Investors say they want big, bold start-up ideas--but their investments suggest otherwise. What's an entrepreneur to do?
Not long ago, an acquaintance reported on a talk she'd heard by a venture capitalist. There were four elements that he looked for when considering whether to fund a venture, the VC explained: social, local, mobile, and gamification. If two these elements were present, he'd be very interested, and an idea that combined three or more was almost certain to get funding.
Add "big data," and you'd have a complete set of this year's buzzwords.
Doesn't investing-by-buzzword mean this VC's companies will be in exactly the same fields as all the start-ups that all the other venture capital firms are backing? Of course it does. And that may be just fine with them. The thing is, venture capitalists and other investors are human beings. It's human nature to want to stick to the group and do what everyone else is doing. We feel OK about making a mistake if everyone else is making the same mistake. We feel funny about going against a crowd, no matter how sure we are we're in the right. (Every homeowner whose house is underwater and takes comfort in the fact that hundreds of thousands of others are in the same situation knows what I mean.)
There's a complication, though. The culture, especially in America, is filled with maverick heroes who succeeded precisely because they defied the wisdom of the crowd. From Julius Caesar to Captain Kirk, we want to go where no man has gone before. In our age, the poster child for this approach is the late Steve Jobs, who built one of the world's most valuable companies by refusing to listen to anyone but himself.
That may make that strategy sound like a good idea, but most of us know it's not that simple to be Steve Jobs. And leaders who refuse to listen to anyone are as likely to wind up like Captain Ahab, or John DeLorean.
So many investors solve the dilemma this way: They seek out ideas that are tried and true and hiding behind a fig leaf of innovation. Nowhere is this more apparent than in the publishing industry where I've spent my professional life. Magazines claim they want fresh new ideas but what they really want are slightly new angles on topics they've already covered. I was once asked by a publisher to write a book proposal for a book about telecommuting--they had already decided to publish such a book and were just looking for someone to write it. At the time, there were already 103 books about telecommuting on the market.
So what should you do if you're an entrepreneur? If you have an idea that plays on a well-established theme, or seems too much like something already out there, stop worrying about how to be unique and focus instead on how to be better. Consider that when the iPad first appeared it was far from the world's first tablet computer--but by a wide margin, it was the best.
If you do have a truly big idea--one that the market hasn't seen before--be prepared for a longer, harder road to get it funded and bring it to market, though if you make it, you'll likely have that market to yourself for a time. And you might consider layering on a social, local, mobile, or gamification element. That way you can have a big idea and make investors feel comfortable at the same time.