How to Know Your Startup Idea Is Lousy

Sometimes Your Experience Does Not Matter

“We quit our jobs and started this company, and we would like your help,” said the entrepreneur and his partner.

They are not recent college graduates. They are both smart, well educated, and about 40 years of age. They are married with kids, which includes houses, cars, and future education expenses. They left high paying jobs to start their company.

They are serious, and I took them seriously.

Red Flags to Watch

I asked them to tell me about the company. They explained the market need and their proposed solution.

Then I asked where they came up with this idea. The idea for the company came from a personal bad experience for home services. This was a red flag for me.

Neither of these entrepreneurs had any experience in the market they intended to serve.

Neither of them had any experience in the sales channel they were going to sell through.

The company management requirements did not match anything they had done in business in the past. They just had a bad consumer buying experience.

Yikes!

Ideas and Their Destiny

“I need to know something. Why you and why this idea right now?” I asked.

One of the future success factors I look for in a startup is the destiny idea. If this company is their destiny, then there is no question in my mind they will stick with it.

No matter the intensity of the trials and tribulations encountered while building the company, they will never abandon it. The destiny idea is the intersection between the idea and their life experiences to date.

The Critical Question

Based on their personal and business experiences, does this idea make sense right here, right now for them?

When it does, the founders tell me convincingly why the idea is important for them to solve. It makes so much sense, they are overwhelmingly compelled.

It is obvious to them and obvious to me they have to start this company. The founders and the idea fit hand in glove.

“We see an opportunity to build a company,” said one of the founders.

Good Reasons Are Not Enough

“I get it, but why this company?” I asked again.

“We want to work together. We know and trust each other. We worked well together in the past and both want to start and build a company. As we talked about starting a company, we realized we shared this dream,” he explained.

His partner nodded in agreement.

“So the problem you intend to solve in building this company isn’t that important to you? Your reason for starting a company is not to serve a market or solve a big problem but to start a company. Is that right?”

I pressed on, “Are you willing to dedicate your lives for the next ten years to solve this problem? Are you ready to risk everything you have to serve this market?”

That’s when I got blank looks. They were stunned by the harshness of these questions. And they should’ve been stunned. This is the reality of a startup for two founders at their stage in life.

Cool Heads Under Fire

“Are you trying to talk us out of this, or are you here to help us?” one of them asked.

“Based on what I’ve heard, I am trying to help you by talking you out of this,” I said.

I have to hand it to these two founders. They kept the conversation civil in spite of my attacks. They showed me a level of maturity which serves them well. I left thinking to myself, This may not be the idea, but these are two really good founders.

They left steady paychecks.

They are committed to their new occupation.

They are becoming entrepreneurs.

When they finally discover their destiny idea, I’ll be ready to back them.

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4 thoughts on “How to Know Your Startup Idea Is Lousy

  1. Charlie, A very important article for every would be entrepreneur to read whether they are in teh for profit world or the non profit world.
    The advice you gave to these new entreprneurs has great value. Reflect over the last 20 years as an investor. How many would be entrepreneurs have spent and wasted $ millions of their own money and others money without this basic realization?
    It is very difficult advice that your gave them only be asking them the correct questions, to which they did not have very important answers for themselves.
    The life of the entrepreneur is glorified in our networking area, but no one ever talks about the pit of their stomachs at 3 am when they cant sleep. No one talks about the damage it can create to families and relationships.
    Ralph

  2. But there might be exceptions to every rule. As an investor, I agree with you but some entrepreneurs will succeed because they have to succeed, regardless of domain expertise.

    • This was certainly the case with you and the great company you created and sold. You also identified a red hot market need. These entrepreneurs were offering a incrementally better solution to an already crowded market. If you saw the opportunity, I think you would have agreed with me.

      But I do agree with you basic premise. An entrepreneur may succeed regardless of domain expertise. It just takes more time and time is money!