Don’t Fall In Love With Your Business Idea

Love makes you stupid

Earlier in my career, I founded several companies. None of them “succeeded” in the way success is measured in that world.

Back then, I lived in San Francisco and rolled with the crowds that were part of the whole Silicon Valley world.

You know that woman who founded Theranos and is in prison now for confusing present-tense and future-tense when describing her company’s capabilities (i,e. she lied)? She would have been running in similar circles. Actually, she was a friend of a friend, though I never met her.

All of us understood the slippery slope she went down, because we also lived in the murky world of hustle culture. The world where you are so enamoured of your vision that you pour every ounce of your heart and soul and mind and time into achieving it, and you need to put on a big show long enough to gain the resources to make it real.

Fake it ’til you make it.

We all believed that if we could just get our visions in front of the right people — someone with the power to influence the media or to fund an investment — we would be one of those who broke through. We just needed the financial runway to reach lift off.

Runway was a common term people used. It meant the funds to operate the startup long enough to get profitable. Some people were lucky enough to get seed funding from an angel investor, but most of us used our own funds to pay for that runway.

When people speaking on panels or in wine-lubricated networking events got asked what advice they would give would-be entrepreneurs back then, they would often say some version of,

You have to have passion for your idea. You have to really love it, because it’s just such a hard a road, that if you don’t love it you will give up before you succeed.

This construct chews people up and spits them out

Look, most business fail. It’s true for small businesses and it’s true for those trying to scale 10x in < 5 years.

In recognition of this, the constant mantra was to “Fail Fast” so that you still had capacity to get up and try a new idea.

But what is “Fast?”

When you’re also being told to fall in love with your idea and push through the adversity, how long do you give it?

Give up too early and you’re a weakling who gave up on your dream. Hang on too long and your spouse will leave you to rot in your emotionally and financially ruined pile of blubbering mess.

The generally accepted wisdom was you should give it at least a year, but no more than about two years.

Two years of your life and sanity and income.

We thought you had to actually start a company to find out if it was going to work.

In order for customers to place their trust in your company and give you their money, you had to have something robust enough to fairly serve them. That meant a functioning product — even if it was just a minimum viable product — plus a full website, financial and accounting infrastructure, and enough staff to run the company. Plus marketing to find customers.

Which means, in most cases, several hundred thousand dollars just to get to the point where you can find out if it’s viable.

This is madness.

Instead of teaching us how to start companies, business school should have been teaching us how to run tiny experiments.

Looking back, I can remember two voices trying to teach this alternative approach. Sadly, I couldn’t really hear them and take it in until I had learned it the hard way.

The first of these alternative voices was Tim Ferriss, in his famous book The 4-Hour Work Week. He had a section on how to run low-cost experiments to test for market demand.

One idea in his book stuck out to me, at the time, as both brilliant and morally sketchy. The idea was to set up a basic eCommerce page for a hypothetical product you had not yet created, run some ads to see if people would purchase it, and then when they tried to complete the purchase they would get a message apologising and saying the product was out of stock.

Now, perched on the hill of dented second-hand junk that is my life experience, my perspective is different. I actually don’t have a problem with that from a moral perspective anymore. The world is so filled with products to buy that I feel like if 100 people get denied the opportunity to buy a t-shirt with a dog on it the world will be A-OK. In fact, those 100 customers have already moved on with their lives and bought something else they don’t need.

The other voice of reason was, frustratingly, coming from within the very business school I actually got my MBA from. I just…never took that particular class.

The Lean Launchpad at UC Berkeley had developed an approach that guided would-be entrepreneurs through developing their business models and then going out into the real world to test their hypotheses in only 3 months.

Part of why I never took this class was that it seemed ridiculous to me at the time. Only 3 months? How could you possibly have given it enough of a shot to make a judgement call? I remember thinking if you’re willing to abandon something because it didn’t work in less than 3 months, you definitely didn’t love the idea.

How shallow.

How impatient.

How weak.

Everything that is wrong with the world.

Now I realise I had entirely missed the point.

The point was actually that the class was teaching students how to design and run tiny experiments to test each idea in the business model.

You think your target customer segment is X and they want to buy Y? Go actually find several people in that segment and talk to them about whether they would buy Y.

Turns out they may actually want B. You never thought about that, did you?

Or, it turns out, you don’t know how to find customer segment X. They hang out in different spots than you thought.

Now my perspective on falling in love with your business idea is that usually, your first ideas are wrong. And if you’re in love with the idea, you resist pivoting.

Pivoting and evolving your ideas quickly is the way you find a scaleable solution before you run out of runway.

All the other courses I took in business school stood in direct opposition to this approach of staying nimble. Yes, they would preach about the importance of a company evolving with the times, but their examples were always large, mature companies who kept up with changing customer attitudes by conducting expensive market research through consulting firms over a time frame of several years. (or the inverse)

If the railroad companies had realized they were in the real estate easement business and not just the transportation business, they could have continued to dominate the economy well into the 21st century!

I mean, yes, this is true. The kernel of the idea is the same, but actually teaching people the tactical skills of how to create these little experiments without hiring Deloitte to run market research was the missing piece.

The new digital era makes it easier than ever to test ideas online.

Now, making a landing page and running some YouTube ads can be done in one day. There are plenty of AI tools that will shortcut every step.

Doing it online is actually smarter than trying to go talk to potential customers. For one thing, it eliminates the bias of someone saying they’d buy your product just because they don’t want to hurt your baby entrepreneur feeling.

Depending on the experiment, it can also give you firm stats instead of anecdotes, and it allows that to occur in much faster feedback loops.

A few experiment examples

I did recently research 12 different online business models and then run 8 quick experiments. Results here.

One experiment I ran involves creating a digital product (a book) and then listing it on Etsy as a downloadable/printable product and listing it on Amazon as a print-on-demand book (KDP). Same product, just testing which platform would perform better.

In both cases I used keyword phrases that have demand, according to the couple of Chrome extensions I used. I also ran ads on both platforms.

Etsy sold 1 copy in 3 months. Amazon sold 162 copies in the same period.

Other experiments were even simpler. For instance, I decided to go through the process of bringing a simple import product to market through Amazon’s FBA program. I simply wanted to see how much effort it took and whether I would enjoy it.

In case you didn’t know: Amazon’s Fulfilled-By-Amazon (FBA) program is where independent sellers import or create a product and have it shipped from the manufacturer directly to an Amazon warehouse so that Amazon can use their incredible expertise for inventory management / logistics to fulfil orders better than that independent seller ever could. The independent seller then creates the listing for the products on Amazon, including the description and photos and pricing (plus typically runs ads on Amazon). Amazon handles not only the shipping and returns, but also the taxation issues. They charge the independent seller a fee for all this, and Amazon sends them their take at the end of all that magic.

I got only halfway through the process before concluding it wasn’t my thing.

Great. I lost only the money I spent taking a course on how to do it, which for me was worth it because it sped up the learning process immensely. That’s a successful experiment because now I know how it works and have ruled it out for me.

I did 8 experiments in about 6 months, while spending a few thousand dollars total. The spend was higher than it strictly needed to be because I paid to get educated as fast as possible and bought several courses.

Experiments aren’t only to confirm market demand

Experiments — actually doing a mini form of the business you imagine — can answer questions like:

• Do you actually enjoy the activities involved?
• Is there a kink in your supply chain you didn’t realise?
• How much time is it likely to take to get a product to market?
• What’s the true cost of creating your product?
• Are you right about which customer segments will vibe with your offering the best?

Running an experiment phase demands you stay detached

Like a scientist, you don’t want to get false results because you’re already convinced of the answer.

Being in love with your idea is the ultimate bias. Instead, trust that you will have thousands of great ideas, and with experimentation you can find a winning business model.

So fall in love with the idea of experimenting. What’s the cleverest, smallest way you can test an idea? Get really good at this, and you will become a great business person.