Powerpoint presentations and fancy domains won’t get you anywhere. Talking to customers/users will.
I was invited to speak on a panel at Stanford’s Graduate School of Business two weeks ago, and was amazed by how many “entrepreneurs” came up to me afterwards (most of whom weren’t GSB students). This reminded me of a past experience.
About three years ago, I had an idea for a startup called Gimme It. It was roughly along the lines of Pinterest, but not as good. I bought gimmeit.com, and did a whole bunch of things that made me think I was an “entrepreneur.” I got close to being a real entrepreneur with this idea. But in reality, that’s all it ever was – an idea. There’s a huge difference between an idea and creating an actual business.
Having subsequently been the co-founder of one real startup, and now as the second employee of another, I have some ideas about the difference between being an entrepreneur and just pretending to be one.
5 Things That Don’t Make You An Entrepreneur
1. Putting together a PowerPoint presentation.
The thinking goes like this: “If I put my idea down in visual form, and sketch everything out, people will be so blown away by the enormity and brilliance of my insight that investors will write me blank checks, Facebook engineers will become my co-founders, and a gigantic snowball of momentum will pick up speed and take my startup to $1bn in revenue in no time!” I should know – I used to think like this, and I produced a glorious deck for GimmeIt.
Nope. Doesn’t work like that. PowerPoint is just a representation of an idea. If you want to start a cookie business, you wouldn’t go to meetings without some samples of your baking. And if you want to create your first online business, no-one will take you seriously unless you’ve built something they can actually use. If you’re not resourceful enough to find a way to build a barebones minimally viable product, who is going to write you a check, sign up for your service, or join your team?
You can waste a ton of time making a beautiful presentation that doesn’t solve a real problem, no-one will pay for, and won’t get you any closer to VC checks. Yes, you will need a deck at some point, but while you have an idea and nothing more, you are just spinning your wheels. PowerPoint may be good for fleshing out your ideas, but so are pieces of paper and a pencil. And with paper and a pencil you will waste a lot less time making completely irrelevant things look pretty.
2. Buying an amazing domain
Yup, I did this one too. I was convinced that spending money on a fancy domain like gimmeit.com would garner me respect and make me look more legit. With emails coming from firstname.lastname@example.org, who wouldn’t take me seriously?
Even with a great domain, you’re still a non-trepreneur. What do PowerPoints and buying domains have in common? Both involve sitting behind a desk, not interacting with anyone. Until you get out there and start talking to your target audience and getting feedback, you have no idea if you’re solving a real problem or doing anything that anyone actually values.
Once you have users or customers and you’ve figured out what your business is all about, you can then spend a bunch of money on a fancy domain. But until you have traction, just pick a cheap and arbitrary domain. Take a color and an animal and stick them together – greensparrow.com is available on GoDaddy and will do just fine for virtually any business.
Zenput, where I work now, used to called Nextpunch. This was actually the name of an earlier, separate, product of one of our two co-founders. But we still got paying customers with the name Nextpunch even though the name had nothing to do with our product – people needed a solution to a problem, and if the product worked well, they couldn’t care less about the name.
Meanwhile, though, Gimme It is no closer to fruition, and I’m still trying to sell a fancy domain that has no business behind it.
3. Meeting expensive lawyers for free
If I had a penny for every non-trepreneur who told me “we’ve met with [Wilson Sonsini/Gunderson/Orrick/your regional big tech law firm] and they’re going to do all our incorporation documents free and introduce us to investors,” I’d have enough pennies to buy all the rotting carcasses of startup ideas that never became real businesses.
At some point you will need to incorporate and will need all your corporate ducks in a row. But you don’t need a fancy firm to do it for you, and most likely those introductions to mythical VCs will never happen. Those lawyers’ reputations are on the line every time they make an introduction, and if they set up VCs (their real paying clients) with every non-trepreneur touting the next “Facebook-killer”, they’d be out of business.
4. Incorporating unnecessarily early in some wacky state
Some people want to feel “safe” and so they rush out to incorporate. To me, the basic rule is: don’t incorporate until there’s a good reason to. There’s just no point doing it while you’re still a non-trepreneur, and if you’re not really ready, you risk making a big mistake (e.g. not filing your 83b election in time).
When do you need to incorporate? Generally if (1) you get a real co-founder or employees; (2) you get real customers; (3) you’re creating some real IP (not just a website); or (4) you start incurring liabilities (i.e. you have to sign real contracts (not NDAs) or you need a company bank account because money is actually flowing into the company).
Honestly, you’ll know when it’s time to incorporate, and you can do it pretty quickly.
And here’s a mini-rant on the choice of corporate entity and location. For 99% of companies, there is ONLY ONE QUESTION you need to ask when it comes to incorporating: is it likely my business will ever take institutional investment (i.e. a big VC round)? If no, incorporate as an LLC (or an S-Corp) in your own state. If yes, incorporate as a Delaware corporation. End of story. Do not get all creative and find some exotic state to incorporate in. There is no point and you will regret it later.
5. Saying you’re an “entrepreneur” or using the word “stealth”
If you tell people you are an entrepreneur, you’re actually not an entrepreneur. Why? Because real entrepreneurs say what they are actually doing, because they are actually doing something. If you can’t tell people what exactly it is you’re doing, you’re a non-trepreneur.
And let’s get something else out of the way. “Stealth” is for airplanes and cats, not startups. Sure, there are some exceptions, but your idea is likely not one of them. If your idea is that easily replicable by [Facebook/Amazon/Google], then it’s probably not a business but a product feature.
And even if it is a real idea, there is some serious egocentrism and insecurity to “stealth” thinking, because you have to believe that the investor/customer/friend you’re talking to would (1) think your idea is better than everything they’re currently doing; (2) drop everything they’re currently doing to pursue your idea; and, (3) do a better job than you. If that’s how you think, you’re not cut out for it. You shouldn’t walk into a potential competitors office and hand them your idea, but that’s different telling people in your network that your idea is too stealth to share with them. They are much more likely to help you than steal from you.
Things That Do Make You An Entrepreneur
1. Talking to customers before you have a product
This is surprisingly counterintuitive to a lot of folks. But why would you build a product if no-one actually wants to use it? And you won’t find out without asking. If you’re afraid to walk into a store, or to track down your target customer on LinkedIn and call them, you’ll never be an entrepreneur.
In fact, there’s a real advantage to talking to customers before you have a product – you’re not trying to sell them anything. So they’ll give you honest answers and useful feedback, and they won’t feel like you’re pressuring them. You’re just trying to find out information.
One of the reasons I joined my current company, is because they already had name-brand, paying customers even though the product was (at the time) very undifferentiated from its competitors. How did that happen? Our co-founder Vladik would get on the phone, repeatedly, and asked people what they needed. I want to video Vladik one day, because he literally runs a clinic in how to talk to customers. He just asks questions, and keeps digging into their business, figuring out why they do things the way they do now and what problems they have. He keeps asking until he understands their business better than they do. I’m deadly serious. And that’s how we won household names as customers with a product that (at-the-time) was fairly barebones. He never “sold” Zenput – he just demonstrated to the customer that he really understood their business.
If that sounds difficult – it is. But talking to customers is the only way to understand whether you’re solving a real problem, and whether anyone would actually pay you to use it. There is literally no point building something that no-one needs. So ask them – “would you pay for…?”
If it’s a consumer-facing product, spend $100-$200 on Google AdWords or Facebook Ads, just to see if someone will even click on the concept, with a launching soon page at the other end to capture people’s email addresses. Or, figure out how you would acquire customers for your finished product (if it’s not through ads), and try doing that with a launching soon page at the end. If no-one bites, that’s a good sign you’re not yet onto something.
2. Talking to investors
This can be intimidating and feel risky, but can also be priceless. If you don’t have any investors in your network, you could also just try experienced business professionals.
But, as with customers, the point is this: at the beginning, you want feedback, not money. You want honest, unvarnished truth, you don’t want to hear “great idea!” And investors will cut straight to the core and identify your biggest challenges immediately. Which is what you want.
If you can’t handle being told your idea has problems, you are definitely not an entrepreneur. You are also horribly unrealistic. Whether it’s technical challenges, user acquisition issues, regulatory problems, or competition, you are going to face some huge obstacles. And you need to accept what they are and start figuring out a plan of attack now. And those problems are not (1) your choice of domain; (2) your choice of website font; (3) whether your first post-IPO car will be a Tesla or Ferrari.
3. Talking to people who have done similar things
You can’t do this all by yourself. And you don’t have the experience anyway. You will need to stand on your own two feet, but there are many things that people can tell you to avoid you re-inventing the wheel. Even though your core business idea is original or a departure from what’s come before, for everything peripheral, you basically want to follow the pack. There are some rivers where you’ll have no choice but to go upstream, but for many many things, you’ll just want to go with the flow. (Sorry for all the mixing of metaphors).
And the best way to do that is to reach out to folks who have done similar things. Started their own businesses in similar industries, or managed products in the same field. People love to talk about what they do, and if you reach out to them in a no-pressure, no-expectations kind of way, they will often open right up to you.
It’s probably too early to have formal advisers, but just find a mentor or two who you can meet for lunch every month. These people will have resources and contacts, and you have to start the ball rolling somewhere.
4. Building something
So with Gimme It, I actually did numbers 1-3. I talked to some large retailers (who would have been my target customers and who were pretty enthusiastic), talked to advisors, and set up meetings with investors. But I never got around to building it. I was less polished than the other business folks who were courting San Francisco technical co-founders. And honestly I got intimidated and overwhelmed at the prospect of bootstrapping it on oDesk or paying someone around here. At the time, I didn’t have what it took to do something like that.
But without a product, even a super barebones one, there was no business, just a PowerPoint, just an idea. I wasn’t really an entrepreneur yet.
Failing is an inherent part of entrepreneurship. Failing is good, as long as you fail fast. Your goal as an entrepreneur is to figure out as quickly as possible whether something is working or not working. If it’s not working, figure out why, and fix it or move on.
There are lots of cheesy quotes on this subject, but the one I like the best is “the more you fail, the closer you are to your goal.” Every time you fail, you’ve eliminated one incorrect course of action. As long as you are objective and learn from your failures, failing quickly and often is good for your startup, and more importantly, for you.
So what’s the take-home from this? Don’t hide behind a computer. Get out and talk to people. Talk to them before you think you’re ready. Ask questions. Figure out why people are doing things their current way. Ask them how likely they would be to do things in a different way. Once you’ve listened, and listened hard, then you can start to figure out what to build.
Building Powerpoint decks is easy. Building something people will actually use is really hard. And that’s what makes an entrepreneur.