help you fix the foundation while you necessarily fly in the sky.
True monitory wealth is circulated between a tight small circle and all below is scraps of such in which scavengers use so much of talent and blood, sweat and tears hard work etc to aquire for saving and spending in which all things bought has no value for human evolution or invention of necessity of human kind. Instead in the end of that much traveled path is owing others for goods and properties and materials in which they own.
…lol The truth comes out. “I never want someone telling me they “WASTED” five years of their life on something…..” The only people that matter in terms if something is a good idea is big $$$. If big $$$ decides to invest in your idea rather than outright copy it and steal it which is typically an easier and cheaper thing for them to do…well then you have a slim chance of it being a good idea.
Too much work. May I suggest:1/ Listen to their idea.2/ Tell them it sucks horribly, no matter what it is.3/ Watch them succeed, probably out of spite.4/ Reveal to them it was all reverse psychology.
I look back at when I started working on what later became indeni. One day it just hit me that the way engineers run their networks needs to change. I had no idea how to do it, but it was obvious to me it had to be done and that I could figure out how to do it. Since then, hundreds of people told me it was a bad idea. Hundreds others, signed off on purchase orders for my “bad” idea.The way I see it, it’s all down to conviction. If you need to ask someone if it’s a good idea or not, you’re not convinced yourself yet.
Maybe it isn’t worth answering “is this a good idea?”. But I see all sorts of new entrepreneurs come up with ideas that aren’t solving a problem, have a tiny market, or are in a crowded space. I think it’s worth helping them think about those things without necessarily passing judgement about their idea.
Hope this is not ‘over’.The gap between the rightness of Kirsten’s comment and the rightness of Jim’s comment can be solved with better wording. The entrepreneur has to have ass on fire but should also *listen* to guidance from experts with broader perspectives along the way to the real market assessment.Instead of asking Fred “Is this good ?” ask “What changes would make this a winner in the circles in which you run ?”
How can people be confident that a vc who thinks an idea is good won’t just tell that idea’s originator that its bad and then take it for themselves (farm it out to a band of their own trusted start up founders or something)?
ideas don’t win. original founders and teams with ideas win.
and any slimeball VC who would do that would not shepherd a winning idea with anyone.
I don’t think it pays to ask questions that are easy to game and that people have been conditioned to know the right answers to and be able to manipulate around.Better to just feel around the edges, tell stories and gauge reactions.Besides what does “all in” mean anyway?I remember seeing some great Netflix on the Mafia series. Before someone became a “made man” they asked him “if your mother is on her death bed and we call what will you do”. And the right answer they wanted to hear was “I will answer your call and do the job that you want and leave my mother”. How committed are you in other words?Now if you told me that story and got my reply you could gauge how “all in” I am to things that I do.
Dunno. Doesn’t it make more sense, in many cases, to flesh things out with the new cow prior to throwing out the old milk?Besides quitting the golden parachute job could be a marker for impulsiveness and lack of common sense two qualities that could be a detriment later down the road.Depending on the circumstances I’d rather see someone keep the day job and work all sorts of hours on the new idea (if the hours permit that idea to be worked on meaning not during the day job day) then I would for them to quit the day job and run out of their air supply and panic because let’s face it this type of thing takes time.
START BUSINESS IS BET WHAT YOU CAN RISK.STARTUP IS THAT EVERYTHING.