My top eight warning signs with tech entrepreneurs

For a number of years now I have been regularly involved in advising technology projects. I started with my students and former students: if you’ve been discussing innovation with them in the classroom, then they’re quite likely to come to you to talk about their own plans related to technology. Then, as word spread through the media, other people contacted me to discuss their ideas.

Given that most new projects today are technology related, I keep busy, and it also helps to keep me in touch with what’s going on.

Over the years, I have seen any number of projects, and been involved to varying degrees: discussing an “idea”, or looking at something that is already well developed. Some people send me their idea first and then ask to talk about it, while others just like to hit me with their idea and see how I react. I’ve even had presentations as performances.

I have also come up against aspects of presentations that immediately set alarm bells ringing, and which I’d like to share with anybody thinking of presenting a project.

• The NDA: Few things annoy me more than being asked to sign a non-disclosure agreement. The way I see it, you’re asking somebody who is very busy, whose experience and insight you value, and yet you think that I’m going to steal your idea. What’s more, if I really were the sort of person who goes around stealing other people’s ideas, do you really think signing an NDA that talks about not discussing the idea, which usually isn’t that original, is going to stop me? It might make your potential investors feel better, but all asking for an NDA does is show that you’re out of touch with the times. If you can’t trust the person you’re talking to, you shouldn’t be talking to them. As far as I’m concerned, I’m doing you a favor, and you should be aware of that.
• Who are you? Where’s your blog? If I can’t find you or any reference to your project on the internet, then you haven’t done your homework properly. Doing your homework means compiling information, publishing it, sharing your project and making your intentions clear, it means being associated with your idea, it means having a reputation in the sector you’re working in. By the time you launch, a large number of people should have been following the development of your product or service, reading your blog, and they should understand your reasons for doing what you’re doing, who you are, what experience you have behind you, and why what you’re doing is going to be a success. If you’re not prepared to invest time and energy in doing your homework, or if you’re afraid somebody is going to copy your idea, it’s either because it’s not worth anything in the first place, or you haven’t developed it properly, which is why you think somebody is going to steal it. This isn’t how things work.
• We have no competitors: I hate that expression. Every project has its competitors: they have always existed, and if there are no competitors, it’s because the idea is probably no good. There is always somebody out there who is better qualified, has better infrastructure, is better prepared, has more experience, better brand recognition, or more resources than you. If you think you have no competitors, it’s because you haven’t done your homework. Grow up. Childishness and laziness are not the qualities I look for in an entrepreneur. If yours is a good idea and could make money, there will be other people, other teams and companies already working on something similar, and if not yet, then somebody soon will be after seeing your idea. If you don’t have a strategy to deal with competition, you haven’t thought this through.
• We haven’t done the math yet: Are you seriously considering dedicating time and resources to something that you haven’t worked out the costs for, as well as how to deal with the problems that will come up? And don’t come to me with provisional, five-year forecasts: even I know how to put together a few percentages of annual growth… I’m talking about a detailed analysis, about what to do when key costs start to go up, about how to weather slow take up of your idea, about what a development delay would mean, about burn rates, and how much you need just to pay salaries and keep the lights on. If you haven’t dedicated the time required to carry out a proper analysis, don’t expect me to provide one.
• It will sell itself: I’m sorry, but the simple truth is that few things sell themselves: I have seen too many projects fail because nobody thought about the marketing. It doesn’t matter how good the idea is, if you don’t know how to let people know about it, then it’s not going to fly. If you can’t see how the company will sell its product, or what deals you will do with your first customers, or how you’re going to structure your revenue model, you lack maturity. If you’re a genius but have no commercial awareness, and if you’re not thinking of bringing in somebody who does, then you’re going to have big problems.
• We’re buying in the technology: If your company’s competitive advantage is based on technology (and if it isn’t, don’t bother talking to me), then you must have developed the technology. I’m not interested in whether you have a supplier, this is something I’ve talked about with a lot of people. And afterward, I always reach the same conclusion: a supplier won’t give you the flexibility you need; won’t offer to carry out all the modifications that experience from launches tells you are necessary, and won’t create the conditions you will need to grow. If the technology isn’t yours, if you are simply business people with no development talent, and worse yet, if you think you can buy in technology for a couple of bucks, then I’m sorry, but your project isn’t going to interest me. If it’s a technology-based project, then you have to give the technology the importance it deserves.
• The three amigos 33% split. Share structures are a difficult thing to get right and take a lot of planning and thought: everything has to be talked through. The idea of the pals who split the company up evenly is the result of not having discussed things properly, meaning that problems will arise down the road. Issues like whose idea it was, who contributed what, each partner’s vision, what each is prepared to sacrifice are all important, and I’m not a psychotherapist. Everything has to have been talked through, if not, there will be problems, and I don’t want to know about them.
• Influence management: If I sense that the person coming to see me is not so much interested in what I have to say but that they want to be known to have seen me, or to know me, or to get me to blog or tweet about them, then I tend to feel uncomfortable. If it’s visibility you’re looking for, find somebody else, I don’t like being used.

I’m sure there are other danger signals out there: I started out with a numbered list, but just ended up making a no-particular order series of points. There are things here that really leave me cold or lose interest, things that annoy me, and things I consider a warning sign. I hope anybody thinking of putting together a project finds them useful. I think the points I have raised reflect real issues. And sadly, just because a project avoids these pitfalls doesn’t mean it’s a guaranteed success. When it comes to developing an idea into a business, you have to be prepared for problems all the way down the road.

Is there anything I’ve missed?

(En español, aquí)