Archive | December 2015

Your Great New Idea… That Everyone Else Also Just Thought Of

fortune-logoNote: A version of this post appeared in Fortune magazine’s Entrepreneur Insider network under the headline “Here’s How to Know Your Business Is Headed for Disaster”

Something that never ceases to amaze me is how an idea will arise and suddenly come at me from several directions at once. Other entrepreneurs all swear to have come up with that same idea independently, and I believe them—it’s happened to me more than once.

To be clear, I’m not talking about x-for-y variations (e.g., Airbnb for cats or Uber for bicycles). I’m talking about genuinely new ideas. My theory is that startup concepts each rest on a set of memes and technical capabilities. When all of the relevant building blocks are in place, conditions are ripe for that startup concept to be discovered. And with enough really smart entrepreneurs actively and constantly alert for new opportunities, it’s only natural that several of them will come up with the idea simultaneously and independently.

That said, there are some startup concepts that are truly out of left field—that leapfrog a lot of these building blocks. So how do you know if you have a really revolutionary breakthrough or a more garden-variety disruption?

You start by searching. Before you build—before you even model your business in Excel—spend some time Googling up any possible description of the idea you have in mind. In many cases, you’ll find that four or five companies on the first results page are already doing it, and you can simply move on to the next idea.

If you don’t find anything, try searching using keywords that describe the problem you’re solving as opposed to keywords describing the solution you’re proposing. You may find direct competitors that way. At the very least, you’ll better understand how your prospective customers currently relieve the pain point, and you can assess whether you’re a quantum level better or simply an incremental improvement. (Hint: It’s really hard to get attention, much less change user behavior without a clear, compelling, and overwhelming benefit.)

If the field still looks open, go to AngelList and read the short description of every startup in the same sector or sectors that you cover. Yes, read every single one. Every. Single. One.

If you still think you have something new and awesome, go out there and talk to as many smart people as you can, especially if they’re investors or customers on the space.

Don’t worry about them stealing your idea. Most of the people you speak to will never quit their day job, and about 1% will be entrepreneurs with their own ideas. They aren’t going to suddenly look at their startup and think, “My baby isn’t so cute after all. Let’s go steal his baby.” Perhaps one in 1,000 will be entrepreneurs with the right skills, connections, and availability to run with your idea, and it will be immediately obviously who they are. Don’t sweat it.

Instead of worrying about people stealing your idea, ask them to break it. Ask them to tear it apart and show you all of the ways it can fail. And if they can break your idea—and you can’t fix it—thank them. They’ve just saved you years of your life and a lot of money chasing a doomed venture.

If after all this you find that you have something genuinely new, compelling, and unbroken, let me tell you about Dreamit‘s accelerator program.

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The Secret to Putting on an Awesome Panel

alleywatch-logoNote: A version of this post appeared in my semi-regular column on AlleyWatch.

Since joining Dreamit, I’ve been on dozens of panels and moderated more than a few of them. Some have been awesome, others have been…less awesome. Want to make sure your panel rocks? Keep reading.

(I’m going to assume you have lined up great panelists. If not, don’t even bother putting on a panel format event. Ok, enough with the blindingly obvious advice and on to the good stuff.)

What separates a great panel from a mediocre one is time management. Take a typical one hour panel with three panelists. After you allow time for the panelists to introduce themselves and for the moderator to set up the questions, each panelist has roughly 15 minutes of actual talk time. So how do you make the most of that limited resource?

  1. Pick your questions wisely.
    If you know the topic reasonably well – and if you don’t you have no business moderating the panel – you should be able to brainstorm an initial list of questions. Share it with the panelists, other experts, and perhaps even some members of the target audience to get their feedback on what would be the most interesting questions to ask. Ask them to suggest questions you haven’t thought of.
  2. Know who to ask which question.
    If you ask a panelist a question, he will most likely answer it even if only to restate what another panelist just said or to add a minor nuance. That’s a waste of time that could be better used on a new topic. So just ask one panelist and then move on to the next question. You don’t need all three panelists to answer every question.
  3. Get the panelists thinking about the answer in advance
    You know what the best part of having a panelist give a long-winded, rambling answer is? Nothing. It bores the audience and sucks time away from more interesting content. But if the panelist hasn’t thought through how he or she plans to respond, your odds of getting a crisp, concise answer go way down.

So how do you pull this off? I’m glad you asked…

Two weeks prior to the panel:
Email the other panelists to introduce yourself (if you don’t already know them) and send them a preliminary list of the questions. Ask them to comment on which questions they think would be most interesting and to add any questions that they think would be worth discussing. Set an explicit deadline on when you would like them to respond. Reading a lists of twenty or so questions, commenting, and adding a few of their own questions is not a big ask so 2-3 days turnaround is not unreasonable.

One week prior to the panel:
Once you have selected the 8-10 questions you would like to ask, send out a poll (e.g., in MailChimp) to the panelists. For each question, ask them to rate (e.g., scale of 1-5) how interested they are in answering that particular question. Include a comments field where you ask them to briefly write out their  thoughts on that topic.

This data should give you an idea of who has interesting things to say about each question. Where more than one panelist is interested in answering the question but where they essentially agree on what they want to cover, simply pick one. If they disagree (in an interesting way, of course), you can pose the question to the second panelist for a counterpoint.

Try to allocate each panelists’ “air time” roughly equally, taking into account their preferences as to which questions they are most interested in discussing.

The added benefit of having them write out how they might answer the question is it that it gets them thinking about how they would phrase their responses. This should increase the odds that they give nice, crisp responses when they are on stage.

The day before the panel:
Circulate the questions that you have selected along with who you ask to answer each one. If they know what to expect and are confident that they will get their chance to answer a fair number of questions that are important to them, they should be able to resist the urge to chime in on the topics that you have assigned to other panelists.

At the panel:
Be awesome.

Good luck and have fun!

The Billion-Dollar Startup: You Need This Mindset to Build One

fortune-logoNote: A version of this post appeared in Fortune magazine’s Entrepreneur Insider network. This column answers the question “What are some common mistakes young entrepreneurs make?”

Too many entrepreneurs don’t have it.

The biggest mistake first-time entrepreneurs make is building first and thinking later. They get so excited about an idea that they start building out a grand edifice without first thinking through quick, cheap ways to do so.

For instance, e-commerce sites typically live or die based on customer acquisition cost (among a few other factors). So instead of spending time and money designing and ordering the products and building out a store in Shopify, a potential e-commerce entrepreneur should take a few hours to model out the business in Microsoft Excel, understand what the highest cost per click he or she can afford is, and then set up a Google AdWords campaign. In a few weeks — and for a few hundred dollars — he or she can get a sense of whether it’s possible to get under that threshold. If not, move on to the next idea and save a lot of time and money.

One of the startups that went through Dreamit in 2009 was a blog discovery platform. The team wanted it to be a freemium service, so they modeled out the business and understood that they needed a 1% conversion rate. Anything above 1% meant they had a real business, and anything below that meant they were busted.

They had already launched their free services and had several thousand active users. Their plan was to spend the next two months coding the premium services, and their mentors at Dreamit convinced them to put up a page that upsold the premium features as if they were already built. If anyone clicked the “upgrade” button, they would see a “coming soon” message. Most importantly, they would have the conversion data they needed. They agreed, and in one week they had their answer: 0.1% conversion. Ouch.

They decided to kill their existing business and launch an entirely new startup — SeatGeek — which ended up raising $62 million during its Series C round this past April.

So what do you do when you’ve just disproved a key assumption?

Check the spreadsheet
It would be awful to abandon a promising startup just because a cell reference was off or a formula was wrong.

Check related assumptions
Variables are rarely independent. In the example above, a higher price point can compensate for a lower uptake rate. If you double the price, uptake will drop, but perhaps not as much as you think. It’s easy enough to test.

Check your model
Is this the only way to monetize your service? If you are solving a big enough pain point, someone will pay, and it may not be who you first expected.

Check your emotions
Entrepreneurs need to be persistent. We see a wall, and our first thought is “over, under, around, or through.” But sometimes, the immovable object wins. You can’t “work around” a fatal flaw. Resist the temptation to “table” a business-breaking issue while you solve other, ultimately minor issues. After all, wouldn’t you rather be building a unicorn than gilding a lemon?