Launching a business from your idea in a nutshell

Launching a business from your idea in a nutshell

Sure, it obviously is a bit simplistic, but at it’s core, this is one of the best short descriptions of how you should go about converting your software idea into a business – and when not to – in as few as words as I have seen.

Quoted here for availability:

I’ll save you the time of getting an MBA (note this primarily applies if you are building a B2B product company, consumer is much harder to validate):

Before you start your new company, figure out what your product is, then figure out who will buy it (I mean, who is the specific person in an organization that would need to make a purchase decision). Then, go talk to 2 or 3 of those people.

At this stage, if you can’t figure out who those people are, then you have a problem that isn’t going to go away once you’ve spent 12 months building your product. You have no market, do something else.

If you can’t get a meeting with those people, then you also have a problem that isn’t going to go away after you’ve built your product. You can’t penetrate your market, do something else.

When you get a meeting with them, don’t try to pitch them your idea. Tell them that you are exploring a market opportunity, and that you’d like to describe a product and ask them if they would buy it. Make it clear to them that they are very welcome to say “no, I won’t buy that”. In fact, you should try to get them to tell you they won’t buy it. If they tell you they won’t buy it, your market doesn’t want it, do something else.

If they say they’ll buy it, ask them if they would sign a non-binding letter of intent saying that if you build the product, and it does what you say it will do, that they will purchase it. This commits them to nothing, but these LoIs are gold if you are ever pitching investors. They are also a robust sign that they aren’t just telling you what you want to hear. If they won’t sign LoIs, then they weren’t serious when they said they’d buy your product, your market doesn’t want it, do something else.

Get 2 or three LoIs in your back pocket, then you’re ready to quit your job and start your business.

I guess the key idea here that most entrepreneurs miss is that you really need to vet your own ideas. Many aspiring entrepreneurs dream up an idea, and then stick to it doggedly, either because its the only idea they have, or they find it technically interesting. They don’t want to discover that it won’t work, so they don’t try to figure it out! This is a bit like writing some code, and then not testing it because you really don’t want to discover that its buggy.

The one thing worse than not starting a company is wasting 6 or 12 months of your life on an idea that has no market. Be smart, and do your due diligence on your own ideas before you take the plunge and start a company.

And one guy responds:

Fantastic. Pure gold. But I’d like to add some stuff on the other side about avoiding bullshit.

The business field is absolutely chock full of narcissistic idiots. The tech field is particularly bad because we had a big bubble about 10 years ago and the field is still full of get-rich-quick morons. Do not listen to these people.

How to spot them? They’re fast talkers, make lots of promises, pad their resumes, name drop like mad, and if you probe a bit you find out that they really don’t know what they’re talking about.

Most of them position themselves as middle-men who will “get you funded” or as “business accelerators.” A few pretend to be entrepreneurs themselves, but what they’re really looking to do is get someone entangled with them so they can ride. They’re almost never willing to do any real work. (This is another red flag.) In the valley the slang for them is “wantrepreneurs.”’tv/whats-a-wantrepreneur-ask-ustreamtvs-founders-326951.php

You want hackers at first, preferably ones who know a little bit about business. Then you want sales contacts who will go out and sell for you in exchange for some commission. The latter should be familiar with your target market. You’ll probably meet them when you’re doing the parent post’s advice.

Remember: it’s easy to get someone to sell for you. Just give them a cut. They don’t even have to be a “salesman” per se. They just have to have a market available to them. For them, it’s all upside and very little downside. Structure the deal this way, and people will sell your product (if it has value to anyone that is).

Finally, a lot of bullshit circulates about the subject of business. This is business, in a nutshell:

To succeed in business, what you need is: 1) a product or service that people want and are willing to pay for, and 2) a way of delivering that product or service such that the amount of money you take in is larger than the amount of money it costs to deliver it.

That’s it. There are a lot of tangential ideas, but most of them “orbit” that one. (marketing, sales, margins, etc.) There’s also the topic of financing, equity, investment, and exits, but you don’t even need to go there until you have the big thing down or until you have some idea of how you’re going to get there.

The whole cult of the ever-ephemeral “what it takes” to succeed in business (hand-wave, hand-wave, bullshit, bullshit), “other peoples’ money,” etc. is just the aforementioned narcissistic idiots blowing hot air. Ignore it. Business ideas are like chemical reactions, and money is like energy. If a reaction is exothermic, it’s a source of energy. If a reaction is endothermic, it consumes energy. Same goes with profitability and money. That’s it. All the rest is bullshit. Bad business ideas are bad, and no amount of narcissistic bullshit will change that. Good business ideas are good, and if they are executed well then “normal” non-sociopaths can make them work just fine. Execution is mostly a matter of hard work, good planning, attention to detail, multi-tasking, and a lot of “boring” management stuff.

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