Many ideas die in the presentation stage. Unlike times past, ideas not longer are funded without proven traction. It’s time to move from presenting your idea to building your minimum viable product.
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- You know, when I started my startup career, One Million by One Million is my fourth startup, so I've done three before that as founder CEO, and my first three were actually at the height of the Internet, the first wave of the Internet, so between 1994 and 2000. So I was still a graduate student at MIT in 1994 when I started my first company, and then I did one startup after another all through the '90s. And during that time, because we were in this massive bubble, the kind of bubble that has never happened in the financial markets before, because Internet was such a revolutionary technology, so new, and people just did not understand it.
So people were willing to throw whatever against the wall and see what would stick. So this dot-com bubble, as it has come to be known as, was a time frame, it was the late '90s, roughly speaking, when you could walk into an investor's office with a PowerPoint presentation or a whatever, slide presentation, and investors would actually sign checks. So investors would be willing to write checks against pure concept presentations.
We are in 2016. None of this happens anymore. That 1999 dot-com bubble did not last. You know, this funding whatever the hell and seeing what sticks, this thing is out of the window. It's no longer happening. We are not in this ecosystem at all anymore. Today's world is far more pragmatic, far more down to earth. Bubbles are still happening. There is the unicorn bubble. The latest of our bubbles is the unicorn bubble.
However, today, one thing that is not happening is concept financing. So you have to be very, very conscious of the fact that, do not predicate your business assumptions on concept financing. You're gonna have to build a business, and then get that finance. Your business, your concept, has to become a business before any investor would be willing to work with you and write you checks. So do not assume that you just can put the concept on a slide deck and investors are going to be willing to engage with you.
It's not gonna happen. If you cannot do concept financing anymore, and that is a reality that we are starting with here, that's a ground rule, then you need to figure out how to get your business off the ground. What do you do? How do you put one step before the other? That's the most important question in the journey of an entrepreneur, that zero to 100k, I'm not even talking about zero to one million, the zero to 100k journey is a very, very complicated journey, where you're fighting all kinds of chicken and eggs, and that's the journey that you're gonna have to figure out a viable strategy for.
My take on this phase of your journey, which is where I'm spending most of my time on right now with thousands and thousands of entrepreneurs all around the world, is you're gonna need to analyze your business and validate your business. Do you have a value proposition for a set of customers, a segment of customers, that really want to buy your product? Are you solving somebody's problem? And that could be all kinds of different problems.
There's no hard and fast rule on what kind of problem can build a successful business, but you do need to find a problem for which people are willing to pay, and that's critical to get to in this early phase. If you take a validated business to investors, the likelihood of your getting money is much higher as investment.
Better still, if you can get a validated business going with customers actually paying for it early on, that is the best way to build a business. And in fact, the beauty of that is that if you get to that phase of a validated business that customers are willing to pay for, and you have the other characteristics of business building that fit the venture capital model come together, then investors actually come chasing you instead of you actually having to go chase investors.
So there's all kinds of good feelings about business that are validated that can find customers willing to pay for it, and the industry term for that is product-market fit. So my advice to you would be, try to get to product-market fit as soon as possible before you go out to seek any kind of financing, if at all.