Sometimes a bad idea is a bad idea and the ecosystem will give you feedback stating it pretty clearly
Startup founders must decide how they want to react to poor response, or suffer the consequences
MY LAST column about bad apples in the startup ecosystem sparked quite a bit of response from readers, with one rather curious email standing out from the rest.
I will not go into the details of the correspondence, but it did make my jaw drop with its claims and requests.
In particular, the sender was perplexed as to why, despite being proactive in sending out pitch emails to the media (The New York Times no less), there was still no reaction.
The email ended with, of course, a link and an invitation to check out the venture so I did just that. I even passed the link to people more well-versed in all things startup and the consensus was almost unanimous, “It is a solution looking for a problem.”
This got me thinking that all the anecdotes and advice I have gleaned and shared have always been predicated on a single assumption — that the startup’s idea is decent-to-good in the first place.
So what happens when it’s not?
Some of you would point out that one man’s rubbish is another’s treasure and that one can never know what the next big thing will be (“What about Twitter huh?”).
Twitter’s rocket-like rise to become an indelible part of the social media landscape has been well documented. It famously made the cover of Bloomberg Businessweek last year with the headline, 'Twitter, the Startup That Wouldn’t Die'.
Notable criticisms during its early days ranged from it not solving any clear problems to a lack of business model and the classic question: “Who would want use a service that only allows 140 characters?”
Well, we know now the answer — millions around the world.
But Twitter may not be as epic a black swan (to borrow from Nassim Nicholas Taleb) as the everyday consumer might think.
“The thing about Twitter, and this goes for Google, too, was that both had a very small group of influencers who could see the potential,” said one startup veteran I spoke to.
“The man on the street may not be able to understand but a specialised group of investors could see the potential, so these influencers were convinced to put money into the ventures.
“The founders themselves also demonstrated that they wanted to take the idea further,” he added.
Say out of 10,000 startup ideas, about 100 are 'instant win' material while about 2,000 are workable. Let's throw in two more that may become unexpected hits. Today’s column is about the other 7,898 ideas.
One person I spoke to who runs an incubator said there was a basic rule of thumb when it came to evaluating startups that passed their way:
Good idea + great entrepreneurs = Great combo;
Bad idea + great entrepreneurs = Salvageable;
Good idea + bad entrepreneurs = Not a good bet; and
Bad idea + bad entrepreneurs = Don’t even think about it.
Another member of the local startup scene shared that one of the worse scenarios for any potential investor was when the investor loves the idea more than the entrepreneurs behind it.
“It’s sad when you believe in the startup more than the founders itself. You can see avenues for them to get to bigger playing fields but they are not keen to go ahead or insist on holding themselves back.
“You keep trying to get them to see the light, opening doors for them, but then you start to question whether you really want to be a part of something with this person. They came to you with their idea in the first place and now you’re fighting for them to continue but they refuse to try or take the easy way out,” he said.
Most of the time though, a bad idea is a bad idea. But what happens when the founders themselves are so attached to their idea that they become blind to its faults?
“That happens quite often, especially in Malaysia. Founders get really sensitive when you ask about the problems that are inherent in their idea,” said my startup incubator friend.
“If someone is passionate about solving the problem, but not attached to what the final reality is going to be, then it is easier to question those types of founders,” he added.
He also pointed out that a startup is essentially nothing but a hypothesis.
“We typically demand market validation of the hypothesis through a lean startup approach. The founder wants to solve a problem and we want to know why the problem is important enough to need solving. And also why the solution imagined is the most elegant and cost-effective or efficient,” he added.
Another member of the startup community I spoke to put it more bluntly: “We advise them to go ahead, prove us wrong and come back to us.”
He shared that most of the startups he comes across don’t seem to try and differentiate themselves. This is especially true with those building a platform-based system.
“They assume users will come ‘auto-magically’ when they launch. No, I didn’t misspeak, it’s something the founders actually think will happen,” he added.
But what happens when after getting all the feedback, the founders still don’t listen?
“Founders who don’t listen, don’t get external funding though they may get funding via friends and family but generally run out of cash because they don’t realise the need to pivot,” noted one veteran founder when asked.
Another veteran said, “If any founder ends up throwing a tantrum, then it means they are in love with the idea. Having passion means you want to solve a problem but
it is important to not be stupid about it.”
So what’s the message in today’s column? In the case of the media, sometimes a non-response means that your pitch may just be targetted at the wrong person or poorly presented.
Most of the time though, it simply means it just wasn’t good or interesting enough.
In some cases, a bit of media attention makes a huge difference to a struggling startup with a unique idea.
In other cases, it doesn’t matter. Publicity can bring the entire African safari to your watering hole but if the water smells funny, no one’s going to drink it.
The choice lies solely with the founders themselves, whether to listen or stubbornly forge on. It could turn out to be a profitable bet or founders will have to learn from making mistakes themselves thanks to harsh reality.
And that can be an extremely expensive lesson.
This column originally appeared in the Metro Biz section of The Star and is reprinted here with its kind permission.
Bad apples in the startup ecosystem
Rise of the clones
Funding for all
The right frame of mind
Advice from the shadows
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