You have a winning idea for a new business. But how do you know when it's time to risk everything and go for it? Just ask Farhad Mohit, founder and CEO of Flipagram, an L.A.-based content platform that enables people to create and share visual stories using their own photos and videos and pair them with legally licensed music on their phones. Here are the questions he says you need to ask yourself before risking everything on your good idea.
1. Are you ready to devote 10 years of your life to this?
To outsiders, Flipagram may seem like an overnight success. It's being leveraged by high-profile artists to promote their work, has more than 30 million users, and recently announced a $70 million round of funding led by top Silicon Valley-based VCs Sequoia Capital, Kleiner Perkins and Index Ventures. But most people don't know the company's back story.
"It started in 2007 as an idea called DotSpots which pivoted to an idea called Gripe, which in 2010 pivoted into an idea called Cheers in 2012, which pivoted into an idea called Flipagram in February 2013," he says. "So Flipagram was a seven-year overnight success."
It also took nearly a decade with BizRate, a company he founded in 1996 and sold in 2005. It's now the largest customer feedback network in the world, garnering millions of customer ratings each month and helping tens of thousands of online stores establish trust with new customers, by displaying BizRate Certified medals.
2. Do you have a good idea in a growing market?
Mohit started BizRate at the perfect time in a growing market and within two years the company was hitting its stride. "By 2000 everything was exploding crazy-style and we were able to attract a lot of venture capital," he says. "Then even when the market collapsed we had enough momentum to be able to turn it into a profitable business and then sell it." He says it's the same thing with Flipagram, which is operating at the intersection of mobile, social, video and music streaming, all of which don't show signs of slowing down anytime soon.
3. Do you have complementary skills on your team?
Delineate the strategic, financial, technical and creative skills you have, and which ones you're missing. "Then try to find people who you can get along with, but are as unlike you as possible," he says. "Entrepreneurs make a mistake sometimes by getting into business with a buddy and they don't have all the skills necessary to execute on the idea."
4. Is persistence your strength?
It's going to get lonely during the 10 years it may take to build a business, and you'll certainly face rejection, lack of results and hard times while you're on the ominously flat part of the business curve. "The road to exponential growth and the road to nowhere look identical for a very long time," he says. "A little bit of a delusional confidence helps when you can see something others can't."
5. Can you eliminate all distractions to making your business work?
You need to be single-mindedly focused on what you're trying to accomplish, with the understanding that Plan B is the enemy of Plan A. That's because during your entrepreneurial journey you're going to hit some walls and face impending failure. If you have a Plan B, you'll probably take it instead of figuring out how to overcome the impossible, which is something you're going to have to do when you consider there may be thousands of people going all-in on the same or similar idea. Part time will never cut it.
"The definition of going all-in is that you're not hedging," he says. "But people have two or three ideas they're working on, or are working on an idea while consulting on the side. It's a recipe for failure."