There is a difference between optimism and fantasy – While
the former is grounded in reality, the latter is based on utopian beliefs.
In the battle of gut and the brain, I strongly believe that
that gut should win. However, it is very important to have the facts and
numbers right before stepping into a business.
The strange thing about startup is that it is prone to
failure even if all the ‘t’s are crossed and all the ‘i’s are dotted. So, to
venture into a startup without proper planning is definitely not the wisest
thing to do.
There are literally infinite resources on creating a pitch
for a VC. The pitches range from ‘Elevator’ ones where you do a pitch in a
couple of minutes, to detailed partner meetings where you have an hour or more
to share details of your business to the investors.
The problem comes when the entrepreneur has not thought
through the ‘business’ aspect of the company (which is the MOST important part
of the company) instead focus on the technical inanities. The technology is of
course important. But, it means nothing if it doesn’t create traction and in
the end, create value for the entrepreneur and investors. No VC can do
philanthropy from the money collected from their Limited Partners! They can
only donate the money that they earn AFTER the return of the investment
Can you don the role of the toughest critic of your company?
Ask yourself the following questions:
1.
What problem does my product / service solve?
Will YOU pay for a similar service if it is available?
2.
How big is the market? Is your solution
applicable to everyone in the planet? Or is it limited to a market that is very
limited?
3.
Business Model – How do you plan to generate
revenue? Will you ask your customers to pay once, or do you ask your customers
to subscribe?
4.
Traction – How often does your user come back to
use the product? Does the novelty wear off after initial excitement?
5.
Entry Barrier – What does it take for a BIG
player to make an entry and take away the market? (This is becoming less
important than it used to be)
6.
Team – Do you have a team that can work in sync
with the vision to pull it off?
7.
Do you have a co-founder? (Most important
question to have a YES to)
8.
Do you know how your product will be positioned
or priced? What are the metrics that you need to track to know if you are
progressing?
There are more questions, and honestly, as an entrepreneur
you must know more about your domain than anyone else. Dispassionately, ask all
the tough questions.
It is very important to write down all the assumptions and
QUESTION ALL YOUR ASSUMPTIONS periodically! Has the market drivers
changed? Is there an impact of macro-economic policies / indicators? For e.g.,
in my startup, we suffered a lot since we had to rely on some of the technology
rollouts by Network Operators, which were not in our control
The study of Vedanta, the most advanced section of Indian /
Hindu Philosophy requires analysis of a concept from multiple angles without
losing perspective when you move across different views. So, the students of
Vedanta chant a particular hymn (called Medha Suktam) to increase their
analytical skills for this kind of application (analyzing a problem from
multiple perspectives)
I am not asking you to drop the famed entrepreneur’s
optimism! I am just asking you to periodically wear a hat of a critic and do a
jolly good job at it, before you walk into the office of a VC / Entrepreneur! Be your startup’s TOUGHEST critic!
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