December 4th, 2008

Myths entrepreneurs tell themselves

in: Startups

My friend Raymond Luk has a great post on the ten tough questions entrepreneurs need to ask themselves before starting a company. He’s right on all counts, and if you’re considering a startup, you need to read them and answer them honestly.As I was reading the list, it reminded me of a recent conversation about some of the delusions that first-time startup owners have, and that need to be dispelled before they can really get to work.

You have a unique idea.

No, you don’t.

Ten other companies are working on the same thing. You can win through execution, but the VC you’re going to visit next week has already met with them.

A VC will sign an NDA.

No, they won’t.

Why would they? They already know more about your competition than you do. And incidentally, they’re not telling you about your competitors, and they’ll do you the same courtesy — they aren’t in the business of burning bridges.

You’ll continue to have control once you get investment.

No, you’ll share control at best.

You’ll have bosses, and your first — and only — responsibility is to make them a reasonable return on their investment in a reasonable timeframe.

Your product or service will grow virally.

No, you’ll have to compete for attention.

There’s simply too much noise and a huge number of conflicting messages. It’s extremely unlikely that your product or service will hit any of the growth targets. Your prospective investors know this; it’s one of the reasons they don’t think you’re worth as much as you do. Just because you build it doesn’t mean they will come.

Your idea is worth a lot of money.

No, ideas aren’t worth anything.

Working code, revenue streams, defensible patents, market attention, and positive customer feedback are worth everything. Smart investors don’t back an idea — they back a team’s ability to make an idea real.

Ads will pay for growth.

Nope, sorry — ads are so 2005.

Online advertising is crumbling, and as Google and other look to pay their bills they’re going to be less willing to share the spoils. Even giants like Facebook and Twitter struggle with how to make money. If you don’t believe me, go watch a great video on why price is the missing part of most startups. While you’re there, watch them all.

Code is hard work.

Not compared to sales it isn’t.

You can control coding; in fact, you have total control over it. But you can’t control sales, because it’s soft and squshy and human. I know many more salespeople with yachts than I do coders, and yachts are a pretty good way to keep score. We live in an attention economy: It’s not what you know, or even who you know — it’s who knows you. And salespeople are masters at making others know you.

Usability isn’t as important as architecture.

Yes it is.

Look at a Wii. Or an iPhone. Usability makes it easier for people to try you out. If you need inspiration, go study Productplanner’s library of common website design paths. The whole focus is to get people engaged as effortlessly as possible.

You can build in monitoring later.

Nope, build it in up front.

How else will you know if it’s working or broken? With free tools like Google Alerts, Crazyegg, Kampyle, iPerceptions and Clicktale to get started there’s simply no excuse. Want to know what to watch? Check out Startup Metrics for Pirates.

You’ll hit your schedules.

Nope, they’ll slip.

Usability will delay the release. You’ll find fatal bugs, or the infrastructure won’t scale, or there will be a security breach. You can’t plan for the delay, even by planning for it.

That’s ten. I could go on, but ten seems to be the right size for a list.

Tags: ,

You can skip to the end and leave a response. Pinging is currently not allowed.