In December of last year a local entrepreneur/investor asked for my opinion on a new venture he was starting. Previously the entrepreneur had bragged to me about having started several earlier business and made millions from the ventures, (bragging is the first sign of a lie).
I told him I’ll be happy to look at his intended business venture and give some feedback.
I met his team and heard their visions of grandeur. The mantra was no different from what I’ve heard hundreds of times from other misguided entrepreneurs. The proclamations included:
- Our vision is to create the first….the best..and be the best at …
- This is going to be worth XX millions in the first year
- This is a hot market trend and we will build the best platform in the market
- We can get lots of volunteers to build the technology
- “I” know a lot of wealthy people who would invest in this so you should be the first one in on the deal
Then I began asking some basic questions including:
- Do you have a business plan that describes the business model , your competition, the value you create, the technology, investment required and who would gain the most from using your assets?
- What is the key differential between you and others doing what you plan to do?
- What is the business experience of the team? The creative, intellectual and strategic capacities?
- How much money to date has been invested and who provided the investment?
- How much research has been done to verify your assumptions, design the offering, the technology and the market needs for your offering?
There are obviously a lot more questions but since the parties couldn’t answer the first five questions I knew right away that the planned venture was simply an idea with no foundation. In other words no one had done any of the necessary homework to define how the idea becomes a valuable business proposition that meets a market need, recognized or not.
I told the entrepreneur/investor that he didn’t have anything worthy of an investment. Until he and his team answered the basic question than all their proclamation were nothing but attempts to sell snake oil to the uniformed including themselves.
Sorry for being so direct but learning what you need to build a business isn’t hard, you just have to be willing to learn to listen and pay attention to more than yourself.