Old school Silicon Valley startup to do list:
- Think of cool idea using some keywords that are current and hot
- Use a dot com name generator to get a unique domain name that is pronounceable
- Find a technical co-founder (if you are technical, find a business co-founder) who will sign on for a promise
- Print business cards
- Make up PowerPoint presentation using several cool slide effects and pictures. It must be shorter than five minutes. Have a ten minute version in the bag just in case.
- Call your friend who has a friend that can get you a meeting with a VC
- Sign contract
- PUT MONEY IN BANK!
- Get a cool office in SF
- Code while living on ramen noodles and soda until the money runs out, you get bought out, or go IPO
- rinse, repeat…
I was reminded of this simple progression, that I lived through in the heady days of the Dot-Com-Bust, by Bob Warfield’s recent article about the pursuit of money by early stage entrepreneurs. Bob is a firm believer in bootstrapping until the money will really make a difference. It keeps you from pouring gasoline on a smoldering fire you started in the wrong place and from chasing really bad ideas just because someone has invested them.
But I know many entrepreneurs will claim they are in a hot field like mobile, social media or gaming and the rules just don’t apply. They have to get out there, get money and catch the wave.
The truth is mobile is hot right now – but it is also highly fractured by carriers, platforms and app stores. The US iTunes app store has over 1 million apps right now, with more than 850,000 that are active. As BetaBeat wrote, “If you’re gonna launch an app these days, better just rent a circus and get it over with.” Bob Warfield’s article uses the now common practice of leveraging funds from an accelerator to jump start an early stage company to make a good point. If the $30,000 an accelerator (or $300,000 an angel might give you) won’t solve a problem you can’t solve yourself, maybe you’re chasing the wrong idea. If you don’t have customers, aren’t solving a problem or providing something people will pay for – the amount of money you’re going to receive isn’t going to put you over the top.
After the last economic downturn, a lot of the stories about development for hot platforms like Facebook are just that – stories. The market has past and is moving on to greener pastures. So, as an entrepreneur – can you afford to chase it? Is chasing the next gold rush a business model you can afford to risk your time on?
None of this is to say that a mobile solution isn’t a good idea for your paying customers or that you can’t leverage a social platform to expand your base. But in those cases, the technology or platform is complementary to the business model. As many Lean Startups do, you might start out as a full concierge service – hands on with customers – as you learn what is of real value to your customers. And it is going to take some time, even when you find the right business model.
But – you can get there.