Startups: Gold Diggers vs. Real Entrepreneurs

NYC Tech is exploding (or has exploded), and I’m constantly hearing about new startups and their ideas. What’s really strange is that, at least on the surface, a lot of these ideas don’t sound like great ones. So for you soon-to-be entrepreneurs out there, I want to make my case for building a real business as opposed to “gold digging”.

I have about 10 ideas for a new app or project per week, and only occasionally will one stick in my mind as a world changer. I’ll think about it all day, draw out some stuff on paper, and do my best to dream about it when I sleep. What do all of those ideas have in common? They’re all things I need; solutions to problems I have.

How do I boil down those ideas to a few that I really care about? It takes about a 30 seconds each:

  1. Do other people need it?
  2. Will the people who need it buy it or at least generate enough revenue to make it worth the effort?

If the answer to #1 is no, then I really don’t go much further. I’ll definitely have ideas that satisfy this requirement, and why drain any energy doing something that is “neat,” but not life changing, and appears pretty risky in terms of ROI?

Need is an important thing. If I can’t feel the need instinctually, I have trouble focusing my energy canon on it. If I can’t see other people needing it, same deal.

#2 kills a lot of ideas. If something is needed, but it won’t make any money, I’m usually not interested. There are exceptions, like open source projects. Sometimes you just want to do something good for the world, and seeing other people use your project (and say nice things) is a much-appreciated bonus. And if it’s not a black hole of time or money, why not?

But not everyone, understandably, has the same filter. And there’s a temptress in tech right now: The allure of the 2 year old, 1 billion dollar startup. Thanks, Instagram.

It’s so common right now to hear tales out of the mouth of some high-flying “entrepreneur” who’s just in it to win it via acquisition. Some bozo of a founder who’s out for prestige and a payday, planning to make their own miraculous exit. They talk as if attracting a billion users is only a matter of time. Of course, they probably don’t let investors see that side.

Those guys bother me, and there’s a lot of them. It’s like they really don’t care about the actual product, or the need it fulfills, or whether it makes any money. It’s like they don’t care about building and managing a real, profitable business.

Are you starting a business? Think about your motivations. Do you truly, sincerely believe in what you’re doing? Could you see yourself doing the same thing in 5 years and sustaining yourself if you aren’t acquired? Do you see a better world for the space you’re in? If the answer to any of these questions is “no,” then you might just be a gold digger. It’s hard to build a company, recruit a team, and change the world when you’re one of those. Your lack of passion will bleed through, and the quality and effort you put into your product will reflect it.

So here’s the culmination of all this: If you want to start a company, build a real business. Make sure you’re passionate about what you do. Be genuine when dealing with everyone involved — your employees, investors, and the end users. Be sure that 100% of you is aligned with what you’re doing, and that you aren’t putting on a show for anyone. If you can do this, you’re much more of an entrepreneur than any of those gold diggers are.

PS: Be sure to follow through.

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  • katzgrau

    Also a great idea: http://www.ideasisland.com/

  • http://www.dynamicrecruit.com/ Nahed Khairallah

    Kenny,

    What you’re saying is spot on true! But can you really blame those gold diggers?

    Ever since the dot com bubble burst, experts and successful business owners have been preaching about having a “revenue model”. For years, we have believed that a business with no revenue model is doomed to failure since cash will run out eventually. Instagram just shattered that argument… The company cashed out for $1 billion dollars without generating a penny in revenue.

    On the other hand, Facebook didn’t buy Instagram because it was impressed with it’s functionality and they’re pretty aware that they paid a hefty premium…They just acquired 25 million niche users that will go a long way in ballooning their advertising revenue.