Running a successful venture, means that you got three things right: the team, the idea and required resources. But do you have to acquire these in an order?
General perception is that a venture starts with an idea. I know a lot of wantrepreneurs, that are just waiting for the big idea that makes them take the leap of becoming an entrepreneur. However, I think it is smarter to start with the team. The only reason why the idea gets so much attention is that in many cases it is the only asset you have for acquiring your team and resources, especially when you're low on experience and money. Most people tend to put (too) much value on the idea. It is natural risk avoidance, people tend to want assurance that the venture is a success. They want to work with an idea that is too good to fail. However people who place all their trust on the idea might not be the best recruits for your team as there is a really high probability that the idea will not work out exactly as you planned. You want people who can operate in an environment that constantly changes and where there is high uncertainty. You want to find fellow serial entrepreneurs, not just entrepreneurs.
Instead of selling a specific idea, I would approach a big problem space. Google approached the problem of finding information, Facebook the problem of not yet being connected with friends online and Spotify solved the problem of not having any legal tools to flexibly enjoy music as you want. I am sure all of these companies didn't have all of the “how” questions figured out when they first started.
One reason why the idea still is important is that it gives the team ability to focus. Even with a small team where founders take minimal salaries the burn rate will be around 10 000 € per month. By constantly bouncing back and forth between different ideas, the money will soon run out. Therefore having an initial idea, is important as then the team can focus on building the necessary MVP to validate the idea. Also ideas don't only need to be good, they need to be the right fit for your team and resources. If you have a really good idea, you'd answer yes to all of the following questions:
- Is the team describing a real, big problem in this market?
- Is the market growing fast and has potential to be huge?
- Can the problem be solved with current or emerging technology?
- Will the problem continue to exist within the next ten years?
- Is the market ready for a solution?
- Does the team have credible ideas on how to solve it?
- Is this team capable of solving it with resources available for them?
- Does the team possess resources and capabilities to sell their solution / product?
- Is the team committed long-term and capable of pivoting to other solutions if their initial idea don't work?
As outlined, the solution in itself doesn't play a crucial role in trusting the team, but it signals the necessary focus, determination and creative abilities to come up with credible solutions. The capabilities to operate in this industry are more important. It is important to have a team that is capable of testing different solutions in this problem space. It is a lot easier to play around with resources and the idea than constantly changing your team.
Getting started, working part-time?
I used to think that to build your team you basically have to quit your dayjob first. My reasoning was that without quitting your day job it is difficult to convince people that you're serious about your business. Where this is true, I now think that showing your commitment by quitting your day job is just a shortcut for getting yourself to work with full effectiveness. You should be able to convince your co-founders with being committed and just starting working on the idea with full effectiveness albeit part-time.
The hard thing is however to get yourself working with full effectiveness. With effectiveness I mean doing the right things instead of the easy things. For many first time entrepreneurs the right things are hard, because you need to connect your ego to your project. The right things are usually things related to validating the need for your business. This might involve talking to potential partners or doing sales. In case you call up a company and say that you're working on a side project, they won't take you seriously. You have to step out of the low-effectiveness/side-project mode and get yourself fully committed.
Instead most people I know enjoy working on low effectiveness stuff like doing a lot of preparation and planning instead of really doing the things that matter. You should set a schedule for yourself and work those hours you set for your project like that project would be the only thing that matters, like you would be all-in. When working part-time you have a limited amount of hours. However, I believe that working only 5 hours enough with full effectiveness will accomplish a lot more than working 50 hours with low effectiveness.
Not quitting your day job yields some serious benefits. Most importantly a regular paycheck that reduces stress and enables you to focus as well as some budget to do some experiments. These benefits are especially valuable in case you are a first time entrepreneur and therefore might encounter problems in raising funding for your idea.
So to summarize focus on building the team and start thinking about which problems you are passionate about solving. Do the right things with high effectiveness and don't let go of your regular paycheck before you must. In the next post I will talk more about networking and building your team.