by Brad Feld
If you don’t have a preference for entrepreneurship (or—more specifically—entrepreneurship doesn’t interest you), you have no business creating a company in the first place. Starting a company is extremely difficult and requires commitment on many levels. Ultimately, you don’t really “try to start a company”—you either do it or you don’t.
Do or do not—there is no try.
Theme One: Idea and Vision
Most people think that the core of a startup is a singular, amazing, world-changing, and earth-shattering idea. It turns out that this is almost always completely wrong. Take it from us, we have had thousands of ideas pitched to us and very few are earth shattering! Here’s a sample of email pitches we have gotten.
Good Morning David!
I have an excellent idea that will transform the world and I would like to join your accelerator to make it happen! I can’t tell you what it is but trust me, it will make both of us a lot of money!
Dear Mr. Feld,
I hope this email finds you doing well. I am a chemical engineer and I have created a novel technology that will make coal-fired power plants more efficient, lowering operating costs, which will translate into lower prices at the fuel pump.
Hey David and Brad—
Do you know how many cars and trucks there are in the good old US of A? 253 million! And each car and truck can use the technology I’m developing. Each and every one. I have an idea that will probably take a year to finish up and after that, I’ll be your first multibillion-dollar company!
It’s a value of ours to respond to any reasonable email, but we can’t respond to these inquiries based on the information we have. We’re interested in helping entrepreneurs succeed, and without knowing your idea we can’t possibly know if we can help you. Next, we have no interest in helping anyone succeed in a dying industry. It’s like rearranging the deck chairs on the Titanic—the end result is the same regardless of what you do. New coal plant construction has declined nearly 80% globally in the past 10 years, whereas both solar (1,600%) and wind (685%) have increased dramatically in that time frame. Last, pitching the size of the market doesn’t have any bearing on whether your product will be purchased by anybody.
The “earth-shattering” ideas are mostly in the mind of the unreasonably optimistic startup entrepreneur.
Many successful startups started doing something else. At Techstars, many of the companies that have gone through the accelerator are now working on something very different from their original idea. Some of these companies are working in the same general domain but with a completely different application or product area. A surprising number of them are unrecognizable from the description of the business on their original application to Techstars.
When Alex White of Next Big Sound showed up at Techstars, he was immediately confronted with a chorus of “We love you but your idea sucks.” He dropped that original concept a week into the Techstars accelerator, built something amazing, and Next Big Sound ended up being acquired by Pandora several years later. Jeff Powers and Vikas Reddy of Occipital spent the summer working on some sort of image compositing software before landing on the spectacularly successful RedLaser iPhone app that eBay subsequently acquired. Since then, Occipital has launched a string of successful products and is changing the world of augmented and virtual reality. We aren’t even sure we remember what Joe Aigboboh and Jesse Tevelow of J-Squared Media were working on when they showed up at Techstars, but we had a feeling they were awesome, which they then demonstrated by launching a series of successful Facebook applications on the heels of Facebook’s F8 launch. J-Squared Media eventually became PlayQ, which is now a very successful game studio in the Los Angeles area. In each case, we saw that the original idea will often morph as companies grow, and it’s the people that will drive them toward success. The key is to get going and start creating as early as possible.
Startups are about testing theories and quickly pivoting based on feedback and data. This is one of the areas in which an engaged mentor can help you avoid falling down rabbit holes and pursuing data that doesn’t matter. Only through hundreds of small—and sometimes large—adjustments do the seemingly overnight successes emerge.
The idea and the vision are the fundamental building blocks that entrepreneurs need. In the following chapters within this theme, we highlight some of the ways that entrepreneurs come up with ideas and how those ideas develop as a result of getting good feedback and data.
Chapter 3
Trust Me, Your Idea Is Worthless
Tim Ferriss
Tim is the best-selling author of The 4-Hour Workweek, The 4-Hour Chef, The 4-Hour Body, Tools of Titans, and Tribe of Mentors, as well as an entrepreneur and angel investor in companies such as Uber, Facebook, Shopify, Duolingo, Alibaba, and 50-plus others. He has been listed as one of Fast Company’s “Most Innovative Business People” and one of Fortune’s “40 under 40.” Starting in 2008, Tim became a Techstars mentor and is an investor in several Techstars companies, including DailyBurn, Foodzie, and Grove.
Earth-shattering and world-changing ideas are a dime a dozen. In fact, that’s being too generous.
I’ve had hundreds of would-be entrepreneurs contact me with great news: They have the next big thing, but they can’t risk telling me (or anyone else) about it until I sign some form of idea insurance, usually a nondisclosure agreement (NDA). Like every other sensible investor on the planet, I decline the request to sign the NDA, forgoing the idea, often to the shock, awe, and dismay of the stunned entrepreneur.
Why do I avoid this conversation? Because entrepreneurs who behave this way clearly overvalue ideas and, therefore, almost by definition, undervalue execution. Brainstorming is a risk-free, carefree activity. Entrepreneurship in the literal sense of “undertaking” is not. Strap on your seat belt if you’re signing up for a startup. It’s a high-velocity experience.
If you have a brilliant idea, it’s safe to assume that other very smart people are working on the same thing or working on a different approach to solving the same problem. Just look at the number of different travel apps on your iPhone or the number of diet and exercise sites on the Web for an example of this.
Overvaluing the idea is a red flag, particularly in the absence of tangible progress. Sure, with this attitude I miss out on investing in some truly great ideas, but that’s okay with me: I don’t invest in ideas. Neither does Warren Buffett. I’ll lose less money than those who do. I can largely control my downside by investing in good people who, even if they fail this go-round, will learn from mistakes and have other fundable ideas (ideas I’ll likely have access to as an early supporter). I do not have this advantage when investing in ideas.
One popular startup dictum worth remembering is “One can steal ideas, but no one can steal execution or passion.” Put in another light: There is no market for ideas. Think about it for a second: Have you tried selling an idea lately? Where would you go to sell it? Who would buy it? When there is no market, it is usually a very sure sign that there is no value.1
Almost anyone can (and has!) come up with a great idea, but only a skilled entrepreneur can execute it. Skilled in this case doesn’t mean experienced; it means flexible and action-oriented, someone who recognizes that mistakes can often be corrected, but time lost postponing a decision is lost forever. Ideas, however necessary, are not sufficient. They are just an entry ticket to play the game.
Don’t shelter and protect your startup concept like it’s a nest egg. If it’s truly your only viable idea, you won’t have the creativity to adapt when needed (and it will be needed often) in negotiating or responding to competitors and customers. In this case, it’s better to call it quits before you start.
Focus on where most people balk and delay: exposing it to the real world. If you’re cut out for the ride, this is also where all the rewards and excitement live, right alongside the 800-pound gorillas and cliffside paths. That’s the fun of it.
David didn’t beat Goliath with a whiteboar
d. Go get amongst it, and like the best boxers, prepare to think on your feet, bob and weave, and quickly adapt.
I had a friend who read this chapter and said, “I vehemently disagree that ideas are worthless. Everything that’s ever been created in the world started as an idea—Beethoven’s Ninth Symphony, Robert Naismith’s invention of basketball. I don’t think those are worthless ideas.” Yes, that’s true. But there’s no market for ideas, there’s no website, nor any company in the world, where you can share an idea and get paid for it. An idea needs a person behind it, and some action, to become valuable. Without those, an idea is, well, just an idea.
What about all those “great” ideas we fund at Techstars? Well, about half of the companies who go through Techstars tell us that they have a “substantially or completely different” idea and product that they’re building after the three-month program ends, compared to when they first walked in our doors. When the founders of DigitalOcean applied to Techstars, they had an idea around helping developers navigate complex infrastructure. We loved the founders but hated the idea. They were already contemplating changing their idea when they arrived in Boulder in the summer of 2012 but were nervous about what our reaction would be. They quickly heard that we believed in them, but not their idea, and aggressively changed course. Alex White, the CEO of Next Big Sound, talks more about this in the chapter “Fail Fast.” The willingness to change your idea based on data is the sign of a strong entrepreneur, not a weak one.2
Notes
1Yes, there are a few exceptions, like licensing IP, but IP is “property,” as distinct from an unprotectable thought.
2Text boxes throughout Do More Faster provide additional commentary by David and Brad.
Chapter 4
Start with Your Passion
Kevin Mann
Kevin was the founder and CTO of Graphic.ly, a social digital distribution platform for comic book publishers and fans. Graphic.ly raised $1.2 million from DFJ Mercury, Starz Media, Chris Sacca, and others after completing Techstars in 2009. Kevin also recruited Micah Baldwin, a Techstars mentor, to join Graphic.ly as CEO in the fall of 2009.
I am a huge comic book fan and I started my company because of my own frustration and disappointment.
A few years ago, I read about the release of a new “Dead@17” story and I was excited to find that for once my local comics bookstore actually had it. I bought the first three issues and loved them. I couldn’t wait to pick up the fourth and final one.
On the day of the release of that fourth issue, I ran to the comics bookstore. I looked at the new release shelf only to find that it wasn’t there. I asked the store owner about it. I was told that because of budget cuts he had to stop buying a bunch of titles, and this was one of them. However, he said his sister store in Newcastle had it.
Newcastle was a 100-mile round trip and at the time I didn’t drive, so I knew the journey was going to suck. I headed off to the train station and I took my iPod along to make the journey bearable. A couple of hours later I arrived at the Newcastle comic store only to discover that the fourth issue of Dead@17 was sold out there!
On the train on the way home, my frustration and anger boiled over. I kept thinking that there had to be a better way of buying comics. And then it dawned on me. That morning I had purchased a movie from iTunes, which I was watching right there on the train. Why shouldn’t buying comics be just as easy? Why did I have to travel more than 100 miles and waste the better part of a day, all for nothing?
I realized that I had two options. I could quit buying comics or I could quit my job and build the iTunes of comics.
That’s how Graphic.ly started, and my enthusiasm for comics has now transferred to a business I love being a part of. Every single day I am excited to go to work. I get to create and innovate in a sector I love. Ultimately, I’ll solve a problem that was ruining something very special to me.
If you’re not passionate about what you’re doing, it won’t mean enough to you to succeed. Startup founders choose an insanely difficult path, so passion is a prerequisite.
Many entrepreneurs start a company to “scratch their own itch.” Kevin is a great example of one such entrepreneur, as you just read in the story of how he came up with the idea for Graphic.ly. Kevin and his business partner, Than, got right down to building a demo during the Techstars program. They quickly produced a beautiful piece of software for rendering comic books on the Web and on an iPhone. One of their mentors, Micah Baldwin, fell in love with the idea, and Kevin recruited Micah to join the team as CEO at the end of the summer. Micah, Kevin, and Than quickly raised a seed round of investment from venture capitalists and angels and began building out the team and the product.
One of Graphic.ly’s goals was to produce comics with amazing graphic clarity regardless of the platform the comic book was rendered on. They also wanted to innovate in the user interface to add a social component to the comic book, allowing fans to interact with the comics in a deep and engaged way. At the same time, they started building out a library of comics with several of the larger comic book publishers. While there was always a chance that existing e-book vendors would start focusing on comic books, Graphic.ly believed that their single-minded focus on comics gave them a big advantage over other companies.
Kevin also shares the honor of being one of the Techstars Boulder 2009 founders who inspired Brad to cofound the Startup Visa initiative. The goal of the Startup Visa initiative was to make it easy for non–U.S. entrepreneurs to get a visa to start a company in the United States. It turns out to be surprisingly difficult to do this, as Kevin (a U.K. citizen) and Than (a French citizen) discovered. After six years of very little headway with the federal government on immigration issues, Brad stopped pursuing the Startup Visa initiative. Nonetheless, Kevin and Than inspired Brad and others to work on the immigration issue, and Brad now works with the Global Entrepreneur in Residence program to support international entrepreneurs.
Chapter 5
Look for the Pain
Isaac Saldana
Isaac is the cofounder and founding CEO of SendGrid, a Techstars accelerator company from 2009 that provides an email service that solves the problems faced by companies sending application-generated transactional email. Since completing the Techstars accelerator in 2009, the company had a meteoric rise and now sends email on behalf of more than 150,000 customers. SendGrid was the first company from any accelerator program to go public when it listed on the New York Stock Exchange in 2017 (NYSE: SEND).
I have always been interested in solving complicated problems and am naturally passionate about scalability and complex engineering issues. I enjoy using technologies such as Hadoop for massive data analysis, Memcached for distributed caching, and Twisted for event-driven programming. Early in my software engineering career I landed positions as a CTO in multiple startups. The more I dealt with engineering problems, the less I wanted to be engaged with users or any other nontechnical problem. I strongly believed that my time was best spent on solving really difficult technical problems instead of dealing with all those pesky customers.
One day I was in the process of moving our static files to Amazon S3 to solve some scalability issues with our website when one of those annoying users notified us that the emails that our application was generating were not getting through to his Yahoo! Mail inbox. Off I went to solve this seemingly trivial problem.
After a few tests I realized that Yahoo! was flagging all of our emails as spam. Since this was out of my control, I contacted Yahoo! to solve what I thought would be a trivial nontechnical problem so that I could go back to my fun and complicated Amazon S3 project. Yahoo! replied to my request warning me that our company was not following well-known standards to deliver email and that certain content was consistently triggering their spam filter.
I researched the flagging email problem and looked for solutions. But the available solutions were not straightforward. Ultimately, I spent weeks understanding the issues, fine-tuning our s
ervers, altering our code, and working with ISPs. I kept thinking about how lucky my company was that I was an experienced and motivated software developer with extensive systems administration experience. Most of the people who were being affected by the problem didn’t even know it!
One weekend I thought about how ironic it was that a solution to one problem (spam-filtering technology) had introduced another critical problem. Spam filters were filtering out most of the spam emails—as they should—but legitimate emails were also being filtered! I wondered how many other subtle problems relating to email existed, and, to my surprise, there were many. I started wondering if I had email deliverability issues with other ISPs. What happened to emails after they were delivered? Who was opening and clicking on links in my emails? Why did companies with applications that generated legitimate transactional email have to worry about CAN-SPAM laws in the first place? It occurred to me that there must be thousands of companies having the kinds of problems that I had just experienced.
Sure enough, I found a report that said that a major electronic commerce vendor loses $14 million for every 1% of their legitimate email that is not delivered. So, I dug deeper.
I started speaking with companies that managed application-generated email. I learned that my theory was correct. Many of them knew that too many of their legitimate emails were being trapped by spam filters and almost all of them were simply living with the pain because they didn’t know how or have the time to fix it. So, I started SendGrid, which makes solving this problem a trivial exercise.
When we offered dozens of companies SendGrid for $100 per month, they all said yes. We raised the price to $300 per month, and they all said yes. $500?—yes. Today, we are working with thousands of companies, including well-known ones like Uber, Spotify, and Yelp. When you’re selling a solution to a problem and you find that nobody is saying no to your prices, you’ve found some serious pain. We’re building SendGrid to solve a very specific problem that I discovered just by paying attention.