7 Things to Separate Good Businesses from Merely Good Ideas

You’ve got a good idea.  Awesome for you!  Good ideas are… well good.  But do you also have a good business on your hands?  There are lots of good ideas… really, really good ideas… ideas that everyone in the room nods their head to.  It feels awesome when you have one of these good ideas.  But here’s the reality — not all of the really good ideas are also good businesses.

There are so many factors that make otherwise-good-ideas turn out not to be good businesses.  Some are due to weaknesses inherent in the market/problem/solution that you’re going after and some are due to common failures of execution.  There are way too many to catalog here, but here are just a very few:

  • The problem you want to solve is just too small to warrant building a whole company around.
  • You thought your idea/product was so awesome that users would make it their life’s mission to help you reach a blowout viral coefficient.
  • You fail to solve the enormously difficult multi-sided market problem.
  • Everyone loves your solution but they are unwilling to pay you for it because they expect a product “like that” to be free.You encounter perverse incentives within your marketplace that want to keep your problem unsolved.
  • Sales cycles that take longer than your startup’s runway.
  • You didn’t realize how expensive it was going to be to deliver a viable product.
  • What do ya know, there are already better solutions out there that you never found because you never looked.

Add to this the ironic twist that our passion for our really good idea can blind us to the reality of these challenges.  In my view, we too often mistakenly believe that our passion is both impenetrable armor and mighty sword in our quest for startup success.  Passion can be both armor and sword, of course.  But at best they are chain male with soul sucking resistance and a +2 short sword.

PassionBlindSpot

At first this realization can kinda suck.  But it doesn’t have to.  Here’s the deal.  If you have a really good idea that’s not also a good business… it’s still a good idea.  It’s still an idea you can be proud of.  After all, lots of people agree that it’s a good idea.  Cool.  Relish that.  But don’t quit your day job, invest all your savings, put your family and your team at risk until you have a good reason to believe that your good idea could also be a good business.

Figuring out if you have a decent reason to believe your good idea is also a good business may seem hard (I hope it doesn’t seem unnecessary.)  I don’t think I have an awesome way yet to help entrepreneurs figure this out but I’m always on the hunt for new ways to think about the problem.  My current thought is around a compelling story you should be able to tell that include 7 theses.

  1. Here’s who would buy my thing. (customer)
  2. Here’s what they would pay for it. (revenue)
  3. Here’s why they would pay for it. (value)
  4. Here’s how many of them would pay for it. (market)
  5. Here’s how I’m going to get them to pay for it. (marketing)
  6. Here’s what the money looks like if I can get them to buy it. (financials)
  7. Here’s how I get there. (plan)

If everyone in the room nods when you layout this story, then you have may just have one of the good ideas that you could also make into a great business.

You can (should) spend hours and hours and pages and pages and spreadsheet after spreadsheet working out a compelling story that gets at every single one of these points.

Reid Hoffman is famous for saying that entrepreneurship requires jumping off a cliff and building a plane on the way down.  I couldn’t agree more.  But that doesn’t mean you shouldn’t design a plane capable of flight before jumping so that what your trying to build on the way down might actually fly.


4 Reasons the Seattle Angel Conference is a No Brainer

The Seattle Angel Conference III is coming up on May 16th.  The deadline for registering as a presenting startup is Monday, March 4th.  I’m signing up to present MoonTango and I think you should sign up too.  The reasons are simple.

1) SAC III will be making at least a $100k investment in one of the six teams that make it to the finals.  That a 17% chance of effectively “winning” a series chunk of investment capital.  This is unprecedented in Seattle.

2) The value of the help you get on your startup by going through the diligence process is worth magnitudes more than the $99 you pay to register as a presenting startup.  Don’t believe me?  Read what Corengi thought about the experience at the last SAC event even though they didn’t win the finals.

3) That $99 is effectively zero dollars, because you don’t pay anything more than a standard conference ticket to also be a presenting startup.  You just gotta let them know that you want to be considered to present.

4) Even if you don’t win (or even make the finals) where else are you going to spend an afternoon with a room full of angel investors

If I’ve persuaded you to register to present at SAC III and you win $100K (that is, you beat me) then all I ask is that you buy me lunch and tell me what you learned along the way.

Now go sign up… before the deadline and before the conference prices go up on Monday!!

Good luck!


Scam alert… blast from the past.

I just received the following text message from 781-366-7992:

I know you don’t know who I am yet but I promise you I will win tonight’s MINNESOTA / OKLAHOMA CITY game for sure. Reply FREE and I will text it absolutely FREE

I don’t even have to look this one up to know how it works… I saw it 30 years ago.

The trick was to start with a sufficiently large number of people and send them each a letter (yes, a paper letter with a postage stamp) identifying which team was going to win the next baseball/football/basketball game.  Let’s say you sent 100 letters.  Half of the letters (500) would identify Team A while the other half (the other 500) got told that Team B would win.  Which ever team one, you were 100% right in 50 letters.  You follow up by sending another letter to the 500 you got right claiming to have a secret for picking winners.  And to prove it you’re gonna pick the winner of the next game.  Five hundred letters go out, 250 pick Team C and 250 pick Team D.  Holy cow… you were right again.  But surely this is just luck, you say?  Watch, I’ll do it again.  Out go another 250 letters, 125 picking Team E and 125 picking Team F.  Voila!  I’m a genius!   You see where this is going.  75 letters, 37 letters, 18 letters, etc.  After establishing a perfect record of six or eight wins in a row, you’ve got their attention.  “Ok, that’s all you get.  If you want to know the 9th pick, you gotta pay me $1000 in cash.  Send the money and I’ll send you pick.”

The wait time of postal mail, the difficulty of anonymity and the cost of postage made this scam harder to run way back then.  But with the immediacy of text messaging, free access to cell phone numbers, relatively easy anonymity and the MASSIVE reach that possible… this sucker is a no brainer today.

All my readers are super smart so I don’t expect them to fall prey.  But I gotta think a ton of less sophisticated mobile users are gonna have an unfortunate wake up call.

Hope the Secret Service paying attention to this?


Entrepreneurs Should Learn to Think Like an Investor

I had a walking meeting scheduled for this morning’s Geeks on a Trail hike.   Before heading out I stopped in for a quick coffee at the long running Seattle Startup Open Coffee which Andy Sack founded years ago and which John Sechrest now shepherds forward.  Spying a new face and an empty chair, I sat down and introduced myself.   To protect the innocent, let’s just say his name was Ricky.

Ended up having an invigorating conversation about Ricky’s startup project.  It was clear that Ricky was an extremely talented developer and really passionate about his product.  As is my wont, after about 10 minutes of getting to know him and his product… I was ready to talk business.

Ricky had lots to say about product features and how he could build them.  But Ricky had virtually no clue about whether the startup project he was working on (for a year!) was likely to also be a sustainable business.

We talked about a lot of stuff that Ricky wasn’t thinking about — like whether his product could ever actually make enough money to warrant investing another year of his life.  What became clear was that after working on his product for about year he still had no idea whether his product had any hope at all of becoming a sustainable business.

A few of the questions he had no answer for were:

1) how big is the market for the product you’re building?

2) how are you going to acquire lots of customers?

3) how much do you think it will it cost you to acquire a customer?

4) how much will customers pay to use your app?

Before I go on, let me just say that Ricky struck me as a really smart guy and seemed like a really nice guy too.  So when I bag on Ricky now it’s not personal.  In fact, I have roughly the same conversation with other entrepreneurs so frequently that it prompted me to write about it here.

Ricky correctly pointed out that I was asking the kinds of questions that an investor would ask.  But, he claimed, since he hadn’t figured out yet what is final product and customer were going to be and because he wasn’t raising capital he therefor didn’t need to bother with such non-proudcty questions like these.

There is a lot wrong with Ricky’s claim, but here are two of the thoughts I left him with.

1) YOU are an investor in your startup.  So is your wife and your kids if you have them.  The opportunity cost alone is sobering when you consider that two years working on a project will cost a talented developer like Ricky at least $250k in salary.  Add in the sleepless nights and the “always on” lifestyle of an entrepreneur and you’re talking some serious emotional bank.

2) Asking those investor-ish questions is key to figuring out what product you should build for what customer.  You may never bring in investment capital; but remember that the questions investors care about are all filters on whether your startup is likely to succeed.  If you don’t have a compelling story to tell about how the product your building is going to be valuable enough to a scalable customer base that will pay enough for you to build a sustainable business around… then you just may not have found a great product or customer yet.  That doesn’t mean you’re dead in the water.  It just means you haven’t found a startup “business” yet.

Ricky was clearly enjoying the startup lifestyle and loved all that he was learning.  I support that and I wish him the best of luck.  But startups don’t have to be just about luck.


It’s not a startup … It’s a startup business

[This post was originally published on GeekWire, February 13, 2013, under the title “It’s not a startup … It’s a startup business.”]

As a species, we can be pretty lazy with language.  That’s cool… we all know what we mean.  But I reckon there can be benefits from occasional reminders about what we all think we know.  The word “startup” is such an occasion.

We say it and we hear it all the time.  But “startup” is really just shorthand for “startup business.”  We all know that, right?  So what’s the point of laboring over two whole additional syllables when we’re already all on the same page?

I’m not claiming causality here, but I find it curious how infrequently I hear entrepreneurs talking about the business side of their startup businesses.  Mostly, we love to talk about the idea and our passion for it.  We love to talk about our motivation… the solution… the design… the technology… the brilliance.  The business?  Not so much.

Mostly, the ideas I hear are good.  Some are really good.  But a startup business needs to be more (much more) than just a really good idea.  It needs to be a good business too.  And as it turns out, there’s usually a huge chasm between good ideas and good businesses.

Here’s the rub: there are lots and lots of really good ideas, cool ideas, outstanding ideas, stuff we all wish existed and if it did exist we think we’d use it… that are NOT also good businesses.  It’s only a small subset of good ideas that are also good businesses.

Job one for an entrepreneur is to figure out if there’s actually a good business to be had from a good idea. Or is it just a good idea?  It’s OK if a good idea turns out not to be a good business — just so long as you figure that out before you spend three years of your life, expend all your savings, exhaust your relationships and take down your whole team with you while you’re at it.

There’s no certainty to be had here but it’s remarkable how often startups are pursued without ever diving deep on the business side.  It’s a rare thing when an entrepreneur reaches out to me because they want to talk about the sustainability of their business model or the scalability of their revenue strategy.  They want to talk about their idea.  Which is just fine because I love talking about ideas.  But even more than the ideas themselves, I love talking about the business of the idea.

So once I think I have a reasonable understanding of their product, their market, their team (which usually takes less than 15 minutes)… I am ready to talk business.  How are or you going to make money?  How much will customers pay?  Why would they pay that?  How long will it take and how much will it cost you to acquire those customers?  How many have you talked to?  What’s the long term value of a customer once acquired?  What’s your distribution strategy?  Is it a two sided market?  How are you going to solve for that?  And a hundred other questions. Needless to say, these can be hard questions to hear if you haven’t spent a lot of time thinking about them and can make for a disappointing conversation for a lot of entrepreneurs.

In any case, here’s what I’ve found: It’s really hard to tell if a startup business is likely to succeed but it’s surprisingly easy to show that it’s likely to fail (or at least show that there’s rational justification for believing you don’t know how it could possibly succeed).  This is really good news because if you can make your startup business fail on paper first then you’re way ahead of the game.

Then you have some choices to make besides fervently proclaiming your passion for the idea and constantly quoting the late Steve Jobs on perseverance and citing Instagram’s acquisition.

You could choose to call it what it looks like, i.e., just a good idea but not a good business.  There’s no shame in that. Lots of useful, clever ideas turn out not to be a good business.

Remember, most good ideas are not also a good business.  If it’s an idea you really care about about but you can’t wrangle a business model out of it then you may have just discovered a labor of love that you can have a blast working on in your spare time without the pressure of feeling like you should quit your paying job.  And who knows, if you keep working at it, something might change and you might stumble upon a business pivot that turns it from a labor of love to a startup business.

Bob Crimmins

You could also choose to dig in and keep working on the business model until it’s really hard to make it fail on paper. This is what I think a lot of really good entrepreneurs do.  This is called “perseverance” and it’s a lot of work so buckle your seat belt.  This is also where your passion is a really valuable asset because it will keep you moving forward while you figure it out.

Just don’t loose site of what you’re trying to figure out, i.e., a sustainable business that can support your awesome idea.  And by the way, don’t build into your model that your going to raise investment capital before you’ve got a reasonable story about the business side of your startup business.

You could choose to take what you learned and pivot your idea in the direction of a different market, a different customer, a different product.  This is another common behavior of good entrepreneurs.

You could also choose to follow your passion, ignore the paper and double down on your good idea in spite of a lack any evidence that it’s likely to be a good business.  At least if you choose to double down in the absence of a credible business model you’ll at least be making an intentional choice to do so.  I don’t recommend that but as an informed and conscious choice I can get behind it.

As I’ve written before, I believe passion is necessary but not sufficient for startup success.  But recognize that your passion is irrational.  Although it inspires you, your passion doesn’t know anything about revenue models, acquisition costs, competitive barriers or conversion rates.  Your passion has never crunched a spreadsheet or solved for a two-sided market. In short, it doesn’t know anything about the “business” part of your “startup business.”

To be clear, when I say “fail on paper” I’m being very lazy with language.  It takes a lot more than just paper to figure out whether your idea might also have a decent shot at being a business.  Some indicators that you’re doing something right are:

  • You’ll be talking to a lot of relevant people about your ideas.  And unless your preparing to file a patent, you won’t be asking anyone to sign an NDA.
  • You’ll be doing a lot of market and competitive research.
  • You’ll be crunching numbers in spreadsheets to figure out what the economics are likely to look like.
  • You’ll feel like you are the biggest critic of your idea and will always be on the look out for qualified folks to confirm or challenge your assumptions… but mostly to challenge them.

My recommendation:

1) Occasionally work in the phrase “startup business” when you talk about your idea. It may feel dorky but it will help keep you honest about what you’re really trying to do, i.e., build a sustainable business.

2) Strap a spreadsheet to your passion and embrace the hard questions that will help you figure out if your good idea is also possibly a good business.  I strongly believe that falling in love with a specific idea is, well, a bad idea.  Much better to fall in love with solving problems and cultivate a passion for exploring ideas with the aim of figuring out if they might also be a great business.

3) Try in earnest to prove that your idea is not a good business.  If you fail at that then you have a much better chance of staying out of the 90-plus percent of startups that fail —  even though the founders had tons of passion for their idea.  You may also have a shot at discovering a labor of love that you can have some fun with while you wait for the muses to return with a better idea or fix the one you already have.


Want to get a job at a Seattle startup? Here’s how!

I just learned that our good friend and legendary startup advocate Andy Sack just launched a very cool new program to Codefellowsgrow the pool of startup dev talent in Seattle. I suspect that the lucky folks who participate are going to have crazy-good job opportunities making serious bank — and many of them will find themselves in the right place at the right time and ride a killer startup to a life changing exit (although I don’t think the program guarantees that 😉 Here’s some deets on the program:

———————
Calling all awesome engineers looking for a job they love at a startup in Seattle! Code Fellows has a lined up a great set of local startups for you to meet on Jan. 16. Plus, SEOMoz CEO Rand Fishkin is giving a talk about awesome company cultures.

WHAT IS IT?
A seminar and mixer about startup jobs in Seattle. Keynote by Rand Fishkin followed by a round-table of CTOs. Open mixer with local startups. And beer. Good beer!
Limited space, register soon at http://getawesome.eventbrite.com/
** This week only, use code “GETAWESOME” to attend event for free**

WHO SHOULD COME?
Engineers and designers interested in getting a job at a startup.
If you’re not sure that your tech skills are polished enough, take a look at Code Fellows. They run 4-week bootcamps that teach fundamental technical skills.

Recruiters and Service Providers not welcome.

For more info please visit: http://codefellows.org/getawesome

Register for the event HERE.


Startup Grind comes to Seattle

Thanks to Red Russak of Startup Seattle for connecting me with Startup Grind, a new meetup that’s already hit the startup scene in a dozen other cities.  Guess they wanted to work out the kinks in some of the lesser startup cities like Silicon Valley, SF and NY before putting it in front of the greatest startup city on planet earth.  🙂  Seriously, though, it looks like a great new offering for Seattle startup entrepreneurs.  Their first Seattle meetup on August 29th at Surf Incubator features an up close and personal chat with Rahul Sood of the Bing Fund — perfect timing!  Hope to see you there.


Why Glenn Kelman is wrong: A defense of networking

[This post was originally published on GeekWire, February 18, 2012.  The original version included a misrepresentation of Neil Patel’s views on networking and was corrected soon after it was published. See the comment thread their for Neil’s response. and to see me lambasted for blowing it.]

First, a big thanks to Redfin CEO Glenn Kelman for stepping up and delivering a thoughtful and illuminating presentation at the recent

Glenn Kelman, inspiring entrepreneur. (Photo by GeekWire)

Startup Conference in Seattle.  I was enlightened, inspired and entertained… and I’m sure the audience of nascent entrepreneurs was as well.

For the record, I don’t know Glenn personally but I’ve bumped into him a couple of times at awards ceremonies and the TechStars offices.  And while I share 17 LinkedIn connections with Glenn, I’m quite certain he’d squint, look at you funny and say “who” if you ever mentioned my name in his presence.

I don’t have a bone to pick with Glenn and I admire his accomplishments.  I’m also not trying to pick a fight… really.

It’s just that Glenn is flat wrong when he told an audience of 300 budding entrepreneurs at The Startup Conference that networking is “a waste of time.” I honestly couldn’t believe what I was hearing.  To be fair, he qualified his remarks a bit… but only a tiny bit.  I considered calling him out during the Q&A, but balked.  Time to rectify.

Networking is critical for early-stage entrepreneurs.  If you have the resume, reputation, personal connections and resources that Glenn has, then there are probably more advantageous ways to spend your time.  But if you don’t (and most of you don’t) then listen up — a great deal of the very best things that are going to happen for you and your startup are going to come from the people you know.  So you be better be busy getting to know the right people.

Glenn already knows a ton of the right people… which puts him one phone call away from two tons more.  That’s so awesome for him, and he’s earned every bit of it.  But if you can’t pick up the phone and get a relevant and meaningful introduction into anyone you need to… then head his advice at your peril.

Here’s what I wish Glenn would have said:

“I don’t network much but I don’t need to.  You do.  Here’s a few tips to help you make the most of it, i.e., to keep from wasting your time.”

1) Have a mission:  If you’re out there networking without an idea of who it makes sense for you to meet then that’s not really networking… it’s partying.  Know the kind of people you want to meet and why.  But don’t be a jerk and turn your nose up at anyone who doesn’t fit your profile. Some time the best connections are not obvious at first and serendipity is a powerful force in the startup world (just ask Dan Shapiro.)

In my experience, the best folks for nascent entrepreneurs to meet are other entrepreneurs, thought leaders in their industry and skilled professionals that have an appetite for startups, e.g., engineers and designers.  Investors are good to meet at events too but usually just to get to know them… not to pitch them.  If you don’t have your shit together or your just not very confident about engaging investors then be careful — start with entrepreneurs who are good at engaging investors and learn from them first.

2) Stick your damn hand out:  I was really bad at networking early in my entrepreneurial career.  I very rarely did it and when I did I sucked at it.  If I didn’t know anyone at the event, then I was the guy who’d stand in the corner with a beer in his hand waiting for someone to come up and ask me what I do.  If I knew folks at the event, then I would spend all of my time in comfortable conversation with them.  So stupid!

I had no clue about how to engage folks and I didn’t accomplish much.  Yep, it was just like Glenn: Just about every minute I spent “networking” was indeed a waste of time.  But it’s not because networking per se is a waste of time… it’s because I wasted the opportunity.

What I should have been doing is walking up to folks I didn’t know, introducing myself with a handshake and asking them what they do!  Lesson learned.

3) Be sincere and add value to the conversation: Don’t go on and on about yourself and your startup.  Ask them questions and listen to their answers.  Then try to think of some way to help them.  An article you read… a similar company you just heard about… your perspective as a potential customer… your thoughts about their business model… is there someone you can offer to introduce them to?  If you do this well, they’ll return the favor.  If listening and helping don’t feel like natural behaviors for you then you may have some things to work on besides writing code and tweaking your SEO.

4) Learn how to disengage gracefully:  Everyone you start a conversation with may not be someone you want to continue a conversation with.  If it’s not a good fit, then it’s better for everyone if you figure out a way to politely and respectfully break away and go find the next person to chat with. One tactic that is very useful (and actually good for the person you want to break away from) is to suggest to them that there’s someone else there that it would be good for them to meet.  Keep this in mind while you’re meeting folks… you may just want to connect them with someone later.

5) Quality matters… a lot:  Lots of traditional networking events have a very low signal-to-noise ratio, i.e., there will be a lot of people there whom you’ll want to politely break away from.  This is especially a challenge where events draw a lot of service providers who consider you fresh meat.  Remember, that free beer and food was paid for by someone and they consider it a marketing expense… so be prepared to be marketed to.  When you run into one that you don’t want to spend time with, tell them you like their shoes and move on. They know how the game is played and they won’t hold it against you.  Again… just don’t be a jerk about it.

6) Go do something!  Networking doesn’t just happen at “events.” In fact, the very best networking happens away from networking events.  It happens on the golf course, along a hiking trail, around a poker table, at a ball game, over a cup of coffee.

7) Networking is a worthwhile investment:  Building meaningful relationships with relevant people takes time and effort.  As I said at the outset, a lot (I’d say most) of the really good things that happen for you and your startup are going to come from people you know.  You can’t force it and you can’t rush it but you can get started on it.  Be selective and deliberate and know what you want.  And remember too that a lot of benefits of a strong network will be invisible to you.  When people talk about you when you’re not around, what do they say?  Are they inclined to vouch for you when asked?  Are they likely to refer you to the strongest parts of their network?  Are they going to spot the opportunities to bring you up in conversations that might be relevant to your startup?  Is it hard to imagine that having a strong network is worthwhile?

8) Pay it forward:  If you’re always taking and never giving back, then your network is not as strong as you think.  If you’re seriously hoping to build a terrific company, entice an amazing team, engage high-caliber advisors or raise funding… guess what… they all know each other and before they sign on to you.com they’re likely to ask around.  If you’re just a taker, then I guarantee you that your network is much less likely to pass you on to their network.  So, be a good startup citizen and look for opportunities to help others.  I think you should do this because it’s the right thing to do.  But if you don’t buy all that fuzzy-helpy stuff, then just know that you have a reputation whether you like it or not.


My Personal Startup Weekend

There’s really no such thing as a ‘holiday break’ for a startup founder — we’re “always on”.  But this Holiday Season I found myself clawing at the walls waiting for December to pass so that I could resume fund raising Startup Weekendactivities for MoonTango.  In case you’ve never tried to raise capital from mid-November through December, sufficed to say you’re odds of success are very low and odds of frustration are very high.  You’re better off trying to grow a giant bean stalk from magic beans and seeking to fund your company through the sale of golden eggs.

Feeling very unproductive, I decided to build something.  And as is my wont, I decided to build a company.  But there were conditions.  It had to be something that:

1) was relatively small in scope, so I could finish it before the holidays were over.

2) my team (i.e., me for now) could execute on, including tech and design.

3) was a real solution that could (even if it didn’t actually) get real customers by the time it was launched.

It dawned on me… if you substitute “weekend” for “holidays”, these are all criteria that you’d want to strive for if you were doing a Startup Weekend event.  I was doing my own personal Startup Weekend!  But rather than compressing the time to a weekend I was compressing the time to about 3 1/2 weeks… a few hours here… a few hours there.  I didn’t keep track of the total hours I spent, but wish I would have.  After the fact, I tried to estimate how much time I’d spent and I really don’t think it was much more than the 54 hours that make up a Startup Weekend.

XaffleWhat I built and launched was Xaffle, a virtual raffle system that allows you to launch, manage and enter a raffle/drawing/contest using only SMS text messages.  The inspiration came from a problem I’d experienced at the November Poker 2.0 event.  GeekWire was sponsoring and they wanted to give away a ticket to the GeekWire Gala.  We knew we couldn’t just give the ticket to whoever won the poker tournament because they might not be able to make it that night.

When the time came to pick a winner we decided just to have everyone who wanted the ticket come up and cut cards to see who won.  It was an apropos method to determine a winner, given that we were at a poker event.  But we had to delay the tournament in order have everyone come up… negotiate how to handle the case of a tie, where two people cut the exact same card, or at least the same denomination — “what’s higher… a heart or a spade… anyone remember?”

At that moment, I wished there was a way I could just have everybody send a text message and then pick a random winner.  I had built a little Twilio app for Dealometry a few months prior that just allowed guys to text their email address to subscribe for deal alerts… and several SMS-based reporting tools for MoonTangoTwilio is so easy to use that it took about 30 minutes to get a functioning app up and running and another hour or two of tweaking and it was done.  Someone, I thought, should build a simple raffle app using the Twilio platform.  Turns out that ‘someone’ was me.

Here’s the kicker.   Xaffle is going to debut at Startup Weekend this very weekend!  We’re doing three Xaffle drawings, each demonstrating a different capability of Xaffle.

The first is a trivia question where people text their answer in and the first three correct entries win an autographed copy of Lean Startup by Eric Ries.  Xaffle automatically checks their answer against the “right answer” and picks the winners based on the time that the answer was received.

The second is a voting contest where the entrants all submit their votes and Xaffle automatically tallies the submissions to see which was entered most often.  The question: What is the best drink to celebrate the launch of a startup?

The third is a simple prize drawing.  Participants can enter up to three times and the winners are randomly and automatically picked by Xaffle.  Entrants submit their email addresses and winners will receive a text notification that they’ve won.  By submitting their email address, each entrant is also subscribing to Dealometry.  This is the ‘lead gen’ aspect of Xaffle and in part what makes Xaffle’s business model potentially viable.  Dealometry is donating a pair of cool video camera eyeglasses as the first-place prize and Madrona Capital is donating a couple of nice tote bags for 2nd and 3rd.  Thanks Madrona!

I am a raging fan of Startup Weekend and it’s a delight to launch a product that was inspired by the Startup Weekend process at a Startup Weekend event.

Lucky me.


Don’t Drink (Too Much of) Your Own Kool-Aid

[This article was originally published on GeekWire, June 25, 2011. ]

When we humans believe in something strongly we naturally seek out others who believe similarly. This Kool-Aid drinking tendency applies equally to politics, religion and startups.

Buy me a beer sometime and I’ll tell you what I think about the echo chambers we create around our political and religious beliefs. But I’ll tell you what I think about startup echo chambers right here, right now, for free.

As I’ve written before, passion for an idea can make us blind to the viability of an idea to become a business. As a hedge to our Kool-Aid drinking tendencies, the wise among us seek validation from knowledgeable characters around them.

If you’re not actively doing this then you are failing, day by day. But even if you think you are actively seeking honest, qualified feedback on your idea/market/model, you still may be failing.

Here’s how things often go badly:

When entrepreneurs first begin to look for people for feedback on their idea, they inevitably start with family, friends, colleagues — people who know them and probably like them. So the very earliest third-party validation that lots of entrepreneurs get comes from people who want to support them and encourage them and, frankly, aren’t qualified to add much value (and even when they are qualified) they rarely have a clue about what valuable feedback for a startup looks like.

It’s also the case that many early entrepreneurs don’t know what valuable feedback looks like either. Our natural Kool-Aid drinking tendency will make you want to find the folks who will tell you that your idea is great. (And doesn’t it feel good when you find one!)

Each new friend/family/colleague you talk to pours you that tall, refreshing drink of Kool-Aid that tastes and feels so good. Each time, your assumptions are reinforced, your passion justified — setting them in your mind ever more solidly.

But they aren’t telling you anything you didn’t already believe. Sure, you’ll get some good ideas about useful features you could add or how your model could extend into other industries. But is that really what a newly minted startup needs? No way!

In my humble opinion, what you need to do is seek out qualified people who DON’T like your idea.

–Customers who say they’d never use it or don’t understand it.

–Investors who say they’d never invest in it.

–Industry veterans who know why the same idea failed before.

It may not feel like it right away, but folks like that are gold. Even if you really don’t think they are right, still have the conversation, ask questions, listen closely and drill in everywhere you can.

In academic philosophy, students are taught a very useful technique for proving that a premise is true by assuming first that it’s false.

The technique is called reductio ad absurdum, which means “reduction to absurdity.”

Very basically, if you start from the premise that your claim is false and can show that doing so leads to an absurd conclusion then you must have been right all along.

Applying the technique directly to validating your startup’s assumptions would be a lot of work and probably not the best use of your time. But the main idea of starting from the premise that you’re idea/market/model is not the bread slicer you think it is is a very healthy approach.

But you’re drunk on Kool-Aid and so when you finally do find a qualified critic of your idea you feel like you have the “data” you need to blow them off as “he just doesn’t understand” or “she’s not really in our target customer demographic” or “we’re just not a good fit for their portfolio” or “you can’t please everyone” or “I’m sure I could answer those objections but I just don’t have time to do the research.”

If you find yourself saying things like this very often then you very well could have drunk too much or your own Kool-Aid.

Early on in the ideation process, I’m constantly on the look out for smart critics; and when I find one that’s willing to talk in depth they get my full attention. If you want to feel a rush as an entrepreneur, then try converting someone who initially didn’t like your idea into someone who loves it and wants to work with you on it… or at least no longer hates it and is suddenly interested in joining the beta when it’s ready. Booyah!

So next time you ask someone for feedback and you find that the person really likes your idea, say thank you, smile and nod… and then put the cork back in the Kool-Aid bottle and go find someone who thinks you’re out of your mind and offer to by them coffee.


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