Lessons Learned From Hearing 1,000 Startup Pitches In One Year
It’s 8:58 a.m. on an unseasonably cold day in Melbourne. I think about my previous week in sun-drenched Dubai and shiver. I glance back at my laptop clock: 9 am. It’s time to chat with another entrepreneur who has a big idea to share.
While many people dream of starting a business, publishing books or becoming a Formula 1 Driver, my work is pretty unusual. I spend each and every day assessing startup ideas and product pitches — and no, I’m not a VC.
As a growth strategist for Appster, this is my job and my passion — listening to the business owners, startup founders, would-be entrepreneurs, and anyone who thinks they have a product or service idea that will set the world on fire.
My role is to provide help and advice, and to determine whether that idea really does have potential. I qualify our leads for the next phase of a development project.
Call is over. George (as we’ll refer to him) had good intentions, but no — it’s not possible to build an app that scans and identifies that yellow bird in your backyard. It’s not technologically feasible. Whether it’s a plant, animal, insect or fish, I’ve heard this idea before. In fact, I’ve probably heard some version of it at least 100 times in the last three years. It’s not totally crazy; it’s just not possible yet.
I hear hundreds of startup ideas each and every month. Some are decent, some are better, and some are so good, they raise the hair on the back of my neck. RealifeChange was one of those stop-and-drop-my-coffee situations. About 30% are legitimately ridiculous and don’t have a chance of succeeding. But nearly all of the product ideas fall into three main categories:
“Uber for X.”
Business to Consumer (B2C)
These concepts target users directly. From January through April this year, nearly every B2C founder pitched an on-demand product: call it the “Uber” of just about anything you can imagine. I get it. We all have less time and want to make the most of our busy days.
On the flip side, service providers can earn extra cash by running errands or delivering meals, without sticking to a 9–5 schedule. Every time Uber expands to a new country or hits a fresh milestone, I’m inundated with calls about the “Uber for X.”
As they scale, B2C startups can also pivot to become B2B products, which opens new markets (with their own opportunities and challenges). B2C concepts, however, are not as simple as they might seem. You can’t slip “the Uber for X” in your elevator pitch and call it a day. A great concept (in the on-demand space or beyond) needs to provide high utility value for consumers, who are increasingly discerning about what they’ll do, buy or download.
Successful B2C products must have a truly unique value proposition — and the keyword here is “unique,” not “sort-of new” or “slightly different.” As I tell my clients, you need to identify an existing market and target pain points that can only be treated with surgery, not covered with a Band-Aid.
Business to Business (B2B)
About two years ago, I met a client who wanted to build a digital product for companies that employ or contract on-site laborers. The application would ensure every employee’s licenses and Occupational Health and Safety certificates were up to date. It would store them in the cloud, flag upcoming expiry dates, and ensure workers weren’t associated with a job site within two weeks of an expired license. There’s a lot more, but those are the basics.
This application served a specific type of company with specific set of needs. Would it be a household name? No, but I could envision a successful product that wouldn’t need a lot of marketing or a big PR campaign to thrive. By acquiring one customer — a contracting firm, for example — the product could immediately add 5,000 customers to its roster of sub-contractors. That’s a quick way to scale.
B2B also includes enterprise-level products, which are created specifically to help businesses serve a large customer base or streamline corporate processes.
An enterprise app could be anything from an inventory system to an internal social network to a sales tracking tool or a customer installation workflow. Are they sexy products? Not usually. But if they solve a real pain point, they can be extremely successful — and lucrative.
Games are exciting projects, but they’re increasingly rare. The big gaming studios acquire most of these applications and many people aren’t drawn to building a business from their game. That doesn’t mean they can’t succeed, though. A quality game will have a strong creative vision. The challenge is to transform that cool, creative idea into a flawless player experience that’s also, let’s face it, incredibly addictive. We have a team of dedicated developers that have built fun games like Morpha and Chook Plucker.
Clearing the first three startup hurdles
Assuming you’re not hoping to turn my face into a living, breathing emoji (another idea I’ve heard more times than I can count), I’m looking for a truly unique concept.
At the same time, I’m intrigued by people who want to build for an existing market, but out-develop and outmaneuver the competition.
You want to build a better Uber? It can be done. Just consider how Gmail killed Hotmail, Myspace fell to Facebook, and the iPod took out the Zune (The what? Point made).
Once we’ve established that your idea has merit, there are three more green lights to pass on the road to viability.
1. You’ve been thinking about your idea for a while
Sure, it’s possible to have a lightbulb moment on your morning run or to come up with a genius idea over beers with your buddies. But when a client says they’ve been working on the concept for at least 3–6 months, that’s a good sign. I like that. It means they’ve mentally worked it over and there’s a real problem that the product or application could solve.
2. You’ve invested energy and resources into your idea
Tell me you have a co-founder, you’ve built some initial wireframes, or you have a draft business plan and my ears perk up. Those concrete steps show basic dedication. They tell me that you’ve worked through some of the snags in your product and thought about how it could actually live in the world — and that leads to point number three.
3. You understand what it means to build a business
There’s a common misconception that developing a digital product is just like building a website: stack up a series of images, add navigation and you’re ready to roll. But there’s a lot more effort required to build an app — and there’s even more complexity involved in creating a real, sustainable business.
I like to use the construction analogy. Imagine you’re building a new house on a vacant lot. You need to dig a hole, lay the foundation and frame it. Once you’re inside, there are many, many more team members to consider: plumbers, tilers, drywallers, electricians, and painters. It’s a complicated project with lots of moving parts, and the final product needs to withstand everything that people and nature can throw at it.
We want world-class products
Creating a successful app or digital product requires far more time, money and effort than most people can imagine. If you’ve built a previous business, you already have a sense of the challenge ahead. But, some people think they can create an app and hide in their office (or their parents’ basement) while the cash rolls in.
Here’s where it gets personal
But let’s get back to the good ideas. It’s exciting to chat with a client who hits those three initial markers of time, draft concepts and realistic expectations. The next step? We need to talk about money:
- Have you set aside a budget or the capital to make your idea happen?
- Are you in a realistic financial position to take this risk?
- Do you have the time available to nurture and grow your idea into a business?
To NDA — or not to NDA?
Speaking of trust, about 80–90% of all the clients I connect with ask for a signed Non-Disclosure Agreement (NDA). Of the qualified clients, however — those people who’ve sailed across the first three hurdles — only 50% request an NDA. It’s an interesting gap.
Intellectual Property protection is an ironclad priority at Appster. People trust us with their most valuable ideas and we hold that trust sacred. At the same time, serious entrepreneurs understand that an idea is just a tiny, tiny kernel of the entire startup landscape. You are an individual with a unique vision. No one else would or could execute your idea in the same way, with the same details.
Even if someone else is building or creates a similar product, that’s a good thing. It validates your concept. It shows there’s a market and other people are thinking about the same problem. Now you just have to make it WAY better than what someone else could or has built — which is also why I encourage founders to talk about their idea. Discuss it with your friends, colleagues, family, and that guy you sit next to on the subway. Talk about it! Not only will you get interesting feedback, you’ll start to build a market for your product.
What else can you do?
- Connect with other aspiring founders
- Attend meetups and casual networking events
- Go to conferences, seminars, workshops
- Join a tech or business-focused co-working space
Think about what’s going to happen 12–24 months after you build the product and take it to market. Imagine the longer-term picture. What does growth look like? What’s your ultimate vision? Educate yourself and think about how your big idea could be a successful business. Clear the hurdles. Get honest and detailed about your capital.
Then let’s talk.
Originally published at www.appsterhq.com.