2. The Idea is Worth Zero (Part II)

Hi there, reader! How are you doing? I’m back, here with you, to continue with last month’s column “The Idea is Worth Zero.” Let’s freshen up (it’s been a while since the previous publication); Zorro and I were in Stanford, in the middle of the worst financial crisis since 1929, figuring out what the hell we’d do after our MBA. Great timing! (sarcasm)

Anyone who goes to an MBA thinks from day one: I made it! However, such mindset changes to : “How the hell was I accepted?, I’m sure they screwed up somewhere in the process, how am I ever going to compete against all these people?” After a couple of months, paranoia decreases and the attitude shifts more to: “How the hell did they accept that other guy?” haha.

One day, during winter of 2008; Zorro, el Abuelo, and I, were in a class about Debt Markets, with a professor called Darrel Duffie; who had the skill of emailing us, at different times, throughout the day, to let us know why the world as we knew it was coming to an end, and how, practically, we would go back to trading and bartering.

Picture a religious/motivational preacher, but instead of giving sermons about everyone going to hell, Professor Duffie yelled: “Everything’s broken!” General Motors, Ford, AIG, Freddie Mac, Fannie Mae, Morgan Stanley, Citi, Merrill Lynch, Bear Stearns y Lehman Brothers had already gone bankrupt. In my mind, he thought: “Poor souls, they paid to study an MBA, and none of them will have a job afterwards.” In summary, his class was a hoot.

In that course, an American friend, called Ben Sloop, made a presentation about the company in which he had worked during summer. They worked on restructuring and renegotiating credit card debt. After class, Zorro asked our impression of what Ben had just covered. I replied that I had made a considerable effort not to pay attention because Duffie’s class stressed me out. El Abuelo responded that it could only work in the USA. “It would never work in Mexico.”

Although El Abuelo’s status quo is being grumpy and bitter, saying that something won’t work, is the default response of most people. It’s easier for human beings to think about why something won’t work, instead of why it will work. That’s why entrepreneurs have to be hyper-optimistic people so that if things take a horrible turn, they won’t panic. In Abuelo’s defense, I can say he’s a great entrepreneur and founder of a successful company of student loans (www.laudex.mx).

That night, around 01:00 in the morning, I was about to finish an assignment and got distracted looking for info about credit cards in Mexico. I found several articles that pointed to a significant worsening in consumer debt, and I got excited (how evil). I performed the typical “copy-paste” of my findings, and just as I was sending them to Zorro, I got an email from him with similar information.

Then, I replied with what I had found, and the mutual thought was: “If at 1:00 a.m. this dude has nothing better to do but to look for Mexican banking info, then he’s interested and serious about it.” We didn’t send an email to El Abuelo, that guy was more into fax machines, in fact, I’m not sure he got the last one I sent him.

Many times, we’ve had talks with people who’d tell us that they’d love to start a business, but haven’t come up with “that” original idea. From our point of view, most of the success comes from how something is executed, and not so much from a brilliant idea. There’s no doubt that the idea is important but, in our experience, execution is as important, if not more, than the idea.

Adam Grant, in his conference “The Surprising Habits of Original Thinkers,” talks about the existing relationship between people considered original, and those who try several things. He shares a graph that compares classical music composers with their hits, against the volume of works they produced. Guessed the outcome? Generally, the most successful ones were those who experimented, since this gave them a chance to fail, learn, and innovate.

I remember a phrase that goes: “You have to be an idiotic person if you believe that your idea is unique, and none of the other 7 billion people on earth has ever thought of it before.”

As you can see, thousands of proposals are generated on Earth, all the time; the problem is we don’t execute them because we’re afraid of what others might say.

For example, AirB&B was born because its founders didn’t have money to pay for their rent, and they offered accommodation, in inflatables mattresses, to get some cash (Air Bed and Breakfast). Later, they decided to build a website, and it took off when they offered their services during the Democratic NationalConvention in 2008.

Imagine the questions they could have asked, and the answers they would have received if they wanted to validate their idea. “What do you think if we build a website where you can rent rooms to people you don’t know?” And, obviously, those people would want to stay in a stranger’s home, and not in a hotel “No brainer!”

Jonathan Beekman, a friend from Stanford, launched a company called Man Crates (www.mancrates.com) with 1,000 USD, the only amount his wife allowed him to spend since he had previously had bad luck as an entrepreneur. He didn’t have a product, just pictures, and a wooden box in which he spent most of his 1,000 USD.

People wanted to buy, and Jon had to call them back saying: “Thank you for your purchase, but I am testing an idea, and I have nothing to sell to you.” During those calls, he would ask them what it was they have liked about what he “offered,” and, surprisingly, many people would remain a long time on the line explaining what it was that called their attention.

When we arrived in Mexico to launch “Resuelve,” one of the first things we looked for was ways to validate our idea, how to know if it would work? “Lets ask the bankers, see what they think,” we said. So we looked for “El Guajo,” who is the father of a good friend, “Linguini” and a very prominent old school banker in Mexico. Guajo has been a sort of professional mentor for me. It’s important to say that, during the more than 20 years that I’ve known El Guajo, I’ve never called him El Guajo to his face (always behind his back. Hahaha!). So, I hope he’s not reading this column. He’s kind of old, so I don’t believe digital publications are his thing.

After presenting our idea, El Guajo told us it seemed “interesting,” and referred us to more bankers. Immediately, Zorro and I called Linguini to see what his father had said. His textual words were: “He could not believe that Stanford and came back with that idea?”

Although, on that occasion, his feedback wasn’t entirely accurate; through the years, I’ve been nagging El Guajo each time something big comes up. His advice is priceless. (If you are entrepreneurs, I suggest you look for a mentor: It has worked awesome for me).

In hindsight, what we learned about that experience was that it’s very difficult for others to assure you whether your idea is good or not. Proof comes from the market, and, many times, it’s unpredictable. Someone experienced can tell you if your revenue, and cost, model make sense, but they can hardly guarantee whether people, out there, will buy or hire.

To this day, in spite of having worked with more than 100,000 people with more than 1 billion of Mexican Pesos restructured, and in three different countries; many bankers keep telling us that Resuelve is unnecessary. We don’t even reply anymore, we turn to look at each other, and think: “That’s right, White Collar. Whatever you say.”

That’s why, if you have an idea… Get on with it, now! Try testing its demand, and don’t waste time looking for validation from other people. Remember, our human nature makes us inclined to believe that it won’t work. Zorro and I can’t keep track of the number of people who have reached out to say: “what you guys do, I had thought about it in the past.” Congratulations, dude! Today, YOUR IDEA IS WORTH ZERO.

We’ll read each other next month. If you have any comments, questions, complaints, or suggestions, nag me on Twitter. Find me as @Javivelop.

P.S. Never in your freaking difficult and bitchy life surrender!