Rebel without a crew : which company should I start?

(last in series  – which company should I start?)

We’ve identified factors/criteria that an entrepreneur could use to select a venture, and have talked about the importance of Bigness of the idea and understanding of people’s needs. I believe that the most important traits of an entrepreneur is relentless passion and that should help you select the idea to start the new venture.

  1. What are you most passionate about (and where can you add value)?
  2. Ask Maslow: Which need in Maslow’s hierarchy of needs is your idea addressing?
  3. How BIG, HAIRY and AUDACIOUS is your idea?

Starting anything up is characterized with difficulties. Honestly, it can get very rough (series of setbacks, unplanned time-wasters, interestingly wierd people to deal with, changing market conditions, etc.) One can only survive these setbacks and emerge out successfully, if he/she is supremely passionate about that idea. Life’s too short, so please don’t postpone it by working on things you’re not passionate about.

Sometimes it may not be clear as to what you’re really passionate about. I use this simple test by asking myself some fundamental questions:

  • If today’s the last day of my life, would I still work on this idea?
  • How much am I willing to pay to somebody to allow me to work on this idea? (This is the extreme opposite of – "how much would I get paid, if I decide to work on this idea?")
  • What do I like more/want more than this idea?

This applies to anyone who’s starting up, not just entrepreneurs, but also actors, filmmakers, authors, teachers, etc. One of the best stories that depicts passion in a true sense is that of one of my favorite filmmakers – Robert Rodriguez. As a broke undergrad student at UT Austin, he subjected himself to medical experimentation to raise a few thousand dollars and make a short film. He has outlined his story in a very cool journal/diary-like format in his book : Rebel without a crew – How a 23-year old filmmaker with $7999 became a Hollywood player.

Some of my favorite quotes from the book:

"I mean, I think everyone has a few bad movies in them, the sooner you get them out the better off you are."

"I’m twenty-three years old. Orson Welles made Citizen Kane when he was twenty-five. Spielberg made Jaws at twenty-six. So I’ve only got about two or three years to make my break-through film. I’ve got to get moving."

Passion it is!

-Kintan

Technorati tags: entrepreneur , passion , venture capital , investment philosophy , Which idea should I invest in? , Which company should I start? 

Big, hairy and audacious : Which company should I start?

From the three identified factors/criteria that an entrepreneur could use to select a venture, we discussed applying Maslow’s hierarchy of needs to identify and size up the market. I’ve always been fascinated by the bigness of an idea and its impact. I’ve come to learn/realize that bigness is actually important (almost indispensable).

  1. What are you most passionate about (and where can you add value)?
  2. Ask Maslow: Which need in Maslow’s hierarchy of needs is your idea addressing?
  3. How BIG, HAIRY and AUDACIOUS is your idea?

If we at some of the visions of super-successful entrepreneurs, they’ve always strived to tackle big, hairy and audacious pursuits. Bill Gates wanted to put a computer on every desk, while Henry Ford strived to make cars affordable for everyone. That word "every" makes all the difference.The grandness of the vision is not only stimulating for you as an entrepreneur, it ends up serving as a magnet for talent. As an entrepreneur you want super smart people to join you and smart folks are not easily excited by mediocre visions or mediocre entrepreneurs striving to solve a small problem. Smart people always want to work on big hard problems. So by selecting a big, hairy and audacious venture will significantly increase your chances of attracting smart people to join you.

Second advantage of selecting a hard problem is that it gives you more time-advantage over larger competitors. One of my favorite entrepreneurs/thinkers – Paul Graham explains it the best in his essay on wealth and encourages entrepreneurs to deliberately seek harder problems.

"Use difficulty as a guide not just in selecting the overall aim of your company, but also at decision points along the way. At Viaweb one of our rules of thumb was run upstairs. Suppose you are a little, nimble guy being chased by a big, fat, bully. You open a door and find yourself in a staircase. Do you go up or down? I say up. The bully can probably run downstairs as fast as you can. Going upstairs his bulk will be more of a disadvantage. Running upstairs is hard for you but even harder for him."

It has always worked. When you have two ideas to start a company, choose the Big, hairy and audacious idea.

let’s think in terms of miles and not inches.

-Kintan

Technorati tags: entrepreneur , venture capital , investment philosophy , Which idea should I invest in? , Which company should I start? 

Ask Maslow

Earlier I had identified three factors/criteria that an entrepreneur could use to select a venture:

  1. What are you most passionate about (and where can you add value)?
  2. Ask Maslow: Which need in Maslow’s hierarchy of needs is your idea addressing?
  3. How BIG, HAIRY and AUDACIOUS is your idea?

First and third factor (passion and vision) tend to be innate in most entrepreneurs, so I’ll share my views about them later. Let’s discuss the most predictable/deducable factor – market need. In simplest terms, the answer to fundamental question: “What should I build?” is “Build what people need.” If you’re an entrepreneur, it is indispensable to assess the needs of the customers and decide to address the most needs that matter the most.

Abraham Maslow proposed a theory to explain and prioritize needs of human beings. Maslow’s hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation,¬†which he subsequently extended to include his observations of humans’ innate curiosity (from wikipedia). It may not seem obvious, but this theory offers a powerful framework for assessing needs for human beings (read customers). So, if you have¬† multiple ideas and are trying to prioritize those ideas, it would help to listen to Maslow.

Needs, represented as a pyramid with most fundamental needs at the bottom can be read interpreted in several ways. For instance, two bottom-most sections (physiological and safety needs) areapplicable to every one and are mostly non-negotiable. People need to eat, drink, sleep, etc.

From an entrepreneur’s perspective, these needs are typically served by commodity products/services (and mostly not by technology products).The barriers to entry are low and price-elasticity is very high. These are typically “bad” businesses to start, especially in tech realm, because scope for innovation and growth is restricted. Another observation is that the size of the addressable market (number of people to whom the needs apply to), start decreasing as we move higher in the pyramid.
askmaslow

The central category of needs – love and belongingness – seems to be the sweet-spot for a technology entrepreneur, as technology can add a lot of value in empowering people to fulfill these needs. “Love and belongingness” is an overloaded term and can encompass a gamut of things, but the basic theme is – connection : need to feel connected to something/someone. If we look at some of the most-widely used applications/services/products on the web (email, instant messaging, self-expression tools, social networking tools), they all strive to address the basic need to connect.

Facebook’s success can also be explained by this need: facebook successfully enables people to connect with each other by sharing information in a simple, accessible and safe way; so it appeals to more than 100 million people. facebook is more successful than some of its alternatives, as it has built upon the initial success and has leverage it to provide more powerful and engaging ways to connect through a gamut of applications built on the facebook platform.

In addition to Reach (How many people need it?), some other factors are also important:

  • Priority: How important is this need for a person?
  • Severity: How urgent is this need for a person?
  • Frequency: How frequently does a person need this?
  • Timing: Are more people likely to want to address this need in the next few months than any other need?

facebook scores high on all of the above and hence is successful. If we were to look at abstract activities (and related needs), the following come to mind (in that order):

  1. communicate
  2. work
  3. play
  4. trade
  5. learn
  6. give

What do you need?

-Kintan

Technorati tags: entrepreneur , venture capital , investment philosophy , Which idea should I invest in? , Which company should I start? , Maslow