David Ronick: It usually happens at a cocktail party. Someone saunters over and says, “I hear you’re an entrepreneur Can I run an idea by you?” That’s when I opt for a dirty martini. People tend to have misconceptions about what constitutes a good opportunity, and it’s no fun to dish out bad news.
Of course, there are no iron-clad rules when it comes to start-ups. Timing, luck, and changes in the business environment can wreak havoc on the best-laid plans and the strongest teams. However, there are some guidelines I’ve found useful during my last 10 years of entrepreneurship. Here are a few:
Pave cowpaths. Many people think they need a unique idea to start a successful company. It may sound sexy, but I think they’ve got it all wrong. Sure, it would be great to come up with a revolutionary idea, and make billions. But the chances of success are minuscule. I’d rather find something that’s worked well, and put my own spin on it. Maybe in a new location, in a different niche, with different pricing. The key is to make it work. That is sexy. I’m trying this with an email newsletter called WordOfMouse.com. DailyCandy has been very successful with their newsletter, using the founder’s unique editorial voice. I’m trying it with several different editorial perspectives, for a point-counterpoint vibe…
Go high, go low, or go home. I like businesses that are either high or low-touch. My girlfriend has a brilliant high-touch business. She runs a corporate concierge service. Her clients run hedge funds or sales and trading desks. They make a fortune, but need help spending it – for themselves and their families, and to entertain clients. She gives them advice, and provides them with access. For example, she’ll get them front row seats at a sold out concert, a last minute reservation at the toughest table in town, or set them up on a once-in-a-lifetime vacation. Her marketing budget? Nada. Inventory? None. Key success factor: chutzpah. In the tech arena, on the other hand, it’s nice to go low touch. Many online ventures are doing this well, having users generate content, or letting advertisers write, bid for, and / or place their own ads. Having an element of low-touch allows for simpler operations, smaller teams, and better focus.
Be fast, cheap and flexible. When I read a business plan, the one thing I know for sure is that a year from now it will be wrong. That’s because it’s tough to come up with the right formula without trial and error. I prefer a phased approach. I try to move quickly and minimize costs, developing hypotheses, testing them, and making improvements along the way. Starting with my own capital makes me especially lean and agile. And with no salary, there’s ample motivation to break even on cash flow fast.
Follow your heart. Think back to that cocktail party scenario. Will you get excited telling people what you do three years from now, or bored to tears? Some people can stay interested in a business even if their product or service is mundane. I can’t. So I try to do things I genuinely love. Try to identify things you find intrinsically rewarding, and that you tend to excel at – things you love to do so much, they make you lose track of time. For me, two of those things are writing, and connecting people with suggestions I know they’ll love. When I have to stay up late writing a recommendation on a new restaurant, it doesn’t feel like work. That makes all the difference.
David Ronick lives in Greenwich Village. He has founded several Silicon Alley ventures, including BranchOut.com, a social networking website, BoxTop Media, an alternative advertising agency, and WordOfMouse.com, a newsletter with recommendations about New York City.