I have great admiration for Paul Graham, founder of Y-Combinator. He’s truly in the entrepreneurship hall of fame. And I would say his advice is probably more likely than anyone’s to be right, certainly more than mine.
However, I recently had a mentee who fell into the same trap as I did in following this piece of advice from Paul Graham:
The very best startup ideas tend to have three things in common: they’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing. Microsoft, Apple, Yahoo, Google, and Facebook all began this way.
My introduction to the software business came at the hands of a product and product designer who followed these directions to a T. Dan Bricklin was a Harvard Business School student who got fed up with alway having to recalculate his business model whenever his professor changed a parameter in the business case, like product price. Out came his TI calculator, his pencil with well-eraser on top, and lots of paper. Dan had worked at DEC (Digital Equipment Corporation) developing a word processor for the PDP-8, one of the first mini-computers after graduating from MIT. He realized that what he wanted was the equivalent of a word processor for numbers and formulas. And given his programming abilities, he was able to create a working prototype in BASIC for the Apple II. With the help of Bob Frankston, his longtime friend, fellow MIT graduate, and programming wizard, they revolutionized business by creating VisiCalc, the first electronic spreadsheet.
So I always thought the best way to do a startup was to create something you yourself wanted (and needed). Unfortunately this lead to two failures, one large (lost about $1,000,000), the other pretty small (lost around $100,000).
So what went wrong? Well you can read about the mistakes I made with Throughline on this post: The biggest startup mistakes and how to avoid them.
Unfortunately I failed to learn my lessons from Throughline with PopSleuth, Inc. a startup bred this century, actually even this decade! This time I wanted to build a consumer product that I myself had always wanted: a way to keep up with the latest releases from and about my favorite creative artists, be they writers, musicians, directors, actors, photographers, etc. I got enough “sounds like a good idea” from friends and two developers that I went right ahead and financed building this app myself. Bad idea! Getting outside money is not just a way to protect your own financial security, it is also strong validation of your business idea.
Long story short, despite building an MVP and later two version of the app, it never got any traction. It seemed that most people who cared about his problem, and they weren’t really a lot of them, relied on social media, namely Twitter and/or Facebook friends to keep up with what’s new from their favorite artists.
So these two failures were on my mind when mentoring a founder who had what he thought was a great solution to particular real estate problem. But after two meetings, here’s what I found out: like me, because he had the problem himself he assumed he was an expert on it. And you know what, we were! And he assumed that his solution would work, and maybe it would. But the big problem was that this familiarity with the problem and personal investment in it, led us to the blind and bad assumption that lots other people had this problem AND cared about our solution. That Boolean just didn’t follow logically! He had done a little primary market research, as I had, but far from enough.
So here’s the big lesson. It’s fine to follow Paul Graham’s advice. But his advice is far from sufficient to build a successful product and company. Just because you have a problem, and even have the ability to build the solution and others haven’t done so – yet – doesn’t mean that enough consumers care!! You need millions of consumers to build an app or web business.
So supplement Paul Graham’s advice with advice from Steve Blank, who has pioneered the concept and process of customer development. Make sure there is a large and preferably growing market for your solution before you build it. Just as much effort, if not more needs to go into customer development as product development and business development put together. Think of all this work as an insurance policy against making the big mistake I’ve made not once but twice, once each for the B2B and B2C markets. Believe me that’s an insurance premium well worth paying!