EVERYONE has a big idea in them and at Slingshot we get pitched great ideas every day, we hear phrases like ‘‘unique’’, ‘‘game changing’’ and ‘‘it will go viral’’ from entrepreneurs pitching their once in a lifetime opportunity.
What we have learnt is that good ideas are everywhere. The value of a good idea is generally zero.
A general rule is that there are at least 100 people working on your idea right now, somewhere in the world.
Out of those 100 people a sizeable proportion are in a larger market with access to better capital than you and have more experienced employees working on the idea.
Therefore it can only be the value of your execution that counts, the idea counts for little. When entrepreneurs pitch their idea to us, sure we look at the idea and the market size but most importantly we evaluate the team presenting the pitch.
The team represents at least 70% of our scoring criteria. We know from experience that an A grade team will win in an A or B grade market but a B grade team will generally not win in either market.
The following traits of the founding team are what we are most interested in.
Passion: Love your product, be your brand. There must be some passion for the market you are in and you must strive to bring value to your customers. We often say if you don’t love cupcakes, don’t open a cupcake shop.
Business acumen: You must be able to read and prepare a budget, understand contracts well enough to have meaningful conversations with legal advisors, have a fundamental knowledge of technology, understand your marketing channels, be able to sell the product and engage customers, inspire your team to achieve and be able to make tough decisions.
Team: Often we find a great individual founder. What we want to uncover is a killer team. Ideally the dream team has a great business founder, an excellent technology expert and a customer focused designer. We generally don’t invest in single founder companies, there is simply too much for one person to do in order to achieve success.
Likeability: Is the team likeable? Will the stakeholders they need to convince including customers, partners and investors want to invest their time and money in them?
It’s not always about financial outcomes; investors want to enjoy the ride. Like in any business, working with people you enjoy working with makes life easier.
Insight: The most powerful attribute of an entrepreneur is the insights they have into their market. These insights are their secret sauce, their unfair advantage over their competitors. Often it’s these little insights that make the difference between the company succeeding or their competitors beating them to the market.
It’s Not Perseverance or Perspiration: Often you’ll hear an interpretation of a Thomas Edison quote that “Success is 1per cent inspiration and 99per cent perspiration”.
There is lots of evidence that entrepreneurs generally build something that nobody wants to buy. If it was all about perspiration then working harder would solve the customer demand problem.
If there is no value creation for the customer in using your product then it doesn’t matter how hard you work you won’t capture the customer demand you need to succeed. Hard work is a given, most entrepreneurs work hard.
The more powerful quote from Edison is “The value of an idea lies in the using of it”.