The (only?) OBJECTIVE INDICATORS that YOUR Startup Has Better Than Average (1%) Chance of Success!
(Alt: Why we believe it’s a mistake to “Go All-In / Full-Time” UNLESS or UNTIL…
Look, you can call me “Debbie Downer” or “Negative Nancy” (though I prefer “Realistic Rick”, “Logical Larry”, or “Accurate Alex”), but the honest/harsh (objective!) reality is that you (and your startup) are NOT A SMART BET (for an investor, for a co-founder, or even for yourself to go all-in / full-time) — UNLESS or UNTIL you have AT LEAST one of…
THE (only?) OBJECTIVE INDICATORS
[That a Startup Has Better-Than-Average (1%?!) Chances of Success]
1. Product-Market Fit (proven, not based on your assumptions)
2. Viral Traction / Growth
3. Repeatable Customer-Acquisition Model
4. Profits (or at least steady or growing revenue)
5. Funding. (Only for how it will allow you to grow —
— NOT because it’s actually as objectively validating as 1–4)
P.S. In case you were wondering, no, I don’t consider “CUSTOMER DISCOVERY” to be a good indicator — partly because I think most people kinda suck at it. Spoiler Alert: There’s often a HUGE difference between someone who *SAYS* “I like it!” or “Dude, that’s awesome!” or “Wow! That’s a really cool [startup, app, product, service, whatever] idea” or even “Yeah, I would totally use that!” — and someone who will *ACTUALLY* purchase your product, pay for your service, download/use your app, etc.
THE BAD NEWS:
Unless/Until you have one or more of those OBJECTIVE INDICATORS — then your assumptions, your hypotheses, your confidence, etc. are objectively no better than everyone else’s; so, unfortunately, neither is your likelihood of success. #99percentFAIL #100percentBelieveTheyWillSucceed
THE GOOD NEWS:
We’re living in a time when countless entrepreneur-friendly services (like WordPress, Amazon Web Services, Shopify, MailChimp, Google Analytics, Facebook Ad-Targeting, and MANY others) make it EASIER, CHEAPER, and FASTER than ever before to build, launch, and A-B test a Startup MVP (minimally viable product).
So … it is not only possible, but we actually RECOMMEND getting started in a PART-time capacity to build your MVP and test your assumptions. THEN, if/when you’ve achieved one of the aforementioned “OBJECTIVE Indicators”, you will be able to make the “Go All-In?” decision with much more OBJECTIVE information at your disposal (and investors will have a much better way of objectively evaluating you!) in regard to whether or not you have a better than average chance of success!
Optimistic Assumptions = Bad!
Objective Indicators = Good!
So, what DO we recommend instead of (prior to) going “All-In / Full-Time” from the start?
Prior to one or more of those OBJECTIVE INDICATORS (that you have a better than average chance of success) — we strongly recommend:
PART-TIME PURSUIT OF *PROOF!
…*Proof of Concept?
…*Proof of Assumptions?
…*Proof of MVP Viability?
…*Proof of Reliable Objective Indicators — of above-average (~1%) success likelihood
P.S. Quick Note to EXPERIENCED ENTREPRENEURS on “Startup ASSumptions“
If you’ve ever been in the room with founders — particularly first-time founders — when they’ve been discussing the “assumptions” necessary to create their Financial Projections, have you ever observed something like this:
>> Co-Founder A: “Let’s say our sales growth rate will be 10% in Year 1, 20% in Year 2, and 30% in Year 3…”
>> Co-Founder B: “Ok… [*enters numbers in Excel*]… Dude, that‘s not gonna get us anywhere close to the $2.5 Million Valuation we’re looking for.”
>> Co-Founder A: “Shit. Ok, well… what if we double the price of this and this, cut this expense in half, change those two from monthly expenses to annual, and let’s just get rid of these 3 rows entirely — and let’s plug in a sales growth rate of… how about… 50% in Year 1? 100% in Year 2? and 200% in Year 3?”
>> Co-Founder B: “Ok, let’s see… [*enters numbers in Excel*]… BOOM! Awesome! Dude, these numbers look GREAT now!
Actually… looking at these Revenue Projections, maybe we should raise our valuation a little??”
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