Thoughts on the 100 Urban Entrepreneurs Atlanta Meetup + Discussion on Business Plan Development

Last night, I attended the 100 Urban Entrepreneurs’ Meetup + Discussion on Business Plan Development. Shout out to Amber Saunders for organizing an excellent (and well attended) event. In typical fashion, I (a) started a little drama – well, I don’t consider it drama. I call it challenging people – and (b) had my own answers to some questions. My thoughts are below:

[Before we proceed, you must know that I don’t believe in business plans. Click here (31 minute mark) and here for a better understanding.]

My question: Many entrepreneurs, including some already this evening, describe their company idea as “good.” What is the definition of a “good” idea?

The first panelist said a “good” idea was subjective (my point exactly), but Amber stepped in with something more definitive: “it has to sell.” (paraphrased)

As Steve Blank says “entrepreneurs are artists”, meaning we ALL think our ideas are great. Sorry to bust you bubble, but, most likely, your idea probably sucks. The only thing that matters is if consumers/enterprises pay for it. Period. End of story.

How can an idea by “stupid” if people pay for it (in terms of money, time, or effort)? How can an idea by “good” if no one pays for it?

So, let’s put the definition of a “good” idea on more firm footing. A product/service is only good if you can successfully relieve consumers/enterprises from their money (paraphrased from Steve Blank).

And a good business model ensures this process is profitable (and scalable in some cases).

These questions weren’t directed toward me, but this is how I would have answered them if they were.

On the tech industry mindset of “doing” with little-to-no planning, and figuring out what works later:

I could on and on…and on about this, but it is easier for you to read up on Steve Blank (Customer Development) and Eric Ries (Lean Startup). I won’t link to these guys in order to force you to search for all the stuff that’s on them.

But I will say this: businesses are like math (really Calculus).

The business model is the equation, and the product/service is just one variable (out of 9) in the equation (research Alexander Osterwalder’s Business Model Generation for the equation).

So your business model may look like x = ((a+b+c)/d – e(f+4g) + 2h)/i

Your job, as an entrepreneur, is to find the best equation (read: most profitable) for your company. Period.

And this entails a TON of experimentation. So much that your original business plan is completely worthless after the first “experiment”.  Heck, it may take you 100 experiments in order to find the right equation. But, the key is how fast and inexpensively you can experiment before running out of money.

On the importance of your “team” when going through the funding process:

Again, ideas are worthless. A great team can execute a mediocre idea, and turn it into something huge. And when I say team, I mean they key people in the company AND your service provides. If you can say “my co-founder worked for Google, and helped launch Google Docs, one of my advisors sold her company for $5M to AOL, another advisor sold his company to TimeWarner for $20M, my law firm has worked the exits for over 50 companies, and my graphic designer did the logo for MTV,” THEN you have instilled alot confidence in the investor.

And a byproduct of a great team is a large/powerful network of investors. And  you know what they say about your network.

The key point here is, if you haven’t guessed it, is your ability to recruit a “rockstar” team. That’s a part of the CEO job description. If you can’t recruit A+ people to your company, then you might want to research alternative funding sources. #imjustsayin

The mindset of asking a funding source (investor, bank, etc) to sign a non-disclosure agreement (NDA):

You aren’t that special (though your mom said you were). Out of all of the people born since 1900, do you honestly think no one else hasn’t thought of your idea? Why would anyone sign an NDA when they have seen/will see something very similar i the future?

But more importantly, if you think your “secret sauce” is so awesome, then get a patent. It is called “defensibility.” After all, defense wins champi0nships.

‘Til I start some drama (I mean challenge people) at the next entrepreneurship event.

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