I was talking to a friend of mine the other day about a business idea he had. It was a pretty solid idea with proven demand and he was in a good position to execute on it.
He has a relevant audience, the financial resources, and could get a team together quickly.
There were two things preventing him from pulling the trigger.
- He didn’t know any investors
- His idea wasn’t “unique enough”
The word unique is thrown around to the point where it doesn’t mean anything. Change out “unique” with the words “new, special, innovative, etc.” and you can see what I mean.
We’ve got a unique perspective on the problem.
We’ve got an innovative solution we’re working on.
We’ve got a new way of getting traction.
When you peel back the covers, you see unique is just a new coat of paint polished with a few buzzwords. Don’t get me started on buzzwords.
The thing is, you don’t have to be unique, or cutting edge, or innovative to build a successful business. In the current startup narrative, everyone is unique but no one is different.
Here’s what unique looks like.
Come up with an idea.
Do a semblance of validation.
Create a pitch deck.
Get initial funding.
If that part doesn’t work – build an MVP in 30 days.
Launch it on Hacker News and Product Hunt.
Get users that aren’t paying because it’s in beta or “monetization” hasn’t been figured out.
Create another pitch deck.
Get the funding that was denied the startup earlier.
Spend the money on a team that’s too big and marketing people that are clueless.
Develop a beast of an app.
Burn money until traction, the startup makes it to the next funding round, or the founders have to shutter the whole venture.
It doesn’t matter. It wasn’t their money anyway.
Repeat the process until they die of old age, put together an investment fund, or hit it big.
Unique takes precedence over being successful and profitable.
And that startup narrative really sucks.
Companies with no reason to exist have not only come to life but have been given millions of dollars. I know better than most that business can be a crapshoot.
Juicero, the $400 juice machine, closed its doors in 2017. The final nail in their coffin was when a Bloomberg piece showed their juice packets could be squeezed by hand.
Juicero’s entire business model went up in smoke. Some of the largest companies and investment groups had thrown over $100,000,000 at the young company.
Do you think none of them did their due diligence? Did they think the general public was too stupid to find out? Or was it simply a matter of greed?
Whatever the case, those are symptoms of a larger problem.
The real problem is how much dumb money is floating around. To compound that, groupthink is real. If it were just a bit harder to get funding for ideas then people would be forced to validate their business models, distribution channels, and products more thoroughly.
You know, they’d be required to do “the business of business.”
Inventing a new wheel
It may seem like funding is the enemy. It’s not. Investment dollars have made it possible for a lot of indispensable companies to get off the ground.
Smart investment spend brought us everything from Walmart to Quora. The way investment dollars are distributed is what’s broken.
The networks are insular. If you don’t know someone or can’t get an introduction then your business with real merit may be dead in the water. People who’ve failed multiple times have a better network, can send a few emails, and get introductions to another moneyed firm willing to fund the next possible unicorn.
Something seems off about that whole scenario to me. We need a better wheel.
I have a crazy idea
Build a business that doesn’t rely on investor funding. Put real skin in the game. Take the time to build it right the first time around instead of breaking shit because you’re moving too fast.
Forget about whether you’re unique. Worry about whether or not you can turn a profit on every item/unit you sell.
Before I continue, this approach may not work for every business. A social media platform, for example, needs a lot of users before they can attract advertisers or get acquired. They’ll need some stay afloat money.
Heavy manufacturing or technologies on the fringe (think artificial intelligence) also have huge sunk costs before they ever begin to yield fruits. They don’t count.
What about that social media scheduling app or the project management software? Are they going to make any real impact on the world?
Do they really need to be funded?
They should be able to prove their merit before funding becomes part of the equation. Let’s strip away the pervasive notion that a startup is an idea, a website, and a few lines of proprietary code.
That’s a hobby.
Instead of building like this:
- Find an idea
- Create a pitch deck
- Meet investors
- Get funded
- Do things to look bigger
- Make decisions for the short term because growth at all costs is the goal
- Burn through the funding
- Avert going insane with the help of your dearest loved ones
- Close the company doors
Build like this:
- Find an idea
- Build it
- Get customers
- Become profitable
- Retain your sanity
- Make decisions for the long term because growth at all costs isn’t the goal
- Maybe find investors
It takes a longer and you put real skin in the game. Are those bad things?
Would you be a fool for going out to find your first ten customers by hand? Then doing the same thing for the next 100? Or should you build scalable systems from the very first day?
If you tried you’d soon find that you’re optimizing for an event that may never happen.
Would it be a bad thing if it took you a decade to build profitable million dollar business?
Or should you take all the funding you can find, go public, and lose billions every year?
We’re conducting an experiment at KyLeads. Our premise is simple. Build products people want, sell to those people, and grow the business on the back of profit.
I know – radical.
We employ a small group of passionate people. It’s not glamorous and we likely won’t be featured in Tech Crunch or Entrepreneur in the beginning – if at all.
The mana was temporary
For all intents in purposes, we’re a startup. Except for the fact that we’re not. A startup is a company that’s conceived and designed to grow fast.
The wheel we’re inventing is as old as humanity. When people were still foragers there was no one to lend them resources. They earned everything.
When we made the horrible decision to start farming, you only grew when you went out and worked for it. There was no one to give you free grain or money. Even in the Bible, Mana only lasted for forty years.
That’s just not how the real world works. Am I calling investment capital a fairy tale?
What do you think millions of dollars in exchange for ownership of an entity that exists only on paper is?
This is our truth.