Friday, July 20, 2007

Objections

I had a long conversation with Frank, and then Sheldon, at work today. Dunno if it was intended to get me to stay or if it was just to let me know some of the pitfalls of startups - it seemed like a little bit of both. Anyway, I want to write down some of the objections they had so I can come back to them and we can perhaps address them.

From Frank:
  1. Advertising/sales expenses. It takes money to let people know about your product. You can have the best product out there, but if folks never hear about it, they won't use it.
  2. Development costs - it sucks to spend $90M and then find there's no market out there.
  3. The company's business is really picking up - I could be missing out on a very exciting time.
  4. We should at least validate the market by sending links to an impartial potential customer (he offered his son) before plunging in
  5. Much of our hurry may be premature - we can watch our competition, see if they take off, and try to catch up with them afterwards
From Sheldon:
  1. We should at least be able to convince angel investors to invest money, even if we don't take their money. If we can't convince them, how can we convince customers?
  2. I'm too young with too little technical experience for this
  3. It'd suck to spend all this time building a product and then find that we were building the wrong product. All that development effort would go to waste.
One of the biggest mistakes entrepreneurs can make is confirmation bias: disregarding information that doesn't fit the course of action they've decided upon. I'd really like to avoid that trap here, so I'm writing down these objections here so I can come back to them impartially. Unfortunately, almost all of these are just opinions: they aren't factually verifiable, which makes them a bit hard to test.

There's also a problem in that knowing more and knowing way less than a person both seem the same: in both cases, they look stupid to you. I mentioned this problem to my friend Doug when I first joined my last employer: there were business decisions Sheldon made that seemed a little off, but I couldn't tell whether he was dumber than me or way smarter than me. Doug reassured me that he was probably not way smarter than me, but that's not really enough to go on.

I think I have a solution to that: I've e-mailed Sheldon asking for the most influential books/websites/blogs/resources in his company's growth. Because while you often can't tell if a person's opinions are wrong (you have no idea what experience they base it on, after all), you can tell if their reasoning is wrong. If you know what they know and then can point to specific flaws in their assumptions, you can answer the question of whether you're smarter or way dumber than someone.

I'm not willing to wait and see how the competitors do. The problem with these highly viral consumer web services is that they'll sit with no adoption until you solve the whole problem, and then everyone will try to use them at once. Once you've solved the whole problem, there's no way for a competitor to squeak in until another problem manifests itself, because users are happy as-is. Most cases where people say "Oh, there was no market" really are cases where there is a market, but there do not exist services on the market that solve the whole problem. For example, YouTube could not exist without FaceBook/MySpace, easy video-editing software, and cell-phone video, because there was no easy way for users to make and edit videos and no audience for them once they did. Reddit could not exist until the rise of blogs and news sites, because there was not enough freshly-updated content to make it interesting.

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