Photo: Faith Goble via Flickr
The “fail fast” and “lean startup” principles are leading to a resounding chorus that ideas matter little. I’ve heard multiple investors say that they back people, and count on them to navigate their way towards the right opportunities.I agree 80 per cent with this. But I think some people are taking this too far. Of course ideas matter! Actually, they matter a lot. When I meet with entrepreneurs, I spend most of my time talking about their ideas. Here’s why:
1. It’s easier to make smaller pivots (or none at all). Kind of obvious, but of course you’d rather spend less time going down the wrong path and make small adjustments along the way vs. Major pivots. Common sense. The nice thing about many Internet enabled businesses these days is that it doesn’t cost that much to test things. So you don’t but too much capital going the wrong direction. But you do waste time. And given the choice, I’d much rather not waste time.
2. I focus first on market before team. I’m not unlike many investors in this way. It’s much, much harder for a great entrepreneur to overcome an unattractive market than a mediocre entrepreneur to be successful in an attractive market. So even if an idea is going to evolve, I’d rather the entrepreneur is pointed at an attractive market and a sensible opportunity in that market.
3. The idea tells you a lot about the entrepreneur. Many times the entrepreneurs that are great “heat seeking missiles” are also the best at describing their idea and how they are approaching it. In particular, I look for two things. The first is unique insight. Does this entrepreneur see the market, product, or problem in a way that is completely different from others? It’s usually pretty obvious to tell if an entrepreneur is just operating on a different plane of thinking than others, and whether she is unusually insightful and creative. The second thing I look for is prioritization. In other words, in pursuing the idea, how does the entrepreneur prioritise limited resources towards progress on product, customer traction, bd partnerships, etc. Is the entrepreneur focusing on the right things first, to validate the idea and/or inform the need to make a quick pivot? I also like to spend time on this because I think this is an area where I can be helpful.
4. A preference for authentic founders and authentic ideas I’ve referenced my partner Dave’s post on on this before. I strongly prefer investing in entrepreneurs that trying to scratch their own itch, or are pursuing an opportunity they deeply care about because of personal or professional experiences. So I do want entrepreneurs to care about their ideas and be passionate about it. I fear that too much of an emphasis on failing quickly can lead to an academic approach to starting businesses that I don’t really love.
This is all to say that I want to remind people that ideas matter tremendously. But I completely agree that a great idea does not = victory. Not even close.
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