The Contrarian Founder: Do your best to kill your idea!
About the Author
Hi, my name is Nikolay Tsenkov and I am a Software Engineer-turned-Entrepreneur.
5 years ago, I’ve quit my 9-to-5 job to find the type-of-work that would make me most happy and in turn have switched between several different technology fields (web, desktop, mobile, hard real-time DSP etc.). After years of experimentation and learning, I finally discovered what I want to do for the rest of my life — I want to build companies with a large and positive impact on the world.
I learn slow and execute fast. I’m interested in everything-there-is. In the rare cases when I lose — I’m the type of sore loser that just will. not. quit.
Always put my money where my mouth is. I work every day.
About the Series
This is the first post in a series I called “The Contrarian Founder” and together with a daily vlog (over 120 episodes recorded and soon to be released), I am going to document the important lessons learned through my own ventures and the wisdom that I’ve distilled from the many podcasts, blogs, books, interviews etc. on startups that I consume on daily basis. My vlog primarily documents the development of new products (as well as exposes the emotional rollercoaster that I am on, working non-stop on an idea). In fact, those 120 episodes, have captured my first startup product’s development, all the way from an inception to private alpha (in the last 30+ days), to right now, just days away from going into public Beta.
For more updates on these series, the vlog, my ventures, and my daily thoughts: you can follow me on twitter @NikolayTsenkov.
Enjoy the post!
TL;DR
Time is your most valuable asset.
One of the biggest risks of wasting your Time is investing it in bad ideas.
The simple exercise of sharing your idea with smart people and potential customers, earlier-on, before you’ve actually built anything, looking for some specific reactions (and evidence someone will pay for it), can significantly mitigate that risk.
Intro
Actively trying to dismiss an idea for a new venture, may be very counter-intuitive, but it’s actually the right thing to do.
I can’t seem to find the original quote, but I believe Reid Hoffman (Partner at Greylock prev. cofounder of LinkedIn & founding engineer at PayPal) has said something along the lines of:
“I love when smart people are telling me ‘Your idea sucks!’.”
The reason for that is very simple — if people can point out the problems with your idea, which you can’t seem to determine on your own => they have already helped you tremendously!
Ideas go “10-a-dime”
Yep. Everyone has them! You have them, your colleagues have them, your friends, your mom, everyone and anyone has ideas.
The difference between regular people and entrepreneurs, though, is that we (entrepreneurs) don’t (always) let those ideas fade away and we pursue them. Unlike normal people, we can’t face the possibility of someone else coming up with the same idea a year later and building a $Xb company.
Nope, we seize opportunities, and we’re willing to take a risk.
Well, usually… You still don’t want to end up like this cat.
The risk still needs to be measured. Otherwise (to make a very bad tautology) we risk making foolish decisions, not backed by enough evidence, that we actually have a chance to “win”.
Time is your most valuable asset
That’s right. You don’t want to spend the next 5 years, or 2 years, or even 2 months, on something that you could’ve determined has no chance of working out, in just a few days worth of work, right?
But how do you validate an idea so quickly? The short answer is — you can’t! A full validation of the idea would require you to actually build it. Yet, determining, early on, a chance of it not working out, so you can make an informed decision on whether to pursue it or not, is not all that impossible.
Here is the best way, that I know of, on how to determine if you shouldn’t pursue an idea — try to find a critical amount of evidence that you are wrong.
That’s still pretty abstract, so let me try to give a couple of examples of how I did this for the product I am currently working on.
NB!: BTW, I am not going to talk about well-covered topics on de-risking startup ideas, such as — figuring out the size of your market (TAM), pricing, revenue model, customer acquisition channels, etc. Let’s assume that you have a hypothesis on all of those things and that’s part of the idea you want to evaluate (read “kill”).
1. Talk to the most critical smart people that you know of.
I, personally, think this is the best way to do it. No matter if you are working on a startup idea or not, you should always try to surround yourself with smarter than you people. Those who are particularly honest and critical are priceless. Trust me, once you realize the worth of their feedback, you will feel like they just reached into their pockets and gave you money.
Find those people in your network (ideally, they are other founders or startup advisors, OR even investors you could reach out to, informally) and pitch them the idea, before you build anything. I think you should have some graphic mockups to better represent what you want to build and that’s about it.
Not having invested a huge amount of time into the project keeps you objective, as well, in taking this feedback and you will, naturally, be less protective of your idea, since, as we just said — those go 10-a-dime (before you put time into one).
2. Talk to the potential customers/users of your product.
Do they need it? Will they use it? Would they pay for it?
You need to be working on an idea, that not only people want, or even need, but they actually are willing to pay for.
Evaluating the feedback of those 2 types of people you talk to, you need to look for some specific reactions.
OK-Feedback is Not OK!
When you evaluate the feedback from the cohorts in 1. and 2., your idea needs to trigger more than “Oh, it seems nice.”-type of reactions.
With the first cohort, ideally, you want to see polarization in their reactions. If the person you pitch to is an investor — a validation in the form of prospect for future investment obviously is great, but even if they don’t like the idea — if those very smart people are struggling to say “No!” to you, I believe that is actually a positive sign to look for. And EVEN if they hate it, you still might be onto something — if part of the people you pitch-to are in-love with the idea and the other part absolutely hate it — you might just be onto something HUGE.
Contrarian ideas don’t immediately make sense to everyone.
I hate giving this example that has been so much overused in the industry, it kind of became a cliche, but 99.99% of the people would not consider AirBnB to be worthy of their investment, early on, simply because the idea was too contrarian: “you’ll post images of your home on the Internet, so you can let strangers sleep over?”. Paul Graham famously said: “Who are the weirdos on both sides of that transaction!?”. He (YC) ended up investing in the company.
The Bad Signs
What you definitely don’t want to see as validation for your idea is the following — no one likes the idea (obviously a bad sign). But even generally-positive reactions without much excitement and without any polarizing factors is still a bad sign. Some people (Peter Thiel is one example coming to mind) would even say that, if everyone is really excited about the idea — that’s bad, too! Why? Because if this idea makes sense to everyone, in a month there will be tens of competitors, in a couple of months: hundreds, and within a year, well… I remember a panel between Reid Hoffman and Peter Thiel in China, talking about a specific idea that had currently about… hm, well, 10 000 clones in China alone… Yep, you read that right. 10k.
“Obvious” usually means “bad”
In some exceptional cases (ironically, I think PayPal was a pretty obvious progression in technology and economic behavior), I am sure there were teams that managed to reach escape velocity and just left the competition behind, but this requires… an incredible execution and usually burning through a lot of cash, very early. Remember, when PayPal was reaching for that escape velocity, their strategy was literally giving money away. If memory serves well, they were, initially, giving $20 away per every new user and then switched to $20 per every new user who has made a purchase/transaction on the platform. And even back then, when I am sure obscurity played a big role in their tech’s security, they faced huge issues not just from competitors and having to raise a lot of money, but hackers that were stealing from the platform (you should listen/read/watch the story as told by Max Levchin, one of the co-founders in PayPal).
Aside all of that, I believe with each and every year, the bar for this type of execution rises as more and more people are capable of competing for the same ideas.
Reactions from potential customers to look for
From your target audience, you have to see excitement about the product to validate that someone actually will be using it. But if the idea is so contrarian that you observe polarization even in cohort 1, I would probably not worry about the initial reaction of the 2nd. It just might be that contrarian, that people can’t see themselves using it. And you will be able to test with group #2 in a weeks-to-months period of time when you have the MVP, anyways, which is still pretty early. For now, we try to determine whether you should build this MVP, at all.
3. Don’t bury your head in the sand while building an MVP.
Even after you get external validation and you start working on an MVP — don’t stop trying to kill this idea!
Constantly think about similar products that have died in the past — why did it happen?
Keep on thinking about competitors — are you going to compete with companies that are too big? Will they ever do something like this? Are they qualified to do something like this? Can they just “turn on” your whole idea as a new feature? What is your defensibility (what’s the “moat” here)?
And, finally, the last point I have is a question, which is a hard one for me. I always feel insecure about it and I believe many people who have a successful track record of building companies, don’t really need to always check this one out.
But as a first-time founder, I think this is a very important question to ask yourself:
4. Are you the right person to build it?
Are you solving your own problem or someone else’s? Why are you affected by this? Why are you uniquely qualified/positioned to solve it?
I’ve recently come to the conclusion: there are a ton of ideas that I can see having a potential to be a $1b company, I am extremely passionate about them AND I have some key insight (or expertise) making me a great candidate to build them. Why not work on those, exclusively?!
So, at this point in my life, I am only working on ideas I am passionate about, targeting a big enough market and I’m either uniquely qualified or qualified-enough to build them.
The Contrarian Conclusion
Don’t be scared of people challenging your idea.
Search for that feedback from smart honest people.
Embrace it.
Use it.
If it kills your idea — great, you didn’t lose much time. Onto the next thing!
If it doesn’t — great, you now have evidence you should go and build an MVP.
Huge “Thank You!” goes out to Alex Gilleran, Vassil Terziev, Veselka Valchkova, and Evgeni Petrov for reading the early drafts of this post and helping me out with their amazing feedback.
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