That great idea you have… The one you’ve been thinking about every day for the last couple of years… The one that’s better than all the other junk out there… The one that could be the next FitBit, Snapchat, or cure for the common cold… It’s going to fail. You’ll be embarrassed, broke and depressed when it does. So it’s probably easier not to bother with that risk of failure looming.
Or maybe not.
Rejection and failure are part and parcel within a career involving creativity and innovation whether you are a founder of a startup or someone sitting within any creative team. In the creative world, out of 20 ideas conceived usually only 2 or 3 of those are presented to client/boss before one is chosen. In a competitive pitch you could assume that over 100 ideas from many businesses end up on the scrapheap never to see the light of day. Resilience is the name of the creative game because dealing with failures large and small are unavoidable. It’s more a case of when you fail, not if. The waste bin is where most of your work will end up. And that’s ok. It’s natural selection at work (albeit often subjective selection), but seldom worth any tears. Importantly the work that ends up in the bin you can feel proud of, and become part of your future success.
How do you ‘startup’?
Naturally some ideas get bigger, they itch us endlessly for to be born, and some of us feel compelled to take them to another level despite all the potential hurdles. But how do you give your idea the best chance of success? Upfront, I’ll say my thoughts are only a small blog post/list, when this is probably deserving of a 500 page book. So please take the following as crib notes – my thoughts on taking innovative product ideas to a working reality and the beginner traps to avoid.
You’ve probably heard those clichés; “fail fast”, “fail wisely”. Yes, very good advice but let’s go a bit deeper.
- Test that idea “The easiest person to fool is yourself.” ~ Richard P Feynman. This is the simplest trap to fall into. You’ve told friends around you what you want to do and they all tell you it’s awesome (usually because they are too polite to say otherwise). So you must test your thinking as much as possible objectively and without emotion. (Passion is great, but keep emotion in check). Research is critical and it IS okay to post-rationalise your thinking. Go outside your inner circle and test your thinking with people who have no reason to be nice. Can you explain your idea in 20 seconds? If not, figure that out or it will probably fail (rule of thumb)! Get some honest feedback. Play devils advocate with every decision you make. Importantly you MUST always respect the needs and behaviour of the end user; try live the idea through their eyes. If you put a business objective (or just becoming rich quick) ahead of the end user experience you will surely fail.
- Don’t let old research deceive you. Research will only tell you what has happened, and it is not always a predictor of what will be. All the research in the world would never predicted the iPad or Facebook or created a business case. Tomorrow hasn’t happened yet. That’s up to you. Naysayers will be quick to point out that if your idea was so good someone would have done it already. You are of course able to fully justify why this is and why your idea is different (at least to yourself and your closest).
- Put some checks and balances across your thinking: Will it change the world? Can it scale? Are other people working on the same thing? Is there an existing market or do you need to make one? What are the barriers you need to overcome? What are the risks? Will people really care? What are the costs involved? Who owns the IP? What is your exit strategy? How much time getting it going will this take? Do I need to leave my day job or can I do it part time? – Just to name a few… too many to list! You get the point.
- Trust your gut. You’ve done some soul searching and a few hard yards. Is the ‘itch’ for this idea still there now you have thought it through more deeply? Do you still feel compelled to scratch? You’ve happy that (1) (2) (3) are in check and you’ve done everything you can but aren’t quite ready to mortgage your house. Trusting instincts served Steve Jobs pretty well at times. Finally ask yourself – do I love doing this? Is this my true calling? Have I got the energy? Yes? Now you are ready for the biggest step… moving from thinking to doing.
- This is going to be huge. I need to find money now! Nope. Unless your rich uncle has money to burn, hold off on this for a bit. You’re not ready. There’s plenty you can do without it and even if you have money, don’t waste it. (Next, please note that the next few stages are not necessarily in any order.)
- Starting out. You need to prototype and test your idea. Think nimble – it is a misconception that this part is costly and expensive because you probably have what you need around you to do something yourself to show your idea to others. Have a look at how IDEO prototyped one app here:
Tip: I’ve written a post on protyping here. Do as much as you can with pen, paper, clay, video, arduino, 3D-printing, whatever you have at your disposal that costs you little as possible etc. Now return to (1) (2) (3) again – and repeat that often thoughout!
- Be presentable. People will judge you and your idea by how you communicate. Everything you say and show to people you’ve just met is being evaluated ,usually in the first 15 to 300 seconds. Accept this, and make sure everything you have on show helps manage their expectations. Don’t underestimate the power of storytelling. Equally you must be succinct and professional. What can be polished easily, you should polish (your slide show for example). Anything rough around the edges should be deliberate and explainable (your sketches, prototypes etc where you have proven concept, yet saved money and time). Being too polished can also work against you, so find the balance. Finally, always remember to listen.
- Find trusted people and partners to help. Few do it on their own. That’s not to say you can’t. Notch built the foundations of Minecraft single-handed but wisely embraced the wider gaming community early on. The value of leveraging relevant networks is HUGE. But for most of us, we need a lot of help and support close by. Finding people is tough and is another short book. Trust is essential because your IP is probably unsecured at this point. Have an NDA in place before you talk to anyone. When you do find those brilliant people, it is still up to you to lead. You have to inspire. Handing an idea over to others to complete is not how it works. They need to believe in you. The team around you will become a huge part of what any future investors will buy into – perhaps even more so than the idea. Make sure you separate your advisors, key staff and your worker bees. Worker bees cost money and should come later. Experienced wise advisors should be free (for now). Your key staff who can make it happen will need to be rewarded of course but if you can’t pay them a wage then any equity hand outs should be based on sweat and success over time because inevitably some people will leave, some will fail. Don’t get screwed, and don’t screw. Be fair and even generous but guard yourself where needed. Make sure everyone knows the risks. Make sure those relationships will survive a failure. As soon as money starts changing hands you must have your shareholders agreement, even better to sort this on day one or at least have a fair understanding in place. Last of all, have someone who understands numbers and don’t underestimate their importance, equally someone to structure your business/tax etc.
- Keep prototyping until you and everyone around you is happy you are onto something. It won’t tell you everything, but it should tell you enough.
- Protect your IP if you can. This is a complicated stage. You’ll need to do it at some point, but if you are cash poor, keep the NDA’s flowing, and at least register domains, trademarks as they cost little. Put a copyright symbol on everything you do. Mark documents confidential. Always try to present in person and never hand over hard copies unless you have to. Patents are tougher and costly but they may also help secure funding later. The downside is that patents put your ideas out in the open. It’s a balancing game. Ask lots of opinions of people who’ve been through it – each case is different.
- Planning within chaos, living in beta. You probably have a good idea now what you are building, and how much you think it will cost. Plan ahead but do it in small chunks. Many people will go wrong at this point: They plan ‘release dates’ (fine if you have unlimited $ to spend) but unless there is a hard reason for a release date, avoid it. You’ll move faster by working in small sprints. Be agile. Change your thinking from Ready, Aim, Fire to “Ready. Fire. Aim.” Work in beta. Every milestone, reevaluate your plan. Fail as quickly as you can and then find a fix. You will hit speedbumps. You’ll feel like you are always behind, this is normal. Deal with it. Catch up when you can. Don’t forget that open communication with all your stakeholders is paramount.
- Now you really need the money. Your idea is moving fast but hard cash is now a very real need. Unless you just built Flappy Bird in your bedroom in a day, you probably need to hire people, buy equipment, rent offices, scale to manufacture and trials etc. Hopefully at this point your risk only involves a lot of time investment, and little in hard cash. Ironically your fate now rests in the hands of the least imaginative, conservative, risk averse, (sometimes greedy) people in the start-up puzzle. The dreaded investor(s). You’ll need to figure out what sort of money you need. Smart? Dumb? Angel? VC? Either way if it’s your first startup, investors will assume your ideas are wrong until you prove yourself right, and even then they’ll tell you you’re wrong. Even when you find one that loves you and your idea they will say “sorry, too early stage” 95% of the time and ask you to come back later. But if you’ve done your people part well, you’ll have someone working with you or advising who can help you prepare for the process. Investors will not buy from a sales pitch (unless they are highly versed in your market). Your documentation should be detailed and triple checked. Don’t forget the detailed competitive analysis. Yes I know, people have actually invested millions based on a sketch drawn on a napkin, but that’s the 0.0001% so it is better to follow a game plan:
- Practice. Pitch to your mentors, advisors, old managers etc.
- Remember, wise old sage say “Ask for money and you’ll get advice. Ask for advice, you might get money.”
Keep that strategy in your back pocket. Directly asking for funding is not always best the way forwards.
- Prepare yourself for rejection. You won’t get funded on your first date, or even the 20th. Rejection is part of the game.
- Learn from all the investors who weren’t interested. Did they like the idea, why was too early for them? Find out what you can. It will tend to be honest feedback. Ask if they know anyone else who might be interested.
- Be patient. Pound the pavement (subtly) and chase any leads you have. You’ll probably be doing that a lot. Attend meetups, find people like you etc.
- Have a plan to see you through the waiting game. (Grants? Part time jobs? Looking overseas for $? etc)
- If it is still not happening (within say 12-18 months), set yourself an end date or find another way. Perhaps a brand might be interested more than an investor to take this on. What about Kickstarter, Indigogo etc? Reality TV show? Think hard!!! Ultimately if the struggle becomes to hard you’ll have to judge based on all the frogs you have kissed in your quest as to whether you were profoundly unlucky or whether this idea is not a goer.
The results are in:
- It failed. The money never came. I had to give up. That’s ok. Breathe. Hopefully (if you roughly followed the path above) you were able to get to that point without getting a re-mortgage on your house or spending your parents life savings. You might have spent several years or maybe it was just a few weeks. But you are now wiser. In fact you already have another idea… and your people still believe in your desire, and you are ready to return to (1) and do it again with a new network of contacts. Now you are in the position that most other innovators have been many times before they got to the next stage. Failure will breed the first real success. Keep smiling, keep moving. Don’t turn back.
- The money never came, but you still have a growing business. Of course it is possible. It can be done. Sacrifice is front and centre of this success story. There was no investment, but it still came at a high price. Some onlookers will think you got lucky. The ones that understand or know you and what you have been through will admire and respect your achievement immensely.
- You got the money! Well done. You have a lot of work ahead now. You took money from people so there will be a weight of expectation. Provided you are always transparent, that you give your all, and that external forces do not change the landscape, you are in a good place to see your dream through (at least until the next round of funding). You have all the key things you need to succeed in front of you. Go change the world 🙂
If you have ever failed in bringing an idea to life and are reading this, please don’t give up. Most of us fail before we succeed. Even enroute to success you will have shocking days when it feels like the world is imploding. But it’s really okay to fail when you are innovating – it has to be – and the people you took on board including investors knew the risks. You never hid them. As long as you filled your journey with respect, dignity, transparency, passion and energy and you will come good next time and those same people will be there.
When I sold my first startup a few years ago (never funded and built only from cash flow) one of my mentors at the time called to congratulate me. He had an interesting way of expressing this: He simply said, “Iain, one in twenty businesses fail and of all those remaining, only one in 20 sees an exit or acquisition.” He said I had joined a quite rare club. I’m not sure if that statistic was even real, but all I could think about was that if I had heard those odds when I began, I may never have begun that journey. My original ignorance and naivety were probably a good thing. So my route wasn’t particularly planned and I probably owe most of our success to the fact that I (and the people around me) enjoyed and loved our work, and nothing was going to get in the way of that. So for all my advice above (and I say from my own experience) sometimes you just find your own way.
Any thoughts, pls comment away. This guide is in beta so I will edit if necessary. 😉